One cannot expect double digit returns from the U.S. market over the medium term as there are significant headwinds impeding that from high P/E ratios, reversion to the mean, consumer price inflation, credit deflation, high debt, to a housing bust.

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That said, I am not particularly bearish over the short-term. We have had a huge sell-off and are down 20%, putting the market into ‘official’ bear territory. Markets do not simply collapse into the abyss without significant rallies, some short and others long. And a lot of the damage from the first wave of credit writedowns is over. This might give the market an opportunity to rally a bit. Things are looking oversold.

That said, we’ll have to wait and see what the real economy looks like in July and August as we’ll be getting a lot of data from companies and n the economy, which will pull us in one direction or the other.

At least for now, things in the market don’t look bleak. But, I wouldn’t call myself bullish.

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