Well now, Mike S....
Are we being told to stand at attention? Chest out; spine straight; clerity of vision? No, I don't think so. But maybe your reading does not go back to last fall? Here's what you missed:
Most folks on this board are completely free of debt and therefore have a great vested interest in protecting & growing what base they have by using their own wit, perception, vision, experience, and intuition. My guess is that, you (too), are investing with the same fervor.
Using our common sense, some tea leaves we have all acquired, and our experience in the market, I do not recall even ONE post from any participant on this board whereby they were harmed by the downturn from Oct'07... and more specifically, the downturn since the Fall of 2008. And, if they were harmed in any manner, then they have focused on short term trading profits to cover those losses. So far, this is a background of 'people' type of paragraph. Let's get to the nitty gritty.
Having lived through, and analyzed Q308 and Q408 in 'real time', discussion hit this board in early '09 as to what path might follow. Though the media & every article out there said that a bottom would come in Summer or sometime in Q3, we ascertained that a bottom was coming in Q1. Big difference in time, no? Stepping aside, nibbling (but never giving the market the motherload), we were all very prepared for the March 9 low. A good reading that the market was moving higher put investments back into play the 3rd week of March (you are welcome to go back to that timeframe & read).
What we realize is that the fall from Oct'07 highs took 17 months to the March 9 low. The market retraced nearly 30% of that fall from grace in merely a month... a juicy bone to a starving populace. Most retracements take longer than a month... & here we are chalking up a 2nd month (which is more reasonable) It could be that we dally longer but the retracement will not get more than a fibonnaci level & then will turn down again. Some think (as do I) that it will bust the Mar 9 lows (or get very close to it) when it turns. This is nothing more that the famous bear trap that we read about but never have trully experienced. To place the motherload into the market when all reason says that we will surely be a victim of a bear trap begs us to continue protecting the motherload.
So... we look for evidence that we could possibly be wrong. The evidence we read & hear is mostly cheerleading for the 'upside'. The 'real' evidence is horrible (at best) with a Service economy wholly dependent upon debt... with debt destruction on our banks, our populace, our cities, our states, our local communities, our industries, and our educational system. The tentacles of what is happening financially to our country are masked with bandaids courtesy of our government & the Central bank. Those bandaids are hiding a great deal & have given 'scared folks' some calm, but they are b-a-n-d-a-i-d-s. The infection lies underneath.
This is to say that no solution to problems has come from the bottom up, but rather is coming from the top down. The infection has not subsided & (even with current discussions on this board) are seen to seep out. Compounding the problem of the infection spreading (unseen through the bandaids) is the vulnerability of what appears to be 'healthy or semi-healthy' adjacent areas.
Let's just look at one of the last vestiges of industry in this country.... metal based products. Industry is dang near shut down due to debt, is barely humming in light of bandaid aura, & the infection is enormous. Possible saving grace? Stimulus plans (top-down solution... not bottom up... and it will be--yet another--bandaid). Will it work?
For instance, when two car companies shut down for 60 days, what happens when the ripple effect hits supporting industries, and their supporting industries? Two more EXTRA LEAN months on top of over a year of 'kinda lean' months will put many companies over the brink... many companies waaaaaaay out there on the 'supporting industry' chain. It's clear that whatever cash was hoarded, whatever cost cutting was done, only a small stash is left to ride out the consequences of what the next 60 days will bring to our c-o-u-n-t-r-y. It's like being kicked when you're down. Not everyone is going to get up. This isn't 'bearish' talk, this is just the reality of what might come down the pipeline.
And, facing that, can we prolong a rally in a market which is more than speculative now? Can we rally because businesses "meet or exceed" their SEVERELY reduced outlooks? Are we seeing and experiencing the makings of the bear trap which, so far, looks like will happen? Should the retracement of the 17 months last longer than 2 months? Can it last 4 months? Is the bottom in on your "reverse J" economic recovery? I don't know. But I feel certain that the market (separate from economic recovery) is not done with downturns.
The market and the economy, being two separate animals, will... at some point... come face to face. When that happens, anyone who has money to invest will buy at the low. And, will we wonder 'Is the low of lows?'? Of course we will. And, we'll discuss, cheer, caution, & give our two cents. The opinions of t-h-e-s-e people count.
I just want to be successfull; whether it is bearish or bullish doesn't matter. Success happens in both environments. And, trust me, when Ahab & crew see the whale, the ship sets it course. There will be reaction from every poster here closely watching its path and when to make the best (not necessarily the clearest) move. In some respects, that is where we now stand: anticipating when the bear trap will shut. That takes discussion. It never matters who is successful in the dialog, it only matters that the dialog occurred.
This is to say that, though Alan left before he started his rant, I shot you mine! What a great way to start a weekend!
Just my two cents on probably the longest post I've done in years... gotta rest ....
