As we enter the last month of 2009, it is helpful to reflect on the year we have had and look cautiously into next year’s expectations.
As the economy paces through extraordinary times, it can sometimes seem that the market is simply a tide that moves all boats—and the unfortunate swimmers—in the same direction. The market has been in this mode from 2007 and 2008 as the markets and economy deteriorated; and, it has clearly continued through the market...
This morning the U.S. Commerce Department released the most recent revision of the third quarter 2009 Gross Domestic Product (GDP) statistics. At the end of October, the Commerce Department initially announced that GDP grew at 3.5%. This morning, the GDP statistic was revised down to 2.8%.
Although the financial markets have recovered significantly, the business environment, employment situation and bank lending capacity seem to indicate that we have not yet...
Recently, as I meet with investors I have been asked, “Is this rally for real?” In many ways the rally over the last eight months has been phenomenal. As I write, the market has been up nearly 10% over the last 10 trading days—an incredible record given the rally is eight months old and has recorded over 60 percent in gains to this point.
Fortunately, or unfortunately depending on your portfolio profile, the stock market rally is for real and...
As I continue to receive questions about the direction of the stock market, it seems that many investors are in awe of the rapid move downward in 2008 followed by the rapid move upward in 2009. It would seem that although the economy is going through a difficult time, it probably wasn’t really as bad as we thought it was last year; and, it probably isn’t as good as we think it is this year.
In the short run, the market is a voting mechanism where the next voter...
With the market pressing forward toward record-setting gains, I continue to see clients that don’t believe that this market rally is for real. In the face of economic challenges, employment declines, widespread de-leveraging and an increasing tax load the market has continued to climb. In part the question is an attempt by some investors to pick a market top and make an investment decision based on a view of a short term market reversal.
One of the...
With the market indices reaching near-term highs on the strength of continuous daily gains, I feel the need to update the discussion on the process of completing a down cycle in the stock market.
In the later stages of a down market cycle, the market will tend to overshoot on the upside, just as it tended to overshoot on the downside. The challenge is that while there is a sign of recovery, much of the data hasn’t confirmed it and market participants will experience a bull...
On the floor or the New York Stock Exchange these days you may hear traders discuss the 17.6 year cycle. The idea has reference to an old adage that the market experiences short-term cycles as well as long-term secular cycles.
If, for example, in September 1929, with the Dow around 350, you look backward 17.6 years, the market experienced incredible prosperity. On the other hand, if you look from September 1929 forward 17.6 years, the markets and economies of the world...
With the recent government takover of so many parts of the United States economy, I continue to be asked if I think the government can effectively run these private-sector businesses. Despite all of the political arguments for or against, it appears that the Obama administration is going to continue forward in managing private businesses in every possible regulated industry or soon to be regulated industry.
With history as a guide, there are several reasons why the...
In the last few weeks the Obama administration has proposed a series of additional taxes. It seems that everything from a new Value Added Tax to a new tax on healthcare is being considered as good tax policy for the ever expanding government. A key theme underlying the additional taxes is the repeated comment that this is needed because of the economic challenges that we face.
Indeed we face difficult times. In fact, this morning, the unemployment rate was announced to be 9.4%...
From March 6th to May 6th the market rallied over 30% leaving most investors behind. As a continued update to the process of creating a market bottom, this post discusses the later stages of the process and what to expect as the process completes.
A market bottom is created when the largest number of investors are determined to leave the market and they attempt to leave the market all at the same time. The rally that we have seen over the last two months is a rally that...