Friday, October 28, 2011
After my last post about news cycles, it seems that word of European attention to the EU's economic problems has kept the good feelings going. So, the Dow is around 12,200. Not that any sophisticated investor believes that the market tracks economic conditions but if you had to pick a general market direction from here what would it be, based on the hand of cards we're holding? Sure, the stronger players in Europe will backstop the broke (along with China perhaps), but what is the long term prognosis for Europe? More timely, what if Europe trips in its attempt to halt financial collapse? These folks have been known to make some mistakes. What will be the market effect? And the U.S.? Typically out-of-touch economists are now pointing to an expanding economy, along with trailing job growth. Does anyone on the street every day believe that? What do we have to fill the hole created by the destruction of the housing market and the securitization market that was tied to it? Job growth since late 2008 gives us the answer: not enough. And has anyone in the investing community noticed the civil unrest that is growing in American cities? This is not to say that the current rally may not continue for a while but I suspect it will come to a volatile end. I am not fully invested long in this rally but, rather, have kept some limited long positions in CRY and CRWN which I had originally purchased with more of a long term view.
Posted by An Observer at 10:48 AM