Lots of thoughts out there on the Bear market we’ve entered. Historically bear markets last about 14 months and see 25% to 30% declines from the previous top. But maybe this all started around October 2007? We’ve danced around a 20% decline for a while now, but will it go further? And does that mean we’re going to see 14 months of dwindling stock indexes from here? Maybe. But maybe we’ve only got about 6 months left to go on that historical average and next year, post U.S. election, everybody wants to turn this economy around.
Some folks think the oil futures markets have been manipulated, and that others have jumped on the speculation bandwagon to produce unsustainable returns. Maybe in other commodity markets too.  And just maybe this is one giant bulge of excess that’s about to deflate. Â
What happens to that excess of money? It has to go somewhere. Maybe it’s like a sector rotation, and that money will have to be put somewhere else in bargain priced assets. Could stocks be the beneficiary of all that money?  Maybe.
We’re starting to see a mass of negative public opinion concerning the inflationary storms affecting the global economy. And folks also think becoming energy independent is not such a bad idea after all, even if it does involve a little drilling. The politicians have to do something of course, usually to excess, that influences current market dynamics. And eventually, the oil bubble is going to pop.Â
Sure we’re going to see higher oil prices in the years ahead, but right now the oil markets are out of balance. Once excess speculation is reigned in and oil producers have greater access to supplies, oil prices will fall. How much? Who knows, but at some point we’ll be closer to an equilibrium reflecting a more realistic supply and demand situation.Â
And maybe the dollar gets a lot stronger over time. Maybe the U.S. or some other country intervenes in currency trading in a big way. Maybe the U.S. backs new exploration and drilling or refinery operations. Maybe we help automakers shift to alternative energy vehicles faster than expected. Maybe there’s just too much oil out there waiting in the wings anyway. Â
And maybe equity markets, piled high with enormous short positions, will rally.  Maybe. But hey, it’s all just pure speculation.  If it does happen?  There’s going to be some huge moves in a short timeframe.  Maybe both ways. But when this beast turns around you don’t want to miss out.
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