|
-- Posted Thursday, 21 September 2006 | Digg This Article | Source: GoldSeek.com
Rick’s Picks Thursday, September 21, 2006 For investors who’d rather be smart than lucky Let the Dow Industrial Average get within a hundred points of new record highs, as it did yesterday, and America’s economic troubles seem to melt like lemon drops. “I think this market action is telling us that the economy may be past its worst point,” Wells Capital’s James Paulsen told the Wall Street Journal, evidently inspired by yesterday’s 72-point gain in the blue chip average. Paulsen will have to ratchet up the hubris if he wants to be a contender for the Professor Irving Fisher Award. Fisher, you may recall, was the economist who was immortalized after saying, just a few days before the 1929 Crash, that stocks had “reached what looks like a permanently high plateau.”
Maybe we shouldn’t be so hard on Paulsen, since a glance at the chart above more or less confirms that the Dow Average has indeed been on a plateau for a long, long time, even if not quite permanently. Ignore the anomalous post-9/11 dip and the Indoos have spent nearly all of the last eight years cruising at heights that would not have been believed before the tech boom radicalized investors’ imaginations in the late 1990s.
But does this really mean the worst is behind us, economically speaking? We think not, for reasons that have been piling up recently like crumpled vehicles in an I-70 fog. The most alarming of them is of course the housing bust, which, Paulsen’s optimism aside, is all but certain to intensify in the coming months. Even so, we are willing to suspend our disbelief until the Dow reaches 13045, the very bullish target broached here just a couple of days ago. Coldly objective chartists that we are, we have no qualms whatsoever about joining the bullish lunatic fringe, if only for another couple of months. The stock market has quite obviously de-coupled from reality, perhaps because there is too much funny money in play globally to allow it to discount recession in the normal way. Soon or later, though, gravity is going to prevail. Until then, we await more irony-charged words of encouragement from the next Prof. Fisher.
*** Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2006, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Thursday, 21 September 2006 | Digg This Article | Source: GoldSeek.com
Previous Articles by Rick Ackerman
|
