"The Recipe for a Bull"
By Doug Kass
Special to RealMoney.com
04/02/2003 03:13 PM EST
Let me start by stating that my extremely bullish view of the virtuous cycle and its implications for world markets is very much a variant view.
It is against the prevailing sentiment of most contributors on Street Insight and RealMoney and of most other market participants.
Short-selling has been my bread and butter over the past 15 years. But, after having spent the majority of the past five years in an ursine mode, I welcome the opportunity that I believe the markets present.
In the process of turning more constructive for the intermediate term, I have attempted to detail, in a logical format, the five or six elements to my bullish view. Here are some of the main ingredients of this view:
. The undeserved optimism that has been habitually entertained by individual investors has been purged. Stated simply, hope in the markets has been lost.
. Skepticism about the ability of monetary and fiscal authorities to reflate the equity market and prop up the domestic economy abounds.
. Despite protestations from Peter Arnett, Maureen Dowd and a lot of other well-intentioned people, we are close to resolving the conflict with Iraq. This will unleash the virtuous cycle, which has plunging oil prices at its epicenter.
. While there have been numerous body blows to the economy (some common, many uncommon), there are many signs that the economy is stable, is surviving and will recover. Moreover, American industry is extraordinarily lean after spending years cutting fixed costs.
. Most of the concerns that led me to be net short -- a spent-up, not pent-up, consumer and maturing/saturated markets in technology -- are well recognized by most investors. While these will serve as headwinds into the market's promised land, my experience is that when conditions are well known by market participants, they are mostly discounted.
. The general level of interest rates is supportive of much higher price-to-earnings ratios.
A Chance to Buy
I have long thought that time and price were necessary to prick the bubble's skin and lay the ground for a recovery in stocks. However, as time progressed after the bubble's piercing, two events have served to delay the start of a new bull stage: the Sept. 11 tragedy and, in its aftermath, the engagement in Iraq.
In an odd way, the transparency of the battle in Iraq (as we all view its ebb and flow) has had an undue influence on market psychology and has served to further dampen confidence. But it remains my view that resolution will unleash the bull. It has been less than two weeks since we've engaged Saddam Hussein's troops, and look at the progress we've made.
Unquestionably, a land with a $400 billion annual defense budget will quickly defeat one with a $1.3 billion budget.
From my perch, impatience with the war effort, when coupled with the horror of seeing it blow by blow, has served to provide another opportunity to buy stocks. We saw the possibility/opportunity two weeks ago when the U.S. market recorded its largest weekly gain in decades. This, to me, was only the tip of the iceberg. "
(in
www.realmoney.com)
Enviado: 3/4/2003 16:12
Quando falei na diversidade de opiniões, não teve nada a ver com o teu post. Ocorreu-me esta história da diversidade de opiniões, pelo facto do Camisa Roxa ter realçado o facto do Kass e do Cramer estarem a defender teses contrárias.
