To the thread: (since I haven't read past this post and there are at least another hundred posts to read, please give me a pass if this read's like "so last week" <g>)
Hi RtS,
I have finally started to catch up on the WSEA thread and hit this post. Like many others, I think it's a great post but I would like to add a few things to the discussion.
First, the business cycle graph in your post is SO last century <vbg>. At least some of the proper questions are asked before it's presented: Will history repeat or is it being altered by current factors?
One of the major factors that is continually changing is the fact that the Medical/Healthcare industry is becoming a larger and larger portion of the total economy here in the US and in most of the developed world. I believe the current figure is one sixth of the total US economy and growing. This will continue to grow, as first, the baby boomers age much longer than their parents and then their children will similarly age significantly longer than the boomers. This may not directly change business cycles within other industries but it will continue to change (slowly and subtly) the spending habits of consumers.
Also, as someone previously posted, we are at historic lows in bond yields and this has substantially paused or completely altered the spending activity in almost every industry. Next add in that we've had 2 major market crashes within the last dozen years. The second one, so (relatively) quickly on the heals of the previous one has completely altered the sentiment of investors.
Lastly, we have new media to contend with. From the internet to CNBC and "Fox News", the places where investors get their information has multiplied by geometric proportions. In many cases, the "news" (if you can call it that) is simply a sound bite or at best 10% of the "real story". You have people like Cramer shouting things like this week's rant: "sell any and every tech company accept AAPL". Millions of people are watching his antics in "real-time", so plenty become lemmings being led to the slaughter. Two months ago it was sell anything to do with China...etc...and the beat goes on.....
I agree with you completely that we are not anywhere near a "long term bottom". At best we are near a short term bottom that is a correction within the trend off the early 2009 lows. If we look at the long term chart of the S+P, I suggest looking at the move out of the 1987 "crash" and look at the 1990 correction, with they eye on the way the market moved over the next decade. Corrections showed up but the "significant bottoms" were not the result of a massive bear market, as in 2002-03 and 2008-09. |
