Today, the SPX closed at a new historic high. Although overbought in the near term,
economic and financial resources are ample enough to support substantially higher
highs over the next couple of years. Not only that, but the market can progress to
significant new highs without a strain on valuation parameters provided the economic
expansion unfolds in way that allows the system to heal further and regain balance and
resilience in the wake of the large 2008 - 09 bust. Business and consumer confidence are
still relatively low, debt leverage is still relatively high, fiscal policy has become
conservative too early, and, finally, the US economy has become deflation prone on a
longer term basis. So, the Fed has to carry the ball here into on- the- ground headwinds
on the reasonable premise that its ZIRP and QE will drag the economy along until it can
clearly progress on its own without the aid of hefty monetary ease. In the wake of the
Great Depression which hit bottom in 1932, it took 14 years of tender ministrations from
the Fed before the economy was more or less fully righted. It should not take quite so
long this time out, but as a student of US economic and financial history, I am not about
to stop fretting now....
On a personal note, there were seven of us kids in my family. Of the four youngest, I was
the only one to survive childhood with this tale to include the loss of a twin. Raised by
utterly grief stricken parents, I wound up fashioning my own way to get along in life. So,
for example, I have been a big risk taker for many years, but the bad shocks monitor
is always on....
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!