Worthless Heading for worthless The new currency?
Some folks think Dow 5000 is coming. I tend to agree. I hope I’m wrong, but can’t see anything positive on which I can justify improving my view. In the same article a guy from J.P. Morgan (stock is down!) claims there are opportunities in stocks and that a double dip recession is “unlikely”. I do agree there are specific opportunities in stocks, but that isn’t what most investors do. Lacking time or expertise to gamble on specific stocks, they use the stock market, via index funds, as a proxy for the state of American business – and that proxy is sagging.
Lots of things work against stock – having to hold them a year for favorable tax treatment (who wants to do that in this volatile time?) Plus the general “once burned” sense of those who lost 40% of their 401K in recent years. There is no new 20 trillion dollars to replace what fell, so how, exactly, is the market to grow? This seems pretty obvious. Sure, specific winners, whoever the Google is of 2011, will do well, but in general I see long term malaise in the market.
Government causes most of the obstacles to improving our economy. By channeling so much of our productivity into non-producing activities, they act as an anchor slowing down everything and sucking away initiative. They also spawn uncertainty because of all the really silly ideas they are forcing on business.
What would perk up the economy? Immediate action to remove obstacles with a certain long term trend to speedily chip away at the size, scope, and consumption of government.
If that happens, the market will rebound quickly. If not, we face a lost decade or longer.
So cash it is. That at least holds the value for a bit, but with inflation looming and gold already way high, what to put it into? No idea. Nowhere looks good.
P.S. Don’t forget the Hindenburg Omen…