Saturday, May 12, 2007

World market tops

This market is back into boring mode. Is it the calm before the storm? Probably. Are we closer to a top than to a bottom? Sure.

I was listening to the Tom O'Brien show recently and he had a very interesting caller. It was a long time caller who lives in India now and gave Tom and the rest of us an update on the world markets. What I found most interesting is when he mentioned that everyone in India is involved in the market. He says that it is now routine for rickshaw drivers to both offer and ask for stock tips. He also says that mutual fund billboards dominate the roads. I lived in San Francisco in the late 90's and all of those dot-com company billboards were everywhere. By most accounts, the same thing is going on in China. The markets look like easy money and the lessons that Americans learned just a few years ago are being totally ignored by Indians and the Chinese. Its different this time, I guess (yeah right).

Once again, the masses are getting in at the top, only to be destroyed on the way down. This type of euphoria is totally absent here, but you can bet that when the emerging markets fall, the US markets will surely follow suit. It makes me wonder if one of the reasons why the large-cap US stocks are making such a nice run right now is because the big players are looking for a relatively safe place stash their cash while the world bubble bursts.

I'm not going to anticipate the downturn because I think there will be plenty of time to get short. The higher these markets go, the longer and further they are going to drop.

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