Third Quarter Ends On an Up Note - For Some
Stocks ended the quarter on an up note. Volume was reasonably high, a good sign, but 52-week lows (219)greatly outnumbered 52 week highs (6). That was for the last day of the quarter. For the entire quarter, though, the Dow was down 7.6%, with the S&P down 9%. Hardly great news, but it could have been worse. For those heavily invested in stocks, the action has provided a bit of a respite.
Besides the usual suspects pumping the stock market and the economy, we've been seeing some wishful thinking from those who simply don't like (we suspect) the idea that we're really in a bear market. So the impetus would be to see the silver lining. And that silver lining would be that if stock prices continue up, we could be looking at 17,000 on the Dow soon. That's the positive view; we might even call it the hopeful view.
Hope springs eternal, of course, but we don't consider it a good basis for making investment decisions. If we did, we'd be buying stocks now. We're not. Nothing out there tells us, at the moment, that the downward pressure has really taken a longer-term turn. That would mean that it's really not a bear market, after all, and that what we've seen was merely a resting bull, ready to charge into year-end. If that really happens - an up market from now through year-end - we'd be taken aback. So we stick with our bearish slant, holding to the view that a bear market has begun and that the economy really isn't in great shape and, for all we can see, looks to be weakening.
All of the above reeks of too much focus on the near-term, on the daily price action. It's just the sort of focus that yanks you first one way, then the other. It causes you to buy, sell, buy - and in the end lose money, perhaps lots of money. Not saying we could be wrong, or that it's impossible that the bear's growl may be premature. Just saying that it's unlikely. The fact is, nothing goes straight up or straight down. Markets breathe in and out. With rare exceptions, bear markets don't always signal their arrival with a huge plunge. The bear's not stupid. He won't roar from a great distance, and warn you to pack up your tent and skedaddle. Remember, he wants to eat your lunch (at the very least) and stands a better chance of gobbling it up by approaching quietly, gently, catching you unawares.
Besides the usual suspects pumping the stock market and the economy, we've been seeing some wishful thinking from those who simply don't like (we suspect) the idea that we're really in a bear market. So the impetus would be to see the silver lining. And that silver lining would be that if stock prices continue up, we could be looking at 17,000 on the Dow soon. That's the positive view; we might even call it the hopeful view.
Hope springs eternal, of course, but we don't consider it a good basis for making investment decisions. If we did, we'd be buying stocks now. We're not. Nothing out there tells us, at the moment, that the downward pressure has really taken a longer-term turn. That would mean that it's really not a bear market, after all, and that what we've seen was merely a resting bull, ready to charge into year-end. If that really happens - an up market from now through year-end - we'd be taken aback. So we stick with our bearish slant, holding to the view that a bear market has begun and that the economy really isn't in great shape and, for all we can see, looks to be weakening.
All of the above reeks of too much focus on the near-term, on the daily price action. It's just the sort of focus that yanks you first one way, then the other. It causes you to buy, sell, buy - and in the end lose money, perhaps lots of money. Not saying we could be wrong, or that it's impossible that the bear's growl may be premature. Just saying that it's unlikely. The fact is, nothing goes straight up or straight down. Markets breathe in and out. With rare exceptions, bear markets don't always signal their arrival with a huge plunge. The bear's not stupid. He won't roar from a great distance, and warn you to pack up your tent and skedaddle. Remember, he wants to eat your lunch (at the very least) and stands a better chance of gobbling it up by approaching quietly, gently, catching you unawares.
Comments