Questioning Questioning the Bull

by: Roger Nusbaum

Roger Nusbaum submits: There was an interesting bit on the WSJ Marketbeat page about the market's recent strength, along with some bearish sounding quotes from various people. There are a few things worth understanding about current market events. I think there are some similarities to the top that was put in in 2000. The curve is inverted, the new high list is shriveling, sentiment (as casually observed) seems to be quite positive, and there is not a lot of confirmation from other indices.

Obviously there are differences between now and then as well.

To be crystal clear I am not calling for a decline anywhere near the magnitude of earlier this decade.

All I am saying is that there are some issues present today that have caused trouble in past market cycles. These troubles, last time around, took months to matter. The market has overcome these problems and many others to have the run it has had, and it could continue to do so, but these internal issues should not be forgotten or ignored. Nor for that matter should the big macro issues be forgotten either.

There is no question we have the ingredients for a decline. Ingredients however don't bake the cake. At some point I need to think about whether my moderately defensive stance is incorrect. It makes sense to reexamine the portfolio. Perhaps a move to make would be to add another defensive consumer name, with yield, that might outperform cash.

Also I am very underweight tech. I could add a little more and still be underweight. All the while I was selling tech, and getting that part right, I said I would probably miss the bottom, which for now appears to be the case, and has contributed to my lag for the quarter. I do not see a strong fundamental case for tech, but it is doing well and I am very light in the sector.

This post really is just an inner monologue of thought process.

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