Friday, March 27, 2009

S&P 500 Set for Highest Monthly Rise Since 1987

Here we go again. I told you so. On February 8, I wrote:

This M2 nsa growth is going to be highly inflationary, but what it is going to do first is rocket the stock market...
On March 10, just a couple of weeks before the recent rocket ship day when markets were up over 7%, I wrote: far as some upside action in the market... I don't see it coming from the stimulus package, but from the huge Fed money printing. I really think it could be rocket ship like when the move starts. You need to be positioned in advance.
And so, today FT reports:

US stocks gave up some of their gains on Friday as the likelihood of a third consecutive positive week put the benchmark S&P 500 index on course for its highest monthly rise since 1987....
Most people are trend followers without understanding the business cycle theory behind market moves in a central bank money manipulated economy. That's why they never get in until the move is very obvious, and they never get out until far after the market peaks.

Last night I ran into a former finance professor who follows the market very closely. Her claim to fame is she got out of the market with "only" losses of 20%. She told me that she was now waiting to find the right time to get back into the market. When I told her I thought she should already be in, there couldn't have been more shock on her face if I asked her to take all her clothes off in the very crowded bar that we were in. She's a trend follower and knows her stuff, so she won't be the last one in, but there are a lot of trend followers. You need to be in and positioned before the trend followers get in--and the trend followers will be really sniffing hard if the market does close out the month at monthly gains not comporable to anything this side of 1987.

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