The Stock Market expresses a real downturn, but no one can tell whether it is a Buying opportunity, or a slide which will continue. I see no real Signs of Rally, though the percentage losses seem within the rally range. The trouble comes from the fact that We are in the doldrums of early Summer, where everyone dreams of that vacation somewhere; no one dreaming of sudden success in the markets. The only people paying any real attention are those employees of the institutional buyers who are 9 to 5. Everyone else is flitting around in Jets, or at home gardening. The people who utilize Options are using them, and those who do not are not buying. All companies say next year will be much better, but it is all next year. Institutional employees cannot use a reference of one year–far too long, and normal pattern Investors will reenter the market with a prolonged history of decline; not the best advance Scenario. This could be a harsh Summer season setting up for a bad Fall and Winter.
This opinion which holds statistical water does not truly excite your average Investor. Three-quarters of all Stocks being uniform losers over Time makes Investors hesitant to advance funds, and only an oversupply of Cash combined with lack of investment opportunity elsewhere seems to propel investment. A significant number of Investors may reach the conclusion that Self-Finance shows greater Profit, than does borrowing for capitalization while using excess funds for Stock purchases. Positive identification of better Returns from Self-Finance could spell disaster for Stock investment, and most intermediate Investors can modify such payment schedules for maximum benefit; making Tax advantage for debt load the sole support for the markets–not a good thing; I imagine such skewed investment presents at least 30% of all investment in the Stock Markets.
Here is another indication of the stress placed upon the markets. It is all in How Many middleman Profits can be derived from the same investment cycle. Nine thousand Hedge funds may be a bit rich for Investors to bear, considering the Investment load each must carry simply to break even. The funds of funds are simply ridiculous, thinking to draft even more Profits from an investment cycle. There are simply too many hogs at the trough, and the hogs who eat hogs cannot enjoy great success from their cannibalism. lgl