YOU CAN BUILD THE IRON MAN SUIT

One of the greatest convocation speeches.

WEAK BOUNCE

To this point, the markets have only managed a weak bounce from oversold prices.  This does not bode well for the short term and the markets will have to stage a rally soon or the bears will take full control and we could easily see another quick 2-5% drop in equity prices.  The economic news out today was generally positive led by a better than expected GDP report.  Tomorrow we will get another round of economic indicators.  It is hard to know if one should cheer for positive data (and risk the Fed tightening up on their liquidity) or cheer for bad data so that the Fed will continue to pump money into the system.  In any event, the markets are weak here and poised for another potential break-down.  Extra caution is warranted until things settle down a bit. 

BAM MARKET WRAP

IS THIS TIME DIFFERENT?

BIDING TIME

The market is in a tight trading range with the S&P bounded by 1700 on the upside and 1685 on the downside.  Breaks in either direction will likely lead to the next big move.  While there are a number of dark clouds on the horizon, the markets have generally ignored all storms in 2013.  At some point, the bulls will not be able to withstand the pressure and a larger decline will occur.  With the talk of Fed tapering, a debt ceiling debate, changes in the Fed leadership (and policy?), upcoming elections, unrest in Egypt, and the historically weak month of September fast upon us, it is not the time to get aggressive.  We will continually reassess but, for now, a conservative posture is deemed prudent with the information available.  The market's resilience has proven a thorn in the side to those of us who have been expecting a larger decline but rest assured it will come (maybe sooner than many think) and we will be glad we have taken a more cautious approach.  In the meantime, we remain invested to capture some of the gains and are ready to make portfolio adjustments whichever way this market breaks.

WELL WORTH A LISTEN

Jeremy Grantham is a British investor and co-founder and chief investment strategist of Grantham Mayo van Otterloo (GMO), a Boston-based asset management firm.  GMO is one of the largest managers of such funds in the world, having more than US $97 billion in assets under management as of December 2011.  Grantham is widely regarded as a highly knowledgeable investor in various stock, bond, and commodity markets, and is particularly noted for his prediction of various bubbles.  In this engaging and thought provoking interview with Charlie Rose, Mr. Grantham shares his thoughts on the US and world economies and what potentially lies ahead for years to come.  It is a fascinating interview and well worth listening to in its entirety.  While long (roughly an hour), Mr. Grantham touches on a number of thought provoking subjects far beyond what many are talking about.  

Jeremy Grantham

BAM MARKET WRAP

OPTIMISM RUNS HIGH - IS IT WARRANTED?

BAM MARKET WRAP

OUCH!