My title today pays homage to one of the most esteemed and controversial figures of the twentieth century, Sir Winston Churchill, and a speech he gave celebrating the October 1942, British victory over Erwin Rommel’s Afrika Korps at El Alamein. In putting the event into perspective Churchill said, “This battle was not the end. It is not even the beginning of the end, but it is, perhaps the end of the beginning.”
As it pertains to our market today, many feel we are near to, or at least at, the beginning of the end. They cite as reasons: valuations, political uncertainties (for one, the upcoming debt ceiling debate), problems in the Eurozone and China and the fact that we have come so far from the lows of 2009. As you may know, I am on the other side of this argument, thinking that we have further to go in what could be a secular bull market.
I got some support for my argument last week in a piece that appeared in the July 25th edition of Marketwatch, in an article by William Watts, entitled, “Streak Of Stock Highs Isn’t As Scary As You Think.” Watts quotes S&P Capital IQ market analyst, Sam Stovall. Stovall is critical of the media and what appears to be a constant campaign to get investors to believe the current bull market has ‘about had it’ because of the recent streak of record closes. “I don’t know why they say that, other than to instill fear and thereby insure investors stay tuned. History, on the other hand shows that new highs are typical in a major bull market. How else would the S&P trade at 1692 (as of 7/19/13) versus 13.55 at the start of the bull market of June 1949, unless it frequently traded in uncharted, new high territory?” According to the table in the attached link the S&P has traded at uncharted, new all-time highs 900 times since June of 1949. I have referred to the secular bull that began in 1982 after 16 years of flat markets in the secular bear that began in 1966. I believe that, after 13 years of flat markets beginning in 2000, there are interesting similarities to today’s market. We fleshed this point out in session 48.
Another Take On The Taper And Ben Bernanke
Friday morning’s (7/29/13) edition of Marketwatch had a lead story titled, “It’s Time To Stop Listening To Ben Bernanke.” My initial reaction was that this was just another media bash of the Fed Chair and his policies. Au contraire, it was not! It was a thoughtful retrospective on the Chairman’s recent pronouncements on tapering QE, and the panic, knee-jerk reaction of the street. The article, written by No-Nonsense Investing’s Howard Gold, posits we should no longer pay attention to Bernanke’s statements because he has already stated (and restated) Fed policy on tapering QE, as well as raising short-term interest rates (i.e. QE will end based on economic data, short-term rates will remain low for the foreseeable future). When the Fed does move to tightened and push short-term rates higher, it won’t be on Bernanke’s watch. “As Ben Bernanke prepares to move on, so should we.”
What do you Think?
The information presented in kortsessions.com represents my own opinions and does not contain recommendations for any particular investment or securities. I may, from time to time, mention certain securities for illustrative purpose, names where I personally hold positions. These are not meant to be construed as recommendations to BUY or SELL. All investments and strategies should be undertaken only after careful consideration of suitability based on the risks, tolerance for risk and personal financial situation.