Posted on 09/14/2009 4:53:17 AM PDT by SeekAndFind
For all the talk of another big drop coming, the pieces are in place for 3 years of 15% annual increases for the giants of the blue-chip index.
It's been exactly a year since the government kicked a smoldering financial crisis into a roaring blaze by letting Lehman Brothers (LEHMQ, news, msgs) collapse. Observers this week are memorializing the mistake, but investors need to look forward -- and what they should see is that the government's later reaction to its error may have actually laid the groundwork for the greatest bull market of the decade.
For while it seems unlikely and irrational in the context of all the lousy economic news you see right now, stocks are well on their way to recovering from the Lehman jolt and ambling with all deliberate speed toward all-time highs. And they don't really care if you believe it or not.
Dow 14,000? Maybe not next week. But in three years? Not a problem.
The signs are abundant, if you know where to look: in the corporate credit markets, in employment trends, in consumer credit trends, in government statements and in corporate revenue trends. You don't need to be a statistician or an insider to see them, but you do need to keep an open mind to see why the 30 goliaths of the Dow Jones Industrial Average ($INDU), companies such as Caterpillar (CAT, news, msgs), Intel (INTC, news, msgs), Bank of America (BAC, news, msgs) and Boeing (BA, news, msgs), could see their stocks rise 15% a year for three years.
Here's what I'm seeing just in the news of the past three weeks and what I think needs to happen next.
(Excerpt) Read more at articles.moneycentral.msn.com ...
“I’d rather have the Dow at 2000 but with a strong US dollar.”
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Wouldn’t we all!!
Near the Eastern entrance to the Great Smoky Mountains National Park in North Carolina is an operational water powered mill where you can buy “water ground” corn meal and grits. It was restored as a historic example but there is a poster inside detailing the original construction in the late 1800s. The whole thing was built in 90 days by hand labor at a total cost of...$600. That is not a typo. It is mostly built of yellow poplar wood. That same number of dollars today would buy a VERY small pile of poplar boards. To reproduce the mill from scratch would cost millions if it could be done at all. By the time the Dow returns to 14000 a McDonald’s happy meal may cost more than the original cost of construction of that magnificent mill.
I forgot to check when I was swimming in the surf back in June, has the ocean started falling yet? I know the planet has begun to heal, it is obvious that the era of good feelings has begun to flower. There is so much joy and peace is guiding the planets and love is steering the stars and all that.
I think I will go out and skip down the Interstate and see if I can spot any Unicorns.
I've presented this thought to several "friends" who laugh at me, they can't believe this Clown is the equivalent of an economic terrorist who is trying to bring down the American economy. They are going to have to learn the hard way.
Letting Lehman fall was a mistake?
The data is not inflation adjusted, and there is huge productivity gains on fewer transactions due to layoffs, hours reductions and inventory draw down.
The markets will go up until they go down and down hard.
That idea died horribly last year. It isn't coming back.
There is no inflation. Wishing there were won't make it happen. Not even a lot of people wishing it - they did, and it didn't.
Sometime after i’m dead!
They were so worried about future moral hazard they forgot about hazard. And it blew apart.
After that, the deluge.
Maybe not officially, but have you shopped for food lately?
People unclear on the concept - it is *deflation*.
Some men are simply ideologically committed to the inflation scenario. They are exactly the ones who blew dollar prices into the stratosphere and created the crash. Houses are not worth more than the mortgages written against them. Oil is not worth $147 dollars a barrel, because dollars are not confetti. Pretending they are and going short them, with debt, on an epic scale, will not make them worthless. It merely gets those so betting, their own heads handed to them.
All true, and if it would just do that, we could all make money, up or down.
The issue here is exposure. How much are you willing to risk in a market supported by drivel.
Agree there is aggregate deflation, but the devil’s in the details of what’s in the basket used to calculate inflation. I posit that there is considerable erosion of purchasing power in consumables (especially when combined with lower wages).
Talk about irrational exuberance... the current rally makes the .COM sham seem reasonable. Don’t get me wrong... there is no technical end (to the rally) in sight.
And, remember... as Larry Kudlow recently said on CNBC, “... the market is a forward predictor of the economy.” Well... you know... except in 1928, ... 1986, 1999, 2006-Oct.07.............. Genius!
Coincidence that the current nonsensical stock market rally is fueled by liberals (in Washington) and the last by left-coast silicon valley loons (in California)?
Full disclosure. I do constantly hold a small-$ short option position the week of options expiration. Cheaper then loto tickets... with a more likely payout.
It isn't complicated. Higher costs of a box of cereal just don't compare with half priced houses.
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