Thanks Marc. I'd love to read the TSC article but it is for members only. I imagine that it is pointing out that you'd make more money if you did the opposite of what the economists say than follow their advice. This is true and is the reason why I am a strong believer in contrary investing. Being a contrarian only works if there is about 80% concensus. The rest of the time, you're on your own.
I don't see any major problems for the economy at the moment. Of course I can read you a score of plausible scenarios that would give you nightmares at nights. But I don't see them happening at the moment.
One way of analyzing the stock market is based on two factors only. The amount of money pouring into the market, and the supply of the shares. This is where I do see some disturbing trends. It takes too long to explain them here, but I sumerize it by saying that there have been only 16 times this century that the difference between the averages and the breadth has been as great as they are now. In 14 of those cases, the market droped sharply within weeks and in two of them it ralied sharply but ended in the two greatest bear markets of the century.
There are times to be cautious and I think now is one of them. You don't have to liquidate your portfolio, but I think it is wise to hedge your bets (via covered calls or shoring related sectors) for the next 6 weeks or rebalance it based on your asset allocation.
good luck,
Sun Tzu
BTW, when I made my 3~6 weeks call after the market close on Feb 22, SPX was at 1275, VLI was 415, and DJIA was ~9600. Today they closed at 1262, 401, and 9672. Given that I said they will drift higher in the mean time, I think I made an accurate call. |
