Stuart Schaeffer

No Bear Yet? Average Stock Already Down 30%

That the market is doing pretty lousy right now is obvious. The big question is, 'what will be doing well in a year or two?' My thoughts? It's going to be a tough year with headwinds like the housing market, the subprime/mortgage mess and the price of oil. Lets see - the first -the housing market - is an essential U.S. industry. Strike one. Subprime/mortgage industry is second and is also an essential U.S. industry. What's more - the problems are spreading to other areas of the financial industry and depending on who you speak to, more write-downs are coming (to the tune of tens of billions of dollars more...). Strike two. The third strike comes from the oil industry. The price of oil has concomitant affects in industries as varied as manufacturing, gas, the automobile industry and more. When the price of a raw material goes up, the price of products that use the raw material are going to increase as well. Obvious economics, but some folks still forget this. We shouldn't - otherwise this could be a long and volatile stock market this year.

Regards,

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