A reformed bear but not yet a full bull
February 21, 2004
I thought it was time that I make another clarification of where I stand…in case it matters at all to you faithful readers!
You perhaps have noticed my missives getting a little more hopeful about the market, a little more expectant and hopeful for higher prices, rather than lower prices. Well, it is TRUE! I admit it. I have finally become a reformed bear. This means that I am FINALLY going to just let my bias be bullish in the market until proven otherwise. While I long ago gave "permission" to the speculators amongst you to buy the market after the March bottom, I always had an eye to looking out for the big correction that would kill the rally in its tracks. It took some more time to fully appreciate the massive amounts of liquidity that was finally ready to bolster this market to the sky. So, I of course never claimed it was a good time to invest (as opposed to trade). At current prices, starting new investments will be very hard, and I am certainly not in a position to recommend when investors should feel comfortable again.
So why not a full bull? My main remaining problem is that I am still not convinced that the recovery in the economy is sustainable. It seems we can hold on through this Presidential election cycle. But while I understand why things are as good as they are now, I still fail to understand how all the props we have used to get us here can hold as long as we need them to.
Regardless, it seems clear that the market has factored in much, if not all and then some, of the good news in the economy. The latest earnings cycle was very positive, but it has led to minor to zero additional gains. The market is in search of some new catalysts - without them, the path of least resistance should turn downward. Should be interesting…