TALK OF A BULLISH SUPERCYCLE UPON US?
Minyanville today posted the following research detailing the vast amount of fundamental data (provided in a link within the article) that supports an economic supercycle. The report itself cited everything from demographics in the BRIC and Sub-Saharan African countries, to demand for commodities, to modernization of infrastructure within countries that are catching up to their western counterparts. The report itself is very compelling and I would recommend taking the time to go through it in detail.
This type of contrarian view of the economy and all the possible things that could go right globally is exactly what is lacking in today's world of depressive, backward looking research. I have detailed on this site, in the limited number of weeks I have been blogging, how bullish I am on the US financial markets over the long-term.
Here are a couple of examples:
- 6 reasons to be long term bullish
I am a big fan of simplification. There is indeed genius in the act of simplifying seemingly complicated questions. The question of where the market is headed and why has a very simple answer.
Since the markets are driven by psychology first and fundamentals last....we must look at the psychological component of the market to gauge where its headed, what its intentions are, who its trying to fool etc.
The market has built this massive wall of worry into what amounts to nothing more than a sideways consolidation range for the markets over the past 10 years +. Check out the yearly charts below for a clear picture of sideways:
S&P 500 Yearly
Nasdaq Composite Yearly
It has built up this wall of worry through the dot com bubble bursting. It built up a further wall through 9/11 and the wars that followed. It built up a further wall through the banking, credit and corporate crisis that we faced as the real estate bubble burst. All the meanwhile, with each successive crisis, trust has eroded...faith has vanished and talk of a sustained bull market is looked at with a great deal of skepticism.
This massive wall of worry equates to bidders who will drive the market forward as psychology shifts. Large moves in the financial markets happen because there is an abundance of participants who wish to participate, but were fooled into sitting on the sidelines at the most inopportune time.
Guess who is sitting on the sidelines? Most people. There is an abundance of global liquidity out there looking for a home. Guess where it's not? In equities. Guess where it will end up? In equities.
Bottom line is that there is an abundance of liquidity, an enormous wall of worry, a chronic nature of worry and pessimism, coming against a backdrop of massive inflationary pressure and global economic landscape shifts in demographics, infrastructure, and influence.
This psychological backdrop, coupled with liquidity potion and mixed with the points outlined in the supercycle research is as bullish a picture you can paint for global asset prices.
The upside peoples is more than me, you or anyone can imagine. It always is.
