Friday, August 28, 2009

The Coming Boom

Markets have a way of humiliating the best and the brightest. Why this is so is a topic of endless erudite essays and books.

When prices are determined in the "market" by countless people making decisions as to where they are headed, there is no way of telling beforehand how a) the future turns out, and b) how those who have made the wrong bets in the first instance would just stampede into joining the "winning" side causing a boom or a bust.

We are very likely going to have a big boom again. It does not take a rocket scientist, so to speak, to make that prediction. The simple truth is Uncle Sam has been printing and spending money like it's going out of style to prevent a collapse of the US economy built on too much debt and too little productivity.

Well, the old saying is true: you can't fight the Fed. When so many trillions have been pushed into the "system" to save the mother ship, "something" will happen. Stock markets, commodity prices, housing prices, you name it, have been strong for just that reason.

About 9 months ago, a depressed former hedge fund manager was lamenting about the state of his portfolio. I told him to relax for every bear market is followed by a bull market. Since then his portfolio is up over 40% year to date.

We are going to have a bull market in 2010. However, I have no idea whether it will have a happy ending though.

All I can say to you is enjoy the ride while you can, but "here we go again". You are forewarned.

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