Common Sense from John Hussman and my 2 C

http://www.hussman.net/wmc/wmc041115.htm

WHat is fueling the current bull market rise IMHO is exessive speculation and the relaxation of reality. A RISE which goes unabated (3% correction) can then also correct unabated when over.

WE have reached no new era of investment, old rules still apply. And IF you buy an overvalued stock, your ONLY hope is that someone else is willing to pay you MORE for it. Like ANY PYRAMID scheme, it will end.

Sometime in 2005 I think reality will return to the stock market and so will the bear market. With the Governments inability to do much about it, having spent ALL their ammo digging us out of the last bubble that burst, the end result could be much more painful.

WHen a country and its citizens lack savings, then the investment goes to other nations, and so does our wealth and manufacturing base, any just see this as a sign of the times.

BIG BOX stores rule the landscape, and bring in deflated goods from China (WMT), only offering low paying jobs in its wake.

I see benefits to lower consumer prices, but I also see our inventiveness going out the window. China is trying to slow down its economy, but investment keeps pouring in. SO I don't see how our manufacturing capacity can recover sitting at decades low of utilization.

Yesterday we saw a 14 year high jump in the PPI as INFLATION is a real threat. Raising interest rates is one way to deal with that should the dollar weaken appreciably.

AS of right now, the gambit has been to KEEP rates SO LOW that savers be damned! And that money has flowed into stocks. There is NO equilibrium. And we depend on foreign governments tobuy almost $2 Billion a DAY! of our DEBT to subsidize our thrist for consumption. WE are SELLING out country off in pieces. There is NO PRIDE IN BUY AMERICA.....as in buy what?

MILLIONS upon MILLIONS of young Chinese and Indian, Pakastani children well educated and willing towork for PEANUTS are entering the workforce, and will be competing with yours and mine children for a job.......WHO will win?

MOST BIG corporations are setting up shop and hiring in those countries.

MOST BIG corporations are giving back dividends or buying back stock with excess cash.......INSTEAD of investing here!

Dividend yields on SPX stocks are STILL only 1.7% EVEN with the new tax status lowering taxes on them to shareholders. HISTORICAL NORM is 4% !!!!!!!!!! AT MARKET TOPS AVG IS 3%!!!! AT BOTTOMS NEAR 6%!!!!!!

This comparison data goes IGNORED by Wallstreet and now Mary MEEKER and company (goosn who screwed investors during bubble with idiotic advice and hype) have re-emerged from the dust of the bursted bubble.

This rebirth of the BULL does not come from a SOLID GROUND (typical bear mkt bottoms of 6% yields and SPX PE of single digits...at OCT bottom it was SPX PE of 30!!!).

"Castles made from sand drift into the sea.........eventually" Even under LSD...Jimi knew!

Tread lightly my friends....and keep those stops tight, IMHO

Duratek