Scary Template

With the market up over 30% in just over a month the temptation is to believe that capitulation has been achieved and we are in the midst of a bull market run. We must remember that the reason for a turnaround in the banking sector might well be due to the artificial liquidity infusion designed by the U.S. TREASURY, and that huge exposure to toxic assets still exist, and will remain on balance sheets for some time to come. Most experts agree we are in the midst of a contraction in available credit to consumers and this will hamper a return to consumer spending. Those who have studied the great depression see a similar template occurring, in the market crash of 1929 stocks plunged 48% in just two months, followed by a surge of almost 50% and then declined 86% from the high of the rally. You all know the old saying HISTORY REPEATS ITSELF, the odds of this happening again are probably slim, due to the fact that government intervention did not take place back then. But the fact that fundamentals such as true earnings, positive employment figures and GDP growth, property appreciation just don't bear this turnaround out. A return of these elements are the only path to real economic progress.