Maybe its that I'm a long-term bull, so long-term that I don't see this as a negative downer, instead more as a terrific buying opportunity (that I have taken advantage of). II stand by my belief that there is no fundamental rationale for the sell-off. I agree with those that say that there was no "fundamental" rationale for the meteoric bull market of the past 3 years, except for the fact that extraordinary amounts of money poured into stocks through 401Ks, Mutual Funds, retirement plans, etc. I don't see that stopping in the current economic environment, nor do I think that we will continue the same 15%+ increases yoy.
Money is still coming in to the market, as there is still no real competitive investment vehicle to stocks. Interest rates remain low, as does inflation. The fact that most of the smaller issues have been down for so long, despite the market gurus claiming the market is still bullish, and that the big caps are now finally giving some ground, indicates to me that we may be near an end to this craziness. That does not mean I think a return to 9000 will happen overnight.
I do think that on the Tues after Labor Day we will see the beginnings of a turnaround, with much more buying than selling, however, this is just MHO. Stocks are much cheaper now than they were before the summer, and if people were buying then, you can bet that people will buy now with virtually every stock off 20%+.
People have been claiming that this is still a bull market for a long time, despite the adv-dec line being so negative, and small issues getting killed. The Big Caps masked all of that, but the Russell has been hurt for months already, and IMO it looks as if the Big Caps were simply tied to bungee cord and told to run as fast as they could. Then, inevitably, the bungee cord snapped back.
Now that we're all back to square one, it is time to start all over again, and with many new and nervous investors out of the mix. But they will come back, because as I said earlier, there is nowhere else to put their money. It may take time, but the eternal bull will march on.
later,
geoff |
