Value Microcaps Motherboard

[lentinman]

Bob Brinker:

The fact that this post follows Rogue's post is purely ironic. I sent this as an email to a friend of mine 20 minutes ago.

In Brinker's latest newsletter, he recognizes that this cyclical bull is becoming very old. His argument, however, is that it is an outlyer and he expects the S&P to go to the mid 1300's (let's say 1350).

He certainly addresses the question I've been harping on - that being the age of the cyclical bull market. And, I understand his logic completely. He's an expert, but he doesn't pay MY bills. I do!

Having given him his due, I am entitled to my opinion and it seems to me that there is a pretty decent chance that he can't see the forest for the trees. He wasn't around to make predictions as to when the bottoms were hit during the other mega secular bear markets. On the surface, it may well seem like we could have made the secular lows in October of 2002, but if these trends truly are 15 years at a time, what are the odds that the low was reached 2 years after the all-time high??? I would say slim - and even if it did, the downside is still far greater than the upside.

Maybe the S&P will reach 1350. Who knows? But, here's the deal. Let's just assume for the sake of argument that he is right that the all-time secular low was reached 2 years into a major secular bear cycle. That means the S&P's low was 769. Let's say it never gets lower. Let's say it doesn't even get as low. Let's say the lowest it gets from here is 869 instead of 769. That's 13% above the previous low. The S&P is 1255 today. If it gets to 1350, that is an 8% gain. If it gets down to 869, that is a 31% drop. I think he wants his cake (secular bear) and eat it too (long term extended "outlyer" cyclical bull). That is just historically very unlikely IMO.

"The low hanging fruit has been picked." And, that was one year ago! I see no reason whatsoever to fight for scraps.

Besides all that, my primary argument is that the US economy and markets have not experienced what I consider to be inevitable...

--- the collapse of the dollar due to staggering budget and trade deficits
--- collapse of housing due to a multi-year speculative frenzy and out-of-control consumer debt
--- collapse of energy supplies due to having reached peak oil and the sudden entrance into the modern age of China, India and others
--- a world-wide financial collapse due to derivative speculation
--- the potential of a world war due to many possible reasons or at least a WMD attack somewhere - possibly within our own country
--- not to mention the inevitable geological "event" or biological event - say pandemic.

These things WILL happen at some point. There is no way around them IMO. And, they will be catastrophic for the markets. Brinker doesn't even factor in any of that. He simply discusses the secular and cyclical bull and bear markets in the context of technical analysis. Fine, I will play the TA game. When the next major market BOTTOM hits, I may well want to play it like the last cyclical bull market (purely based on TA), but for now, I'm as content as cat having just finished off a mouse.

Len