If it isn’t enough to bear after hearing the news that Ashton Kutcher no longer follows Demi on Twitter the esteemed Economic Cycle Research Institute says we’re in a recession. Surprisingly this has met some very intelligent opposition in none other than Doug Kass who believes the current data does not support the case.
To be a good investor IMO means that we should be realists and face our reality and consider that hope is a four letter word.
With current earnings estimates for the S&P 500 for 2012 at $110, a stagnant low growth economy could bring them to $97-$100 range and its my view that if that is the case then the markets will likely make further lows.
According to Sentimenttrader.com the average peak to trough for the S&P 500 is 23.9% while our current loss is 17.9%. If we get real particular and factor in only recession induced bear markets within the painful confines of secular bear markets then the average loss drops to over 40%.
Personally, I don’t know if we’ll drop another 20% but I think its likelier that John Lackey shows composure on the mound and regains his old winning ways than the S&P 500 holding its August lows.
Looks like we’ll be trading on the Darkside for the downside for a while to come.
Long Terry Francona
Short John Lackey