(Jedi): Please take heed of what The-Noid said above as it seems to echo comments I've seen from various talking heads on CNBC regarding The Baltic Dry - it may more reflect overcapacity (build out put in place last spring when it did look like global economies were recovering), rather than tremendous drop off in global demand per se (OMG, the world is going into global recession and there will be no pockets of growth remaining (US, China?) to justify a rise in stock market).
And to follow-up on what I wrote above:
- when the dust settles and we look back at stock markets 2, 3, 5, or in worst case scenario 10 years after the fact, unless we are in the
nascent stages of a new multi-year secular bull market (I have read William O'Neil's / Investor's Business Daily CANSLIM system (
http://www.amazon.com/William-J.-ONeil/e/B000AQ1QAM/ref=sr_ntt_srch_lnk_2?qid=1327625711&sr=8-2), but have no had a subscription to the newspaper for about 10 years (
http://www.investors.com/default.aspx?fromad=1), so don't know if their The Big Picture column is indicating new bull with what, in retrospect will be the next 10 bagger high growth companies breaking out of their initial bases - I use Gary Kaltbaum's technical analysis comments on the spotty basis he makes in comments public (
http://www.tradingmarkets.com/authors/all/Gary_Kaltbaum) on the internet because he seems to use the same CANSLIM system, but on an institutional, not individual investor basis), that prudent institutional investors who have a client basis sophisticated enough to tolerate short-term market volatility but don't take kindly to real sustained losses over time (that is not me, I am no market pro, I have no formal financial markets education or training, I don't trade individual stocks, and just deploy all of my capital in a diversifed portfolio of what I believe are high quality mutual funds that are looking to optimize long-term shareholder gain), it seems like we are either in a
muddle through environment with slight deflationary bias (cash, bonds, dividend paying stocks in defensive industries), vs.
muddle through with slight inflationary bias (I think Bob Doll of Blackrock, who recommends companies with positive free cash flow who have the ability to either increase their dividend over time or institute one) might end up being the prudent call for someone who is concerned about both risk and reward.
Think back to commentary you yourself saw during those bleaker time in early November (post-MF Global collapse where markets felt European politicians were keystone cops hopelessly behind where the market wanted them to be and no sense that they will ever get their act together), to say time around Thanksgiving (coordinated global central bank 1% dollar swap lines action), and then perhaps to right after Christmas when LTRO had already been announced and market started to drift higher under guise of tepid Santa Claus rally.
For me, off hand, i think of:
- initial phase where only someone like Warren Buffett can see opportunities over 10 year horizon
- then someone like Larry Fink / Bob Doll of Blackrock seeing enough constructive policy action to say on CNBC that they see opportunity in equities if you can stomach volatility and have 5 year time horizon
- then someone like John Manley again reiterating how prudent equity investors who can stomach tremendous short-term volatility quite possibly being rewarded 3 - 5 years down the road, but being very unhappy during year 1 or 2.
- there was interesting banter this morning between Simon Hobbs and Michelle Cabrusso-Cabrerra this morning regarding Greece, blah, blah, blah, and that got me thinking about what if - what if this hedge fund Greek bond holder holdout actually leads to more a more substantive result (really dealing with Greece's debt in a way that just doesn't put another band-aid on the problem, but puts Greece (presumably same solution would apply to smaller PIIGS like Portugal and Ireland, but not TBBF Italy and to a lesser extent Spain) on a path where it really deals with that debt load AND puts them on austerity / growth path where they will actually be able to pay off those newly issued bonds over time. Would that indicate that European Keystone Cops might have actually gotten ahead of market expectations, at least on this particular issue (?)
- and some more perspective from early November 2011: (
http://video.cnbc.com/gallery/?video=3000056089)
(end of random, stream of consciousness thoughts right now )