My crystal ball is not working as well as I'd like
September 20, 2010
– Comments (5)
The rally in the stock market occurred quite naturally. In fact, I called the bottom accurately on Aug 31
http://caps.fool.com/Blogs/looks-like-we-have-another/440797
This was an easy call. If the Asians provide enough cash to America for general bubble-reinflating purposes, then it's surprising that the bubble does reinflate.
My bullish call is unchanged: S&P 1200 by November, 1400 by January.
What still confounds me is surprising strength of emerging markets. If America has a reason to go up, these markets have nothing to cheer at all. Their money is now in America, locked in10 year contracts to yield 2.5% - essentially gone. An impartial look at their central banks' balance sheets will reveal a colossal multi-trillion dollar malinvestment in the biggest bubble in history. The waste of capital was far worse than whatever mistakes Lehman made in the mortgage market.
They never read Keynes, and they let US propagandists convince them that Keynes was irrelevant. So they still don't have a domestic market for their products. That's why they never decoupled. How can they decouple when they squeezed their consumers dry? They now have to keep selling stuff to America, get funny money in return, and incinerate that funny money in US Treasuries. Where is the growth prospect in this bankrupt business model?
US stocks are not cheap, but they continue to offer more bang for the buck that emerging-market bubbles that will grow for a while and then will crash spectacularly, leaving bagholders with 80% losses. My red thumbs on BRIC stocks will remain open.
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