THE “GREAT RECOVERY” IS OVER, TIME TO SELL STOCKS
So says fund manager Lars Dijkstra of Kempen Capital Management, a Dutch money management firm. You probably don’t know who Dijkstra is, but he coined the term the “great recovery” when he turned very bullish earlier this year. He now believes the odds of a W-shaped recovery are on the rise and that it is time to sell equities:
“In April, when most people were talking about ‘The Great Recession,’ I introduced the term ‘The Great Recovery. The minute liquidity returned, we could expect a very strong economic recovery. It’s a one-time move, comparable to an elastic band: if you expand it and release it, it will jump up, but before it finally stops moving there will be a lot of aftershocks.”
His reason for selling? He sees underlying weakness in the economy that the market has not yet begun to price in:
“New orders dropped, inventories rose, so in this regard we seem to have reached the top. Markets haven’t responded to this yet, but for us this was the reason we decided to start taking profits in some categories.”
This is just the beginning, but once it starts most people will not be able to get out because there is no depth to this market.
I am slightly bearish, but timing is important. And I think everyone would not be ‘SURPRISED’ to see this market crack and crumble. The problem with the “everyone expects the market to go down so it won’t” argument is that people will always expect this thing to go down. And they always will. Even if this goes to 50,000 or infinity because nobody believes in a much better future and too many have been fooled/burnt in the past 2 years (let alone their lives) to be naive. We need a catalyst though, that much is certain. And after Q3 data comes out and the Fed begins to slow quantitative easing, a drain of liquidity could be that catalyst…
Could managers be positioning (falling over themselves) to lock in their bonuses for 2009?
Lots of USA companies reporting earnings this week, but I have a real problem with them when looking a couple of quarters into the future. The dollar is worth less 20% or more against almost all other currencies. So when these companies have to restock and purchase their goods from overseas, isn’t that going to cost them 20% more and really hurt the bottom line?
Hi!!, Everyone:
I’m going to go along and agree with Thomas Edison who was heard saying: “Not one person on this planet knows 1 millionth of 1% about anything!” So, my best guess is that this market is coming from a bubble up economy stimulated by Fed.’s interventionism of trillions of bailout money, because the move up seems countercyclical to our nations’ employment picture. We should be investing in our nations’ capitalist companies’ prosperity via employing our people; instead of loose money sloshing around in la la land fresh off Helicopter Bens’ printing presses with nowhere to go except some bubbling up phenomina that attracts a lot of attention for various and sundry reasons only certain investors understand. One time it was tullip mania. They all seem to end up as crap shoots in the end don’t they? Keep everything in “cash is King” until another wave of inflation robs our buying power and obliterates our thriftyness/savings under the so called FDIC insurance scam? We’re left with mainly: What’s our next guess as to where to put our discretionary funds….huh? Where ever we go we seem to face a commission to go along with it pluss position maintenance costs etc. Maybe a good ole fashioned Depression will help us decide to clean up the actual mess or messes? Sooner or later, looking back from the future, we’ll be better able to understand our mistakes and then be forced to correct them or maybe that will be left up to the next several generations?
In the meantime that’s my best guess, after thinking over what Thomas Edison taught me about us all!
Yeh!!, if only the happy days could actually be brought back but oh well!
Russ Smith, California