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Portfolio strategy update No Holy Grails David Gottstein
Editor’s Note: The following column was compiled in early June. David Gottstein is with Dynamic Research Group in Anchorage. We are more pessimistic about the fundamental investing climate in equities right now than are many.
We recognize that valuations, especially in the technology sector, are still well off their highs and might be viewed as bargains.
Analysts argue that some of our biggest bull runs in history started during recessions. This is true. The key was that the only bull markets that sustained themselves coming out of a recession environment were coincident with economic growth.
We are having trouble seeing not only where, but when, the next support leg is going to come from, since the FED can only lower rates so much and thereby raise PE’s only so much. It is doing so, right along with pumping money into the banking system, only to help offset what would otherwise be an even greater profits recession.
We simply don’t think it will be enough to build the world an economic fire. So, neither Europe, Latin America, China, Mexico, nor even our own economy seem poised to act as any catalyst.
In spite of all the rhetoric, the one time tax rebate will have no sustainable or positive impact on the health or growth of the overall economy. At best the effect, if any, will last only a few weeks.
There are no holy grails for what ails the economy and stock market.
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