To the long-term readers of our emails you have repeatedly been told that we are in a secular bear market. That means a market that goes up and down and goes nowhere or up and down with the final result being down. Warren Buffet and a host of others believe that we will have a secular bear market for another five to ten years. That means to use a buy and hold strategy would be a disaster. History has shown how during secular bear markets people generally nearly break even or lose. This graph shows the bear markets since the beginning of this century. Examine the last bear market of 1966 through 1982. 

See my comments at the end

Some people have accused me of being a pessimist. I really am an optimistic person but I am also a realist. In my opinion this country needs to get its spending in line.  I am not alone in my concern. For eleven years I have been blowing the horn of caution but I am one person. The column today is from NewsMax.com and quotes our own U.S. Comptroller General. If you would like a copy of the entire article please e-mail me.

U.S. Comptroller General Warns the Nation of Economic Calamity

See some choices at the end of this article

For nearly three months, the market has been influenced by events other than corporate earnings, the most pronounced being the action of the Federal Reserve and the activity in the Middle East.  Once we became immune to the daily inoculations of Middle East news and saw no huge immediate affect on us then investors asked, “Will the Fed continue to increase short term rates, or will they pause?”  Speculation, prompted by various economic reports, as to what the Fed will do or say at their next monthly FOMC meeting is either encouraging or discouraging higher market values. (Next Fed meeting is August 8th)

Friday morning’s new job numbers report came in at 113,000 new jobs created. Professionals were anticipating a number of about 150,000. The lower number and the bump up in the unemployment rate from 4.6 % to 4.8% were supportive of higher stock prices on Friday. Investors were supporting higher stock prices because the poor economic reports were thought to mean the Fed would not raise rates at their September 8th FOMC meeting. Another example of how bad news is good for the stock market.