LouieK

Market Cycles: A Look at the Historical Evidence

The author David Van Knapp asks for a definition of a bull and bear market. Good question, and one I too have seen no one adequately define. Here is my take: There is some level of economic value to the economy and some trajectory it is following toward the future value. This is objective to the markets subjective assessment of that value and trajectory now. When markets subjectively underassess this objective value, then we are in a bull market and when markets subjectively overassess this objective value, then we are in a bear market. Concurrently, there is an interplay between the subjective assessments and the objective values and trajectory, so each of them affects the other and complicates the actual future outcome of the economy. Equity markets do not simply follow economics, they also have an impact on the economy (and its trajectory).

The Bubble of Uncertainty Is About to Burst

g.pincheot writes about,

"the rise of "Ineptomania" personified by Rush Limbaugh - the pied piper of the uninformed."

I listen to Rush Limbaugh from time to time. Do you? My guess is you don't listen to him very often, if at all.

In any case, I would rather have my brain than your brain any day, even it is older.

The Bubble of Uncertainty Is About to Burst

The markets are reacting to the uncertainty surrounding Obama (which remains an uncertainty---just how ideologically motivated is this guy), to the policy prescriptions so far (why did they spend approx 900 billion for fiscal stimulus on a plan which seems overtly not meant to be stimulating and will hamper the economy in the long term--doesn't this make one suspicious of the ideological agenda; and what economic theory supports this spending?), and to the changes in the investment climate. And yes, markets can go lower because they are assessing day by day the new evidence for and the risks to earnings.