MARKET COMMENT
Dave Fry at ETF Digest, February 26, 2009
Another bullish start turns south. Bulls just can’t sell their “stocks are cheap” canard to investors who aren’t interested. This can be especially true when the news media puts out misleading data on price/earnings ratios as we pointed out yesterday and the day before. Further, as I mentioned in the current Investor’s Business Daily article stocks are hardly cheap and this bear market may continue for some time. The typical length of these markets runs roughly 30 months according to dshort.com and we’re only 16 months into this one by their estimates.
Volume was heavy today especially in tech and breadth was negative.
That’s it for us blogging this week. Tomorrow it’s our podcast and there’s plenty for Greg Newton and I to chat about.
One thing that’s interesting is this populist and conspiratorial article from Paul Craig Roberts who suggests that governments are doing their best to squash gold by their leasing activities. Further, he posits a controversial view that how we’ve been taught to view free trade is all wrong.
Then there is this excellent and thoughtful article regarding Geithner posted in Bloomberg. It’s thorough and well worth reading.
We’re still in a bear market and it’s as simple as that. The proposals from the Obama Administration are not finding a lot of support in markets. Tax increases are outlined here and they’re stunning. It’s hard to get comfortable with increasing taxes during a recession. I wonder how they’ve calculated the increase in tax on those earning over $250K per year. How many people will still be making that kind of money? How many near that level will ask for an amount beneath that level to avoid the extra tax. People behave in a manner to always avoid taxes and this may not be baked in the numbers.
Let’s see how we close February tomorrow. It should be with a whimper I suspect.
Disclaimer: Among other issues the ETF Digest maintains positions in: IEF, TLT, TBT, and GLD.
