There is not a lot that's new to say. S&P earnings forecasts and even dilatory reported trailing earnings are plunging faster than stock prices, so the value buy spot , bruited by many long term bearish value guys as "OK to buy over time", is fading into the mist. Some say the P/E ratio is as high as it was at the top of 2007. It looks worse than awful. That's when we are urged to buy in all the books. But is blood really running in the streets yet? I suspect this concept was originally meant truly as in revolutions and riots. So in that sense, "no", we aren't there.
The politicians are lost in FDR-land without a compass or understanding. They are long since brain-washed on the FED accelerator and brake concept which is supposed to control everything. They can't deal with the wings icing up on the economy as happened to that extremely sad flight into Buffalo NY today. When the wings ice up, you don't slow things down, as the FED did in 2006-2007. If you do you drop under stall speed instantly and crash. Diagnosing weather conditions and aeronautical lift parameters is key to survival, and Bernanke didn't. He was captive to the monetary delusion, as were and still are most academic economists. Push on the gas and it will go. But not if you've already stalled out. Honestly, I did not predict a crash. But I sensed that the engines were not revv'ing correctly. The engine was overheating, but we weren't going anywhere in late 2006 and early 2007.
The stimulus, or "porkulus", program is a very generous, un-focused, political jesture to prove to history that "we did something". It consists of throwing good money after bad, as the saying goes. I repeat: how can pouring more debt onto a problem caused by too much debt help things? It can't, as any weekend economist can readily understand. It can only add to the evidence of the national decline. Once that is clear, investment reality shifts gears into survival mode. I don't want to go into that here full tilt at this time. First of all I am not a financial advisor. I'm a private investor/citizen thinking for myself and my family. Secondly, it has not sunk in yet for most people what is going to play out, so we still have some time to think hard and plan.
For now I'm still in very short term (approximately one year) Federal and municipal notes with much higher than TBill rates. But I am long gold and royalty stocks in metals and energy. I have small "black swan" positions in non-US and non-Euro currencies. I am nervous and thinking constantly,awaiting the next non-surprise. The stimulus passage today,the short term tidal cycle,and seasonal considerations could lift stock markets out of this gloom for a while. Whether one trades it or not is a personal matter, but if it happens it's an opportunity to reallocate.
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