Drawing The Wrong Inferences From Economic Data
Jeff Miller | Aug 22, 2012 01:36AM ET
Most individual investors have missed the stock market rally -- so far. Many hedgies are also lagging and finding excuses. The stories about the "headwinds" date back to Dow 10K, when the question was whether we would go to 5000 or Dow 20K. (I Bob Dieli .
As I do this, readers will understand why I insist on strict definitions of a recession, which starts at a business cycle peak.
Investment Conclusion
While it may take me a few more weeks on this series, there is no mystery about the outcome. I freely share this in advance, so that the answer will not be too late.
- Those who are treating current conditions as an average recession and recovery are committing a serious blunder. These "cycle pundits" acknowledge that the recession is unusual, but still evaluate the recovery in terms of averages. Why the disparity?
- We are in the early stages of a long-cycle recovery. This is crucial for stock selection and explains why I like cyclicals and software stocks.
There are many names, but favorites include CAT, ITW, ORCL and INTL. I really like these stocks on a long-term basis, but I also see gains as traders reluctantly acknowledge economic improvment.
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