Today the markets rose violently in what was assuredly a long overdue relief rally. Whether you've been bearish or bullish, today's move probably did little to change your overall stance, nor should it have surprised you given the massive carnage we've seen year-to-date. It may seem like a truism, but in the last few weeks many forgot that markets don't go down [or up] in a straight line.
Regardless of whether you think today's action portends a sustained rally, it's important to remember that the average American is going to feel worse before he/she feels better.
If you're like me, you've begun to see loved ones falling prey to the economic downdraft. Too many smart, hard-working people are losing their jobs right now, and for the life of me I struggle to see how we're going to recreate these jobs anytime soon. The kinds of companies making these layoffs aren't doing so lightly; to think they're going to reverse course and start hiring again belies logic, at least as far as I can interpret the tea leaves.
On days like today, we start hearing the pundits remind us that "the markets discount the end of recessions months in advance." Great. But does anyone reading this REALLY think we're six months away from brighter days?
If you do, then I'm wondering if you've seen the 2009 MetLife Study of the American Dream?
I hadn't seen the study until my friend Mark [on Twitter] made mention of it today.
I implore you to read through the 38-page survey to understand just how perilously close we are to far harder times. There are a great many data points worth pondering in the survey, but two, in particular, illustrate the severity of this economic environment:
- Less than 2 weeks -- 28%
- 2 weeks to a month -- 22%
- 2 to 3 months -- 22%
- 4 to 6 months -- 14%
- 7 months to a year -- 5%
- More than a year -- 10%
- Trust -- 45%
- Do Not Trust -- 55%
Now consider that this survey was conducted in early January, and what's transpired in the subsequent months.
So maybe we've seen "the bottom", that's not for me to say. I've long been on record as saying that trying to predict the exact bottom [or top] is a fool's errand. Unless you're a talking head paid more for what you say on TV than what you do for your clients, I just can't see why anyone would try to claim they have any idea if we've seen the bottom or not. The key is to stay nimble, stay humble, and protect those who count on you to protect them. Don't let Freddy Krueger invade YOUR American Dream, I certainly won't.
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