June 20, 2005
Hello,
The way things look my bet is an ever expanding “summer rally”, followed by the traditional fall correction starting in September after labor day and ending around the third week of October and then rallying thru year end. Is this the beginning of something big? Long-term investment returns would suggest yes. The recent rally since the lows of April has shown ever expanding resilience, oil prices have risen yet stock continue to rise. Shhhhhhhhh don’t tell anyone, it is called earnings growth. Higher oil prices and the risks associated with them have long since been factored into the market. As I said last week in the current environment of slightly higher oil prices seems to be a positive, keeping the economy from over heating. Don’t fall for the ‘falling markets in Europe equal higher oil prices” argument. Stocks are down in Europe because of fears that the EU may dissolve.
The other issue that promotes stock gains is the progress being made putting a lot of the “Clinton Era” company crooks in the big house restoring credibility to the market. The wheels of justice may be moving a bit slow for the average investor, but they are moving .From Tyco, WorldCom, Health South, Enron to Adelphia Communication; it is up the river, off to the big house, away at college, on the rock pile and working on the chain gang. Seeing Bernie Evers make license plates wont get your big loses back but it just may be enough for investors to get that warm and fuzzy feeling back for the equity markets.
James
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