Another analyst who recommends entering the stock market with caution at this time, is Joseph Elliott.
His website regularly updates the chart in his book Ahead of the Curve. Historically, back to 1966 bear markets start when year-over-year growth in consumer spending falls. Given the consistent history of rising Discount or Fed Funds rate (green line, inverted scale) leading bear markets, investors should approach the stock market cautiously at this time.
One of the most important concepts in the book is the leading indicator chart. Even Richard Duncan, in the Dollar Crisis, makes the mistake of thinking that rising employment leads the economy. Employment is the most lagging of the indicators. It all starts with wages, which drives consumer spending. Government spending is 1/3 of the economy, and it is the hope to pull us out of the recession. Our government is large enough to spend its way out of the recession, unless the derivatives market falls apart. Not even our government is a match for that.
qcomer, I figure with CDs paying 5% now, why risk losing money in the stock market, which historically pays 7-9%? In today’s economy, with a falling dollar and a recession ahead, I’ll go with the safe 5%.
