I am constantly debating the bull and bear case in my head. While I have gotten bullish when sentiment has turned too negative, I cannot bring myself to get bullish for a longer term move. The argument I keep coming back to is how bad business is in the real world. Almost every business owner I speak to is struggling and the job market is brutal for those seeking jobs.
Can corporate America flourish while the rest of the country goes to shit? If valuations were great I would say that it is priced in but the market is not cheap. Can the Fed create another bubble? Its not out of the question, but that is not something I am willing to base an investment decision on.
The other bear argument I keep coming back to is that there is a lot of supply lurking. The government still has over $15 billion of Citigroup that it wishes to sell. General Motors wants to come to market with a nearly $20 billion IPO. There is over $30 billion in the the IPO pipelines as private equity buyers look to bring companies public again. There are eager sellers waiting if a rally does materialize, which should limit the upside.
Ofcourse these arguments do not even take into consideration the slowing economy and the above average chance of an economic accident as a result of the slow economy and the many imbalances.