Market is forward looking mechanism. If you continue to focus on what everyone knows is current situation, you are not a market analyst. Look at what is being chewed to death by bearish commentators.
Housing slowdown: Is there anyone who does not know about it by now. The more critical thing is what is next six month outlook for economy not what has happened.
Inflation: Now this one is being talked about for last 2 years but it impacted market only in last couple of months. Now bearish commentators are all over the place with scary inflation scenarios. When everyone gets it most probably the trend is over. Also inflation is lagging indicator. With economy slowing and excess capacity in so many industries and two major deflationary countries China and India desperate for growth, will inflation continue.
Oil Prices: We have seen this movie before. Oil scare. This time it is different. What did you see yesterday after an event which was supposed to be a viagra for oil stocks. The OIH barely budged. If you are chasing oil stocks now, what were you doing two years ago. The trend in oil started in 2004, if you are discovering oil now, welcome to the party. Probably very few oil stocks will make an up move from here. As I have said many months before the move in oil stocks is over.
What does my grandma knows that bearish commentators do not know.
Fed has become better: Over the years the Fed has become good at managing the economy. Read the book Inside the House of Money : Top Hedge Fund Traders on Profiting in the Global Markets by Steven Dronby, almost every major macro trader in it acknowledges the fact that the Feds have become better at managing the economy.
Recessions/slow downs are shallow: Over the years the recessions have become milder. Look at the 2000-2002 period. Everyone was predicting doom, what happened not even 25% of the predicted gloomy scenarios came true.
Deflation: Grandma says biggest long term threat to economy is deflation. Cost of capital is decreasing rapidly. Productivity is improving dramatically. All that you need to start business today is a business plan, the venture capitalists and angels will pour in capital.
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