Back to Bedlam?
Excuse the poetic license but a number of things come to mind...
There have been many articles lately regarding the Iran nuclear issue. One paper referenced that the market fell yesterday due to "nuclear concerns". Recalling bomb shelters and air raid drills in the 1960s we were concerned that the Soviets could bomb us. We were post-war and caution was the way. But would they bomb us? Given many similarities in our shared Western culture, probably not and of course they never did. Can we have the same certainty with Iran? We generally view our position in the world as geographicaly isolated and mostly untouchable. This situation is much more complicated and a bad outcome is not unlikely. (Think hijacked airplanes destroying the World Trade Center...)
On Friday I referred to Greenspan's soft landings as getting little respect so why would Bernanke's get any? Today the street is abuzz with "which worry should we worry about?" Inflation or a weak economy? Certainly less impressed with the soft landing idea.
Gold prices are strengthening again. Gold was in a bull market that paused in May - down 30% in a month. Prices have rallied about halfway back and the demand is looking increasingly strong.
The US Dollar has been falling for the last 2 months.
US interest rates have been falling.
Stocks have been up the last month.
The pieces of the puzzle can almost support each thesis: Nuclear concerns, inflation, and weak economy. Thus, which worry should we worry about? Net Net, in a slow stock market - today less than 1 billion shares at 3:15pm - the path of least resistance feels like it's down but prices are holding. The equity markets often look beyond the obvious but it's tougher to respect stocks when there is such low volume. My take is that there are too many liabilities on the market's balance sheet. In August 2000, prices rose just like this market. Then September came, the crowd returned, and the bear market began in earnest. While I am not anticipating a meltdown, the current environment has the wrong feel to it. Thus, our continued low stock exposure. Or, as my mentor would say, "better to be on the outside wishing we were invested than on the inside wishing we were NOT invested".
We continue to monitor stocks and maintain a buyable list. There are many opportunities and we know that it takes time to build a portfolio. The challenge is to be early but not too early.
Please visit our website for more information: www.GellerCapital.com
There have been many articles lately regarding the Iran nuclear issue. One paper referenced that the market fell yesterday due to "nuclear concerns". Recalling bomb shelters and air raid drills in the 1960s we were concerned that the Soviets could bomb us. We were post-war and caution was the way. But would they bomb us? Given many similarities in our shared Western culture, probably not and of course they never did. Can we have the same certainty with Iran? We generally view our position in the world as geographicaly isolated and mostly untouchable. This situation is much more complicated and a bad outcome is not unlikely. (Think hijacked airplanes destroying the World Trade Center...)
On Friday I referred to Greenspan's soft landings as getting little respect so why would Bernanke's get any? Today the street is abuzz with "which worry should we worry about?" Inflation or a weak economy? Certainly less impressed with the soft landing idea.
Gold prices are strengthening again. Gold was in a bull market that paused in May - down 30% in a month. Prices have rallied about halfway back and the demand is looking increasingly strong.
The US Dollar has been falling for the last 2 months.
US interest rates have been falling.
Stocks have been up the last month.
The pieces of the puzzle can almost support each thesis: Nuclear concerns, inflation, and weak economy. Thus, which worry should we worry about? Net Net, in a slow stock market - today less than 1 billion shares at 3:15pm - the path of least resistance feels like it's down but prices are holding. The equity markets often look beyond the obvious but it's tougher to respect stocks when there is such low volume. My take is that there are too many liabilities on the market's balance sheet. In August 2000, prices rose just like this market. Then September came, the crowd returned, and the bear market began in earnest. While I am not anticipating a meltdown, the current environment has the wrong feel to it. Thus, our continued low stock exposure. Or, as my mentor would say, "better to be on the outside wishing we were invested than on the inside wishing we were NOT invested".
We continue to monitor stocks and maintain a buyable list. There are many opportunities and we know that it takes time to build a portfolio. The challenge is to be early but not too early.
Please visit our website for more information: www.GellerCapital.com
posted by David Geller at 2:59 PM
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