The $825 Billion Stimulus Plan is Ready, But Where's the Beef?
January 25, 2009As you are no doubt aware, we have maintained a relatively upbeat view of the stock market for the past month or so. To be sure, we haven’t been talking about the beginning of a new bull market. In short, we’ve been looking for a rally to reflect the concept that the worst of the waterfall decline is behind us.
Our feeling has been that the lows seen on November 20th represented an emotional washout based on the fear that the banking system could collapse. However, given the measures taken by governments and central bankers around the world, the prospect of Financial Armageddon has since been alleviated. Therefore, it is our humble opinion that these lows likely marked in the beginning of a bottoming phase.
Since then, we’ve seen some rare buy signals ‘go green’ and a marked improvement in the tone of the market. We have seen positive divergences begin to develop and a reduction in selling pressure during the nasty down days of late. All of which are positive and indications that a bottoming process in underway.
Hopefully, we have made it clear that such phases in the market aren’t much fun as volatility remains high and the lows of the waterfall decline are often tested and retested. These periods generally last between 1 - 3 months and tend to wear out any investors lacking conviction; thus extinguishing the last of the near-term selling pressure.
We have further opined that when you toss in the fact that governments around the globe are talking about spending trillions of Dollars, Euros, Yen, Yuan, etc., in order to support the financial system and stimulate their respective economies, it probably is a safe bet that things will improve over the next six-to-twelve months.
However, in reviewing the new American Recovery and Reinvestment Plan, which has been designed to produce jobs and stimulate the economy, the question of “Where’s the Beef?” comes to mind.
Is This Really a Stimulus Plan?
In a piece written for the Washington Post, Larry Summers, who just happens to head the President’s National Economic Council, wrote that when President Obama takes office he “will face what may well be the bleakest economic outlook since World War II.”
The opinions and forecasts expressed are those of David Moenning, founder of TopStockPortfolios.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of TopStockPortfolios and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.
Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.
The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
The information contained in our websites and TopStockPortfolios publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.
Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.
Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.
