September 11, 2009
– Comments (5)
Rosenberg via Big Picture has 5 points to warn about with this rally.
I did expect bear rallies through this whole correction process but I did not expect such a spectacular bear rally. I guess the bear rallies bubble too.
You simply assume it to be a bear market rally.
I wouldn't be so sure. IMO, this rally is partially inflationary rally (less the dollar will be worth in the future, the more dollars something is "worth") and partially corrective (sell-off in November and March were exaggerated).
This rally is just putting in a base and a top. From here, we meander + 10/15% - 10/15%. Some companies continue to climb, some dive steeply. But the whole market is not going to take drastic drops and dramatic climbs that will satisfy all the shorts out there.
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Like the title says, "Hope" based rally...
you mean you still have hope in the dollar?
Well personally I do hope my country pulls through this crisis. I do hope that the economy eventually starts to at least grow again. I do hope that those who lost their jobs will eventually find new ones. With that said, the stock market has not been rallying based merely on hope.
Well 6 months of gains have passed by going on 7. It is no coincidence that the market is rising along with a weakening dollar and tremendous greater financial liquidity. It is no coincidence that the market has advanced before the US's GDP has most likely turned positive. It is no coincidence that the market is telling people that companies earnings should continue to improve especially after all the cost cutting by them.
Whether this is all sustainable, time will tell, but it is certainly not hope that is moving it. And to think otherwise probably means you are earning 2% off your money instead of the tremendous gains you could have made in the market. But if you are risk adverse so be it.