Pretty interesting quote from this week’s Barrons and Michael Santoli’s weekly piece:
“Plenty of folks who have gotten things mostly right in this cycle are tactically nervous. The Leuthold Group has said the cyclical bull market might have seen its peak. The Ned Davis Research ‘cycle composite,’ blending historical one-, four- and 10-year patterns, has turned negative. Michael Darda of MKM Partners, an economic optimist until earlier this year, fears that sluggish European monetary policy making is dooming the Continent to recession and contagion. Bridgewater Associates, the huge hedge-fund firm, stated in a starkly concise commentary Thursday that ‘there is an uncomfortably high probability that there will be an unmanaged banking and sovereign-debt crisis in Europe.’ “
Leuthold and Darda were notable bears before the crisis and both turned bullish near the bottom. Bridgewater, of course, is the world’s largest hedge fund and continues to navigate this environment beautifully. I largely agree with the commentary above. Although I don’t pretend to be able to predict what part of the market cycle we’re in I do agree with the notion that the risks in Europe have set the table for what certainly has the potential to end disastrously. The European leaders are so far behind the curve on this one that it’s now looking like catastrophe is the only thing that will get them up to speed….
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.