For my money, you can ignore everything coming out of Washington on the subject and simply listen to Wal-Mart's (WMT) CEO. Matt Laure actually does a good job. As much as I criticize him here, he deserves kudos when deserved.
- "A lot of stress still in the system"
- "This is not a V recession that we just bounce out of"
- "When people start buying more expensive cuts of meat, we may be coming out of it"
- Children's apparel sales stronger than adults. "Mom and Dad will sacrifice but they will not deny their children"
- On increasing Wii sales, "Outside entertainment is being cut back on"
This goes to my assertion that the recent market rally is overblown and contrary to recent pronouncements from Obama and Bernanke (green shoots showing), we are far from the end of this.
Those buying equities today must be extremely careful they are buying them based on the actual current situation of the company, not what you HOPE the economy will be doing in 6 months to justify today's price. After a 20% market run, should the economy be as bad as today in October (very likely), you will have discovered you overpaid today for that stock.
My recent purchases of General Growth Properties (GGP), RHI Entertainment (RHIE) and Natural Gas (UNG) (yesterday) do not depend on an economic turnaround to justify their current valuations or the case for appreciation. All three have an investment thesis independent of the overall economy and should it improve, it only enhances the thesis.
Unless we get a dramatic correction in the market, I just think that is the only play right now for the vast majority of stocks out there.
Disclosure: Long WMT, GGP, RHIE, UNG