I think the implications of your analysis is correct. BB did state some numbers for the Dow and the S&P 500. That was some time ago, and the certainly the scope and impact of the Asian situation was not clear at that time.
It is my personal opinion that BB's crystal ball gets foggier as you stretch out the time interval. He has said a bearish signal could emerge in the period of a couple of weeks.
The way the game is played (Alan listen closely) is that Bob has a very good handle on the near term, predicated on the current market conditions..stock market, domestic market and world market. After the fall in November, he was looking for a re-test of the lows and perhaps the development of a buying opportunity. Since that time, new information has come forward.
We have seen the stock market brush off a ton of good news on the domestic market..with inflation less than 2% per year, and the Asian crisis coming just at the time when our labor supply is very tight. Domestically, this all is very good news. However, up to this point, I believe the Asian situation has been viewed as mob psychology on the part of Asian traders; that is not as a real crisis.
So, in summary, sitting here in mid-January, the world looks a lot different than it did when BB first put out the numbers that would produce a buying opportunity. If he holds true to form, this weekend I believe we will hear a new assessment of the market. He could say: "As long as the Asian turmoil continues, disregard the previous buy signals". This would not make him "wrong" in November...he said he is "looking" for a buying opportunity, not that one will positively occur. He has not deceived anyone, nor prompted anyone to loose money. He certainly can change his advise now and not be accused of being "wrong". I do think his analysis will be very insiteful.
Right now he is saying "stay fully invested"...if the market falls badly (greater than 15%) and stays there for a year..then he will have made a major mistake by not foreseeing a plunge. It will be very interesting to see if perhaps he recommends taking some money out of the market...or if he sticks with the same "buying opportunity" call he made in November.
It is my guess he will see the American economy as being the strongest it has been in 40 years, and will look at the Asian problem as a great opportunity for US companies to finally crack the political trade barriers that have kept us out of many of their markets. And by the 2nd quarter 1998, earnings will be up, interest rates low, and sufficient room for the market to hit 9000. Just a guess 8-)
Greg |
