Tuesday, March 10, 2009

 

The banking crisis is over, next the Obamanomics crisis

This was a very positive rally because it was the banks that led the way. I take this as a signal that we are closer to the end of this bear market than the beginning. Still, don't think that we can't go down to Dow 2000. If the bear market resumes then the causes of for it will be Obama's economic policies. I said at the end of November that the credit crunch portion of this economic downturn was over. Credit is flowing now, albeit much tighter than before. Now I believe that the bank crisis part of this crisis is nearly over.

What has only just begun to feel the effects of Obamanomics namely his war on business with the possibility of card check, universal health care, changing tax rules for corporations, and the crowding out effect of massive gov't spending over the next few years. All of these policies will be huge head winds for the economy. In the mean time we are ripe for a bear market rally that suckers in the bottom hunters. That's what bear markets are supposed to do.

Just remember, don't invest with the idea that a certain price will signal the end of the bear. Time is the most critical factor. Look for an end in 2011-2012. By then I will say buy yourself a lot of leveraged ETFs. They will make you very wealthy.

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