The Sixth Porsche

davfor

Here is an excerpt from an article that hit my inbox this morning. In it, the author muses about short term and long term prospects for our never ending bull market. Somethings got to give eventually. This article directs our attention in what seems to me to be a reasonable direction.....

In the near term, stocks are almost surely set for pullback. In the longer note mentioned above, Morgan's Wilson makes a compelling case for tech as a good candidate for a drawdown, due in no small part to the disconnect between relative profit growth and relative performance.

In a bigger-picture, longer-term view, all of this is unlikely to be sustainable for too much longer. As evidenced by the rise of populism on both the left and the right (and trust me, now that we've tried right-wing populism, we will, at some point, swing all the way left), the vast majority of voters in developed economies are tired of a system that they see as creating massive wealth disparity and perpetuating not just inequality of income, but inequality of opportunity (which is itself often an extension of poverty).

If you think that doesn't matter for investors, I would strongly encourage you to reconsider. Indeed, if there is anything that matters for those of you with a long-term investment horizon, that's it - the possibility that the rules which have governed the game for the past seven decades will be rewritten. This is a theme that pervades year-ahead and "new decade" outlooks from Wall Street, and you can be sure it will make all manner of headlines this week in Davos.

https://seekingalpha.com/article/4317967-sixth-porsche

Mark

Good article. I'm leaning toward a bumpy slowdown myself but who knows if a recessionary sinkhole or a black swan or two isn't hiding in there somewhere along the way. As for the wealth disparity 'If you can't say something nice Mark ....'

catch22

Hi @Mark
As to a "black swan" or what could also be named as an excuse to take some profits by the big market players; IS IF.......and likely a much to do about nothing, is the monitoring of the coronavirus in China and other countries in the area.
If this virus were to become very wide spread and deadly; well, who knows, eh?
Market reports (of course) are already headlining that this virus could trigger a markets sell-off.
I can not disagree that if a global problem with any virus became serious enough; markets would be affected.
Of concern to the CDC, WHO and other health organizations at this time, is the beginning of the lunar new year period; which always involves escalated travel volumes by millions of Chinese, both domestic and foreign travel.

NOTE: I'm only the messenger here.

A somewhat data and scientific overview of coronavirus, not related to investing markets.

Take care,
Catch

Crash

Dang, that clip stopped before the bit I wanted to share. Poop.

FD1000

Every week I can find articles about doom and gloom, eventually, the market will go down at one point. Hussman (link) made a career of scaring investors for many years. he looked great in 2008 but in the last 10 years his funds' performance is terrible.
HSGFX vs SPY 10 years (chart)

davfor

@FD1000 This particular article was not "doom and gloom" from my perspective. Rather, I found it to be helpful in that it was pointing out a potential source for a short term market pullback. Also, I found its discussion of a potential long term source -- perhaps looking ahead a decade or more -- for a significant change in the overall investment landscape to be worth considering. (That focus appears reasonable to me based on the polarizing changes in the distribution of wealth and opportunity that have occurred so far during this century.)

The author's overall investment view towards 2020 currently appears to be guardedly positive.

Assuming inflation remains anchored – and there’s every reason to believe it will – “Goldilocks” could be in the driver’s seat again in 2020.

Fingers crossed on her as a chauffeur. It’s usually a smooth ride.

https://seekingalpha.com/article/4318308-take-wheel-goldilocks