Little Miss Sunshine

  • The American Association of Individual Investors survey is showing the largest number of bears in the 25 year history of the survey (over 70%).
  • The stock market is on the front page of every major newspaper and is the lead in on the nightly news.
  • High quality stocks are paying twice the dividend yield of 10 year treasuries.
  • Some clown got on CNBC yesterday and said that shorting was a no risk strategy.
The signs that this bear market is getting long in the tooth are obvious for all to see. At a minimum stock selection will be a viable strategy, even if stocks bounce along the bottom for some time. Market pundits have recently found the new religion of cash. Everyone is going to know when the bottom is in and only invest at that point. Just like they were able to get out before the tech and real estate bubble burst.

I continue to be of the belief that this market decline should be bought into. However, it is important to buy into high quality companies with solid balance sheets. I am coming to the realization that this decline might need to end with a bang. While I am not looking forward to it, I am ready for it. While one would have had to be in a fallout shelter for the past year to be surprised by the unemployment report, it just might serve as that catalyst.

2 comments:

Lars said...

Many people have gone to the fall out shelter and it is so bad, that many won't even know when a recovery occurs for months. We are going into survival mode in many areas with almost no descretionary spending and stocking up on food, etc. This is mostly older people who probably will never again buy stocks.

Sign of a bottom coming?

Tsachy Mishal said...

By that logic of following the baby boomers, I would have been loading up in 99'.

How about the fact that certain stocks now pay high enough dividends that just the dividends make for a decent return. No need to sell to the next guy at a higher price.