03-01-2014, 05:26 PM
Let's add a new twist. On Seeking Alpha, Richjoy responded to this article thusly:
DSO has expressed his opinion ("...Aging bull market"). He would have investors turn more defensive. IMO, it is true this recovery is aging ONLY when compared to the average recovery (expansions average 59 months, and contractions 11 months).
However, most of the world experienced a financial crisis that lead to a severe recession. Financial crises go deeper and last longer compared to normal recessions. More importantly, it also takes much longer to recover from a financial crisis than from a routine recession.
So let's look for clues in the business cycle: It consists of 4 phases...early, mid, late, and recession. DSO believes we are in the late phase. I (and many others) believe we are in the mid phase. In fact, our slow-growth economy supports our being in an extended mid phase of the business cycle, before entering the late phase.
The typical characteristics of mid and late stage recoveries are as follows:
Mid phase -- Typically the longest phase of the business cycle...Growth peaks, credit growth is strong, Fed policy is neutral, inventories and sales grow (reaching equilibrium with one another).
Late phase -- Typically suggests an overheated economy ready to slip into recession, and hindered by above-trend inflation...growth moderates, earnings come under pressure, Fed policy is made restrictive by tightening credit, inventories grow and sales growth falters.
Sorta agrees with we're seeing. Regardless, still tending to my knitting and letting the market cycle worriers trade as they see fit.
DSO has expressed his opinion ("...Aging bull market"). He would have investors turn more defensive. IMO, it is true this recovery is aging ONLY when compared to the average recovery (expansions average 59 months, and contractions 11 months).
However, most of the world experienced a financial crisis that lead to a severe recession. Financial crises go deeper and last longer compared to normal recessions. More importantly, it also takes much longer to recover from a financial crisis than from a routine recession.
So let's look for clues in the business cycle: It consists of 4 phases...early, mid, late, and recession. DSO believes we are in the late phase. I (and many others) believe we are in the mid phase. In fact, our slow-growth economy supports our being in an extended mid phase of the business cycle, before entering the late phase.
The typical characteristics of mid and late stage recoveries are as follows:
Mid phase -- Typically the longest phase of the business cycle...Growth peaks, credit growth is strong, Fed policy is neutral, inventories and sales grow (reaching equilibrium with one another).
Late phase -- Typically suggests an overheated economy ready to slip into recession, and hindered by above-trend inflation...growth moderates, earnings come under pressure, Fed policy is made restrictive by tightening credit, inventories grow and sales growth falters.
Sorta agrees with we're seeing. Regardless, still tending to my knitting and letting the market cycle worriers trade as they see fit.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan