Tuesday, August 9, 2011

The Stock Market

The stock market should be bought here. No one has made any serious money by holding stocks since March of 2000. That is more than eleven years of nothing, except occasional dividends. Stocks will do better over the next eleven years. Long term investors should own this market here.

That doesn't mean that stocks won't go lower. They probably will. But, picking a bottom is a fool's game. The economic environment always looks terrible when it is a good time to buy stocks. Otherwise, it would not be a good time to buy stocks.

Agreed that the Obama Administration and the Democratic Congress of 2009-10 have done everything they possibly can to destroy the American economic engine and have, in part, succeeded. But, help may be on the way. It isn't clear that the American worker will survive the Obama debacle, but American business might. American business can outsource, can expand plant and equipment and can sell its products to the rest of the world. The US is probably entering a long run period of economic stagnation, but that doesn't necessarily spell doom for the stock market.

Americans have chosen to price themselves out of the labor market by adopting an absurd litigation environment and onerous mandates and America has chosen to impose upon itself unaffordable retirement and health care schemes. But, the rest of the world, especially the part of the world that is growing, has not been so foolish. American business can, over time, link itself to the growing parts of the world. This is not encouraging for the future standard of living for the average American, but, for the investor, the non-western world can provide solace.

So, close your eyes, swallow hard, say a prayer and buy stocks.

2 comments:

Larry said...

Good call ETB! I sent this to Kent after the FOMC news to Kent.
If no one can make any money in Treasuries until after 2013 , it is a risk on scenario unless your goal is to just get your money back. That is why I'm bullish now. I might change my mind tomorrow, Ben is going to kill the retirees.

People are going into investment firms right now saying they need yield but are conservative investors. They will be put into bond funds and stocks. Then one day bond holders will lose money and the house of cards will fall apart. Or they will be paid back with worthless diluted dollars. It really is a crime. ETB it's you old trader Larry

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