Unfortunately I have to agree with Doug Kass' prediction that the market has likely peaked for 2009. Here are 5 of the 10 reasons he provides to support that claim:
- Cost cuts (exacerbated by wage deflation) pose an enduring threat to the consumer, which is still the most significant contributor to domestic growth.
- The consumer entered the current downcycle exposed and levered to the hilt, and net worths have been damaged and will need to be repaired through higher savings and lower consumption.
- The credit aftershock will continue to haunt the economy.
- While the housing market has stabilized, its recovery will be muted, and there are few growth drivers to replace the important role taken by the real estate markets in the prior upturn.
- Commercial real estate has only begun to enter a cyclical downturn.
Trying to time the market is almost certainly a fool's errand, in my humble opinion, but Mr. Kass' thoughts are pretty hard to refute. I'd only add that the uncertainty around what's going on in Washington at the moment is not something that markets have historically looked favorably upon.
Click here for the rest of the article.