Joined Apr 1, 2010
8,861 Blog Posts
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i think it resolves up. for a variety of reasons including
-historical precedent. kass and several others have had nice pieces on stock performance after manic, rapid selloffs like we had in early august. they were all resoundingly bullish over 6 and 12 month timeframes.
-its remarkable how many cheap stocks there are all of a sudden.
-the odds of a recession are hurt by the fact that we have considerable slack capacity and companies are already lean. hard to lay off huge mobs of new people in that situation. also the odds are hurt by already high unemployment, a president with motive to act (but a house controlled by repubs who want a tanking economy so as to win the oval office increases the odds of a recession) and inventories aren’t likely drastically high at companies.
accidentally hit post.
pro recession realities are slowly reducing government deficits don’t help the economy at all, the shock of the last few weeks has more than a little ability to create a self fulfilling prophecy, as soros recently noted. market crashes materially increase recession risks, plain and simple.
Now I wandered away from my computer to make lunch for the runts and lost my train of thought.
Gun to my head the market goes higher in, say, 6 months. We had such a wave of selling, presumably every margin call possible was made, the computers took us down, and down hard, and may settle down a bit for fear that they will come under increased scrutiny… they aren’t dumb. they know that if the markets are up and people are happy, they are less likely to be prosecuted. For their own good, they should get together and put in some crash prevention mojo in the algorithms, because if this time wasn’t enough for congress to kill them, next time just might be.
I agree 100% that we’ll be up from here in about 6 months. As for the more immediate future, though, I’m not ready to get heavily long until that bear flag is resolved.