Friday, February 16, 2007
This Market
First, this market is unfathomable to me. As I reflect on my assessment of the market--and I say this being a reasonably intelligent individual--I just stand in awe to watch the euphoria against the backdrop of what I see as some pretty nasty stuff (predominantly a slowing economy due to several areas of deceleration). It's that wall of worry, but HOW do you know when that wall is crumbling? There will always be worries and the market will climb, but how does one develop a divining wand that directs you to the sidelines, for if you continue to invest money and the market pulls back dramatically, you will find yourself pitiably offsides?
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2 comments:
You have good company. See below from John Hussman:
"If the parents or the children of Wall Street analysts were to ask for wise investment advice, would the first thought of these analysts really be to encourage stock purchases at a multi-year market high, in a long-uncorrected and strenuously overbought advance, at a multiple of over 18 times earnings on unusually wide profit margins, with wages and unit labor costs rising faster than inflation, while interest rates are rising, bullish sentiment is unusually high, and corporate insiders are selling heavily? Would the potential for further gains in that environment exceed next inevitable correction by an amount that would make the net gains worth the risk? Would they encourage using trend-following systems in an overbought market, even though a decline to simple moving averages already implies substantial losses?"
This is why I hold such a high percentage in cash. But that's been my excuse for a year....
I think the Wall Street Folks are using that money to escalate the bribes to needed to get into Manhattan pre-schools on the Harvard track.
Are we really expecting "wisdom" from Wall Street Analysts?
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