There's a lot of bad news priced into the market. If things turn out not to be as bad as discounted, we will have a rally this summer, and we will end the year 10 percent higher than we are now. |
They're now looking at a situation where their shareholders are going to see the fund is down for the year but they're going to have to pay taxes on large gains. The managers are selling tech stocks that they might have bought at higher prices to realize losses and offset the gains. |
This changed the whole psychology of the market from one of disappointment to one of optimism. |
This was a big psychological negative and I think it was one of those things that triggered off the decline in tech stocks last summer. So the removal of the threat of breakup is a positive psychological thing. |
Unemployment claims were OK. I suspect we're still in for low volatility sliding up to the close tomorrow. I don't expect any big moves in either direction. That's disappointing, given that the week between Christmas and New Year's is what we call the Santa Claus rally, and so far all we've gotten is a lump of coal. |
We have a lot of cross currents right now and so it's very difficult for investors to pick out the proper path. People like myself think that things are in fact slowing down some, that inflation is not a significant problem, and that while the Fed may tighten policy once in the next couple of months, they really probably don't need to. |
We've now changed the valuation of the stock market quite a bit, ... If anything, the earnings estimates have been going up and stocks have been going down. The price-to-earnings ratio on forward earnings is now down to about 15 times, which is very low relative to interest rates and inflation at the present time. |
You don't bet the farm but you need to be putting some money in as you find stocks that look attractive. |
You really have a two-tier market with tech stocks going down and everything else going up. Part of this is because valuations in technology stocks got overdone this year and, at the same time, the Dow hadn't performed and now they look cheap. |