One of the many factors in determining investments is the attitude of the street - and learning which market monitors better have a feel for the fundamentals verses those who 'shine their shoes' daily. Friday's National Business Report on PBS interviews both types. This Friday (22 Oct 2004) interview is informative:
Quote:
from National Business Report on 22 Oct 2004
PAUL KANGAS: My guest "market monitor" this week is Stan Weinstein, editor and publisher of "Global Trend Alert," an advisory service for institutional investors. Great to see you again Stan. Welcome.
STAN WEINSTEIN, EDITOR & PUBLISHER, GLOBALTREND ALERT: Always my pleasure to be here, Paul.
KANGAS: Nasty, nasty sell-off today. Are we suddenly in a bear market here?
WEINSTEIN: I think we`re in the ninth inning of a bull market. I don`t think we`re yet in the bear market. I think it`s a mistake to talk about bull markets, bear markets. Really a bull and bear market existing side by side. In this tape (ph), you can see so many of the big cap stocks (INAUDIBLE) like Ford, Minnesota Mining getting hit, a lot of that technology doing well. This is typical, late-in-the-day action.
KANGAS: So we`re overvalued, fairly valued or undervalued?
WEINSTEIN: You know me. I`m a technician. I don`t get into value. I think half the market is bullish, half is bearish. I think in the months ahead it will become more bearish.
KANGAS: What if Bush is reelected, will that help? Or if Kerry wins, is that going to hurt? How`s it going to work?
WEINSTEIN: I think that it`s no secret that the market will most definitely want Bush to win. You watch when the polls were bad for Bush, the market went down between February and August. Since then, market`s done somewhat better. I think if Bush gets elected, you`ll see a fourth quarter rally, but I still think that even if Bush gets in, the first quarter, second quarter of the new year could be a problem. With Kerry, I think it will be even worse.
KANGAS: What would be the most prominent warning signs for you to say that we`re going into a bear?
WEINSTEIN: I think you should watch the following levels. Right now we`re getting warnings, the fact that the market is so divergent, split, that`s a concern. But if we close below 1060 on the S&P at any time in the coming months, if the NASDAQ Composite confirms, it closes below 1850, that would be a bear market. I don`t think we`re ready for a bear market. I think there`s one more good rally coming.
KANGAS: What do you make of stocks like General Motors and Google going through the roof?
WEINSTEIN: That`s the most important thing, Paul, that we can get across to viewers tonight. Too many people are treating this as a monolith. You know by reading my stuff that there`s a lot of stuff that I`m very, very bullish on, a lot of technology, the Verisigns (ph), the Googles. That`s doing fine. Conversely, an awful lot of value, General Motors, Ford, Minnesota Mining, we`re bearish on and this phenomenon often appears in the ninth inning of a bull market. It`s one of many reasons I`m concerned.
....
KANGAS: How about a word about bonds? What do we do with bonds here? We only have about 40 seconds left.
WEINSTEIN: I think that bonds are moderately positive which actually worries me for next year for the economy. Bonds are still moderately positive, would only turn negative on bonds if the long-term, 30-year contract breaks down and closes below the 103 level. Right now bonds moderately positive.
KANGAS: Boy, I`ve seen you more bullish on stocks than you are right now.
WEINSTEIN: Well, one of the things that concerned me was on your show last time was I thought there would be a top this year and I think we`ve seen it. It often happens in an election year. I think we`ve done the election-year top. ...
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Unfortunately, many other economic indicators suggest this is true. Caution is recommended especially with so many companies issuing profit warnings that even apply to 1st quarter next year.
History demonstrates that when a nation fights expensive wars and even hides those debts, then the long term consequences are negative. Remember, the US never really paid for the Kuwait Liberation. That was paid for mostly by other nations - especially Japan. That war did not result in massive and unpaid debts to create a severe recession.
We are now in a war that has virtually no allied assistance and that incurs massive debts for up to a decade (welcome to nation building made even worse because George Jr made no plans for the peace). It takes people out of productive domestic jobs to liberate a people who did not want to be liberated (just like VietNam). History says this and the resulting massive government debt has negative economic consequences, later. Consider it when a 'shiny shoe' mutual fund promoter hypes a future economic boom. Boom will not happen when the government is currently promoting economic recession, corporate and richman welfare (will not even prosecute massive corporate fraud), and when the economy has fewer 'killer app' products to export.
With Boeing, the drug industry, the insurance industry, the airlines, the auto industry, the chemical industry, etc all in trouble combined with a doubling of energy (oil) prices (and US is now becoming an importer of even natural gas), then where are the products to move us out of recession? Where are the new killer apps from the computer industry now that Intel has hit a brick wall and the software industry is currently stagnated by security (and other) issues. Instead of encouraging innovation, this president promotes tarrifs, trade embargos (openly stifes free trade), corporate welfare (such as tens of billions to the airlines with no strings attached, or welfare to Boeing for 767 tankers, or $millions to GM to develop the hybrid that anti-innovation GM stifled for decades), massive funds to politically inspired and unproductive science (ISS and man to Mars at the expense of ongoing and important research), and hypes fear about terrorism. Even successful domestic terrorism is directly traceable to a president who did not read his own memos.
The Sec of Treasury said a second tax cut would not solve anything just as the first tax cut did. Instead, George Jr (essentially) fired the Secretary rather than learn the facts. This nonsense only increases debts, increases America's now large trade imbalances, and encourages recessions. Invest with caution under a George Jr government. They don't promote innovation, they spend money they do not have (Cheney: Reagan proved that deficits don't matter), and they are realigning American military bases, combat divisions, and international treaties for the next war. All these factors should be part of your investment plan. Does your mutual fund perspectus issue the same caution?