Anonymous,
Everyone, bears or bulls, on this thread, probably can list 10 to 20 different reasons why the stock market is in trouble. However, here I want to do sth different. I am listing several reason that I believe are more than enough to offset those worries:
1) Russia is in trouble. However, the whole Russia market cap is about half of that of Mcdonald.
2) China has to devalue its currency in the near future. However, Chinese government has just informed major banks that it won't devalue yuan unless yen devalues significantly more to 170 against the dollar.
3) A majority of Fed members now believe that if the Fed maintains the interest intact, it is equal to tightening under such circumstances.
4) The US economy is still robust and showing no signs of recession. AG has publicly and privately stated numerous times that 'this is the best period for the US economy that he has ever seen in his life'. It's also no secret that AG is working at devicing a model in which both high growth of economy and low inflation can coexist thanks to the rapid development of high tech.
I think that we are witnessing one of the most amazing achievement of the economy that the high tech is growing so fast forward that it allows a well managed economy to robustly go forth while meeting no serious pressure from inflation. This transition might take years for everyone to realize and if that's true, we will have to agree with Ms. Cohen that we can't use to old rules to measure the vale of the stock market.
The market is driven by fundamentals, and lots of times by greed and fear. We have seen these two extremes in the not far past and it will certainly continue. However, as long as the fundamentals for the US economy remains intact, there is no reason for the US market to welcome the arrival of bears.
I remain a bullish stance with respect to the US market: It can recover toward 9000 by the end of the year and make a rally toward 10 k next summer.
good luck,
larry! |
