Tuesday, December 1, 2009

A few more bricks for the Wall Of Worry

Here are three recent items from the news media that show the Wall Of Worry on Wall Street is still getting higher. The top image is the latest cover of Newsweek. The story is by Niall Ferguson, a very talented historian, author, and financial journalist. Over the past year he has also found a big audience among doom and gloomers. The thrust of his Newsweek story is that the U.S. budget deficits, current and projected, and the resulting projected increase in the Federal debt are unsustainable. He offers no solutions, but does assert that the U.S. in well along the road to disaster. Why similar disasters won't afflict the rest of the world he doesn't say.

The middle item is a chart from Floyd Norris' New York Times column this past Saturday. It is a chart of one of the major surveys of consumer confidence. You can see that it has reached the lowest level seen during the past 30 years.

Right above this post is the front page of the Chicago Tribune's business section of November 25. The headline speaks for itself.

As you know I think the U.S. stock market is in the middle of a bull market which I expect will last through the end of 2010. By that time I expect to the the S&P 500 close to its 2007 high of 1576. The articles and images above reinforce my view that public sentiment is still quite bearish, despite a 60% advance in the market averages during the past 9 months. While a drop of 5-10% in the S&P can occur at any time, I think it would present another buying opportunity for the contrarian investor.


  1. Right on, Carl. It really shows what a great market buff you have become in your life. I hope I can say the same when I reach retirement age in a few decades ;-) You're the man.

    Thanks so much.

  2. Carl,

    If the S&P hits its 2007 high, you're definitely going to need to revisit your falling Euro/oil number prediction. As you should be keenly aware, there a number of oil related stocks that comprise the S&P. Even the basic 'Joe' can tell the direct relationship between the S&P an oil and a falling dollar.

  3. Carl, I am an owner of your recent book, The Art of Contrarian Trading. Ben Bernanke as Time's 'person of the year' strikes me as a contrarian indicator. Any thoughts?