The Barnard Observer

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Home  Misc Contact                                                                       c2003-08 Thomas Barnard

A Note of Cheer

Just a Correction

            Well, if you consider the events, things look pretty grim.  The subprime debacle will continue for the the foreseeable future.  We are paying an arm and a leg for gasoline, and the government is doing little about it.  (As say the Germans and Japanese have done, subsidizing solar for years now).  Lost the war again.  First, they beat us at autos, now they'll beat us at energy.

            But I submit we have suffered a correction, not the beginning of a long-lasting bear market.  The market is down 10-12% depending on the average, a healthy correction, but it's August, not the best time of year for the market, and we're going to see some more rough seas.

            According to Investors Intelligence, the number of bears is getting close to 40% up from the high teens a month a go.  And bulls are down to 40% down from 60% or thereabout a month ago.  We are getting to levels not seen since 2002.

            Furthermore, Mark Hulbert, who follows such things, says that only 5.5% of investment advisers are recommending that their clients buy stocks, and 94.5% are recommending they go to cash.

            Hulbert says, "This reaction is not what is typically seen at market tops, according to contrarian analysts. Such times are usually characterized by belief rather than skepticism. The typical pattern at tops is for corrections to be seen as buying opportunities; as a result, advisers will stubbornly hold onto their bullishness and, if anything, react to weakness by becoming even more enthusiastic."            

            They say the stock market climbs a wall of worry.  There is plenty of upside.  Relax and buy technology stocks.

August 28, 2007