Market Perspective 10/16/2008

After last week in the market, this week seems like sort of a walk in the park. I mean, at least we havent seen 5% declines on a daily basis. I guess that's a good thing. So this is what it feels like when 300 million people get a hang over all at once. Make that 6 billion people or however many people are on earth right now.

What is becoming quite apparent to most of us now is that a lot of the "economic growth" that happened this decade wasnt really economic growth. It was just the illusion of growth that happens when you borrow more and more money from someone to buy things. The only problem is that eventually you actually have to pay the money back and then you realize that maybe borrowing the money wasnt really worth it. But its too late now.

So the deleveraging of the market continues as painful as it is. The speed of the decline in the market over the past 6 weeks has simply been stunning. I dont think anyone really expected it to unfold like this. Anyway, I think we are at point now where the stock market has declined enough to accomodate a good deal of negative economic data. So, it remains to be seen exactly how bad the data will actually get.

What is unfolding right now in the equity market feels like the 3rd bottom of the year w/the first two occuring in Feb/March 2008 and the second in May/June 2008. What remains to be seen is whether this is the final bottom of the cycle or if there are more to come in equities. Certainly we are close to the bottom we hit in the stock market during the short-lived 2001-2002 recession.

Either way, if you are a long-term investor then you have to consider to yourself whether the current levels are attractive from a long-term perspective. If you will be needed your money w/in the next 5 years, you better not put it in the stock market.