Subject: "America seems to be alive and well...So where is the problem?"
Ken Fisher agrees with you. However note that two of his seven reasons are in question after this week. Keep your eye on the dollar and bonds as well as stocks I guess.
His point 6 is a good one about the size of the developed economies compared to the others. OK but I am seeing our industries oil, oil services, lumber, pulp and paper, gold, steel, nickel, apples, liquor, golf clubs, heavy equipment, engineering, airlines, aircraft, autos, ports, semiconductors - demand dry up or in oversupply - you really think we escape? They say entertainment and services will save the day. OK but I hope things turn around soon.
Abby tell me it ain't so!!
forbes.com
Don't let 'em scare you
out of stocks
LAST ISSUE I said I thought we
had a correction, not a bear
market. I still think so. Here are
my reasons:
First: It's rare that bear markets
start out with a big break like the
one we've had. They usually begin
gently to lull people into
complacency.
Second: The U.S. bond market is
strong and interest rates are
benign. Most bear markets are
preceded by a nice long period of
either rising short-term interest
rates, rising long-term rates or
both.
Third: In the past when bear markets began without
rising interest rates, the dollar was weak. The dollar
has been strong. Bear markets rarely develop when
there is lots of liquidity around. And there is now,
because the Federal Reserve is creating lots of it by
printing money aggressively. Even more liquidity is
coming here from overseas where the dollar is strong.
Fourth: Recall history and my
"third-year-of-a-President's term" rule, showing how
1999 should be a good year (see my May 4 column).
Bear markets generally take a long time, and there isn't
time for one between now and a good 1999 market.
Fifth: All the media talk is similar to what we've heard
for almost a year now. Asia. Now Latin America and
Russia. Monica. High P/Es. All old. As I wrote on
Mar. 13, 1995, in one of my alltime favorite columns,
old and widely circulated arguments lose their power.
As I said: "Bearishness may yet be vindicated, but you
will need new fuel to justify it."
Sixth: People have a hard time fathoming how big the
economies are in the U.S., Western Europe and
Japan. And how small everything else is. In the rest of
the world there are many bodies and little economies.
If you take all those countries and aggregate their real
international trade, Russia and China included, it looks
like several dozen major U.S. firms.
A major downdraft in all those places at once would
look about like a major industrial sector rotation here
(of which we've had many over the decades). It would
likely cause the Fed to cut interest rates early next
year, and we would move on. Shy of a Russian
revolution that put nuclear weapons into the hands of
whackos, there really isn't a there there.
Seventh: Politics look good.
The elections now seem
assured of providing us more
gridlock. Bullish.
So don't let the correction
scare you out of stocks. Use
it as an opportunity to buy stellar European firms like... |
