"But the worst seems to be over."
From Perspectives newsletter. (The newsletter can be received for free by sending an email request to perspectives@shaw.wave.ca.)
Commentary
Trade or die.
It is a common saying in the brokerage business, and it is the thing that
ensures that the speculative stock markets, all stock markets, will be
around forever.
Everyone knows that the VSE and ASE are in brutal bear markets, some say
the worst ever. It is easy to think that things will never be good again,
that these markets will never enjoy the liquidity and profit potential that
we saw two years ago.
However, with the number of people who make their livings off of these
markets, with the number of companies whose existence depends on them,
things will work. If they don't, powerful, wealthy people, many with big
egos, will die. And that is just not an option.
There is lots of money on the sidelines, there are lots of deals waiting in
the wings. When the psychology of the market ceases to be so negative,
these things will come back. The powerful people will slowly bring them
back and gather momentum. And slowly, greed will bring others back too.
Many will have died, but the strong will survive.
Our prediction is this. The rest of 1998 will be spent slowing the downward
momentum and bringing some optimism back to speculative stocks. During that
time, world currency issues will slowly work themselves out after a lot of
suffering. Commodity prices will stabilize, and US interest rates will move
below 5%. You will see the odd good opportunity on Vancouver and Alberta
that will get played, but for the most part, things will continue to be slow.
****Early in 1999, things will actually start to turn around. Not a strong bull
run, but some strength and some rebound in the spec stocks. Enough for
those who have survived the bear to actually start to make some loot again.
By the spring of 1999, we will have a VSE index approaching 600 - 700 (a
50% increase from now, but still very low relative to where it once was)
and investors will start to forget all the problems. Large cap stocks may
not give the amazing returns that they have recently and investors eager
for quicker profits will start to come back to the promotional penny
stocks. Things will be alright in 1999, not outstanding, but enough to
reward the strong who have survived.
Why? Because it is trade or die.
Enough Said.**** (Again, the Perspectives newsletter can be received for free by sending an email request to perspectives@shaw.wave.ca.)
Hey people, at least someone's hoping besides us. --Alan |
