Let’s put on our hip boots and stroll into the bullish mindset, shall we?
You’ve seen many of these arguments before. Let’s walk through them one by one.
- Interest ratings on a cutting cycle: Fifty basis points isn’t going to cure anyone’s ills. The notion that Powell will just keep cutting is wrong-headed. As inflation returns, and it IS going to return in a big way, the cuts will stop in their tracks and reverse.
- Big earnings week: So what? Seriously, so what? Why is this bullish?
- Election less than three weeks out: Anyone who thinks that the election is going to go smoothly and yield a clear winner – – much less bring in a bright new era of leadership which will guide us to peace and prosperity – – is under the influence of some seriously strong narcotics.
- Santa Claus rally: OK, this is adorable. You are seriously putting money on this well-worn notion. Notice how Costco starts selling Christmas stuff in August? It’s called front-running. Look it up.
- Fund managers chasing the indexes: This one is perhaps the most laughable of all. Lemmings. Sheep. Call it what you will. But the fact that a bunch of numbskull fund managers are all rushing in the same direction is a contrary indicator, not a signal to do the same.
- Low oil prices and overall input costs: Indeed, oil prices have fallen, and, short-term, that will help companies that buy a lot of fuel, such as airline companies. The bigger picture is that crude oil is falling because the world economy is heading into a recession, not to help out firms that would like to trim expenses.
- Lots of cash still on the sidelines: Oh, Lord. This old trope. Where, precisely, are these sidelines? Do you honestly think cash levels at funds are high? Quite the opposite.
- AI investment thesis still intact: The key word here is “still”, and yes, one look at NVDA confirms that the AI Fad is still running hot. That’s going to change, though, and when it does, it’ll be like the classic Hemingway line – – it’ll happen gradually, and then all at once.
- Inflation in the 2% zone: I see what you’ve done there. “Zone”. As is, inflation is in the single digits. That’s true. It’s actually substantially higher than that, and in any case, we’ve already seen the nadir. I expect inflation to be raging again in short order, especially as post-election “revisions” tumble out.
- PE ratios not that bubbly historically: this is simply nonsense, like saying an ice cube is equivalent to boiling water. It’s just plain wrong. The empirical data plainly shows we are at one of the highest levels in the history of the universe, over two standard deviations above the norm. So this person is either a total dolt or is simply lying.
Allow me to show you where we actually are right now.
