Return of the Goldilocks Economy
Wow another huge rally..nothing short of divine intervention can’t stop this bull market. This socialism is so painful..for the love of god make the mental recession stop..my google, mastercard, and potash stock keep surging..please for the love of god end this fake recession. I have no credit and no liquidity. aghhh pleease help me
The Goldilocks economy or ‘great moderation’ that began in the early 80’s is making a comeback despite the worst media generated recession in 80 or so years. Pundits keep bemoaning about a supposed credit crunch and liquidity crisis, rising unemployment, rising oil prices, job loss, and deep recession, but stocks keep surging. This is because we’re entering goldilocks economy of tame inflation, easy credit, strong consumer spending, falling dollar, globalization, free trade, deregulation, growth in information technology, modest economic growth, deficit spending, and tax cuts. True, in the past year economic indicators have gone south but it is temporary. The stock market will recover all its bear market losses within the next 2-3 years as the great moderation resumes.
Dow 14,000 within 2-3 years:
In the coming months and years the dollar will keep falling and commodity prices will rise. In addition, technology spending increases and jobs will continue to be outsourced and insourced. This is good for the stock market and economy. American labor is too expensive and burdened by pensions, regulations, and nest eggs, which cost employers money and hurt profits. That’s why the jobs are being outsourced (to India, China) or insourced (from Mexico & India) and it will remain that way. We also need to keep bailing out the financials companies to free up the credit markets.
Just keep buying all the dips. I know pretty much everything. When I say time 2 buy it almost always is.
Unstoppable Bull Market: 8,500 Target For The Dow
Wow amazing..after that 250 point plunge on monday on some overblown GM news stocks are surging for yet a second day.
This bull market can’t be stopped. When I say time time buy it is usually time to buy. Just keep buying all the dips as the markets keeps climbing a steep wall of worry. All bad economic news is being discounted because the huge funds that move the market anticipate many years of steady growth on the heels of a Goldilocks economy. Despite constant pessimism on the internet chat boards and the leftist doom and gloom media hardly anything has changed at all regarding the fundamentals of the US economy between June 2007 and now, except a small dips in GPD consumer spending, and a slight rise in personal savings and unemployment. However, these are temporary amd the V shapped economic recovery is inenvitable.
That’s why stocks keep going up. Just keep buying the dips to make money. Consumers will resume spending, savings rates will go negative where they will remain, greed and deregulation will return, oil will surge to 100, gas surge to 4 gallon, and the dollar will plunge. Inflation will remain tame, and stocks will keep surging anyway.
Here are some charts showing how the dow will hit 8,500 in the short term
I was right about GM story not being a big deal
yesterday I tried to submit this article to seeking alpha but not surprisingly it was rejected. When It was written the dow was down 300 points. Now it’s up 150 points at only 8:30AM pacific since then because I’m almost always right about economics and stocks. When I say GM story not a big deal, I’m right.
Here is the article:
Title: The Failure of GM Will Have Little Impact on the EconomyAuthor: Cetin Hakimoglu
Positions: Google, Mastercard, Potash Corporation
I turned on the TV at around 3:00 AM on Monday morning to see that futures had tanked. Apparently the General Motors CEO Rick Wagner was forced to step down by the Obama administration, and in addition new details regarding possible bankruptcy in the near term time frame were revealed. However, I knew immediately that this sell off was indeed unjustified because the significance of GM’s contribution to the United State’s economy is being blown out of proportion.
With the Dow down almost 300 points in midday trading, I ask why are people panicking? Why is this this General Motors story so important? Why should a company with a market cap of only a couple billion dollars drag the entire multi trillion dollar stock market down three percent? None of this makes any sense. The US economy is like a painting, and GM represents just a brushstroke.
GM has about 250,000 US employees. In the worst case scenario, If GM were to close completely these people would be unemployed, which seems bad on the surface, until you put the number into perspective. The United States workforce is over 150 million strong, so if all these workers were fired, the total unemployment rate of the United States would rise just a fraction of a percent. GM’s market cap is only a couple billion, so it’s contribution to the DOW and S&P 500 is negligible. Many of these workers will look for work, so it’s not like the unemployment is permanent.
Yes, I know a lot readers from the leftish side of the political spectrum, as well as fringe Ron Paul supporters from the paleoconservative movement like to reminisce of a bygone era when a highschool graduate could make a good living with a unionized manufacutring job, but those days are long gone. The era of American factory jobs and unions are coming to an end.
In the past thirty years a seismic transition from an economy based on the production of manufactured goods to one of production of intellectual (Internet services, software, movies ) and service (fast food, health care, landscaper) goods has occurred. The growth and strength of the US economy isn’t in unionized, entitlement based jobs, but in the meritocracy embodied by the Internet, service, and finance sectors where lifetime employment and pensions subsidized at the expense of the company aren’t a guarantee. But in exchange, companies like Google, Apple, Amazon.com, Visa, Twitter, Wallmart, Myspace, Facebook are created. These are just some examples of companies that contribute greatly to the US economy, while spurring further innovation, as opposed to companies like GM that hold America back.
In conclusion, I would interpret Monday’s sell off as a prime buying opportunity in what has been an exceptional, three week bull market. People are panicking over what will amount to almost nothing should the worse case scenario occur regarding GM. The failure of GM may seem like a big deal according to the headlines, but in actually it isn’t.
Keep Buying the Dips
Title: Keep buying the dips
Author: Cetin Hakimoglu
Positions: Google, Mastercard, Potash Corporation
After the phenomenal 6.5 percent rally on March 23 stocks have taken a small breather. While most short sellers are rejoicing in this small victory, the celebration will be short lived as the rally continues. I emphatically believe that we’re in a new bull market that will last for many years, and thus every dips should indeed be bought on the way up.
The trend of low volatility continues. Since this bull market began three weeks ago there have been no major sell offs. The steepest one day sell of has been less than two percent, which is a testament to the unmitigated strength and resiliency of this bull market.
If we compare this bull market to the one that began in 2003 we see many similarities with regards to the cessation of volatility. The chart below shows how the 2003-2007 bull market began. Essentially all the volatility dried up as soon as the bull market began. The pink circle indicates where we are now relative to the last bull market. As you can see, the major breakout has happened and its just a steady, uninterrupted climb higher from here on out
The same pattern can be seen today:
The recent sell off only managed to erase just 90 minutes of the March 23rd rally. It’s nothing more than a minor pullback.
Now is the time to be buying all this dips. We’re in a new bull market, and the best way to make money in such circumstances is to go with the flow rather than resist it. The wall of worry is also intact because the market has yet to sell off on any economic data for the past three weeks. I still recommend google, apple, mastercard, potash corp, mosaic, bidu, and rimm.