Dancing With the Cyclicals

I have been struggling for several weeks to articulate how I feel about the current market. Equities seem to be getting away from economic fundamentals even as the market continues to relentlessly grind higher. Luckily, Doug Kass took the time yesterday to masterfully map out how he has been right on the economic fundamentals yet very wrong on the strength of the markets. If you have not read it (notation 1), I encourage you to take the time, it is well worth the five minutes.

My outlook and concerns are very similar to Doug's. I also think the Federal Reserve is "pushing on the string" right now and is very close to doing more harm than good with its current policies. Multiples have expanded significantly over the rally of the last seven months even as profits and economic fundamentals have not kept pace with rising stock prices. I personally believe the market is overdue for a significant correction (about 5% to 15%). However, a good investor always puts some money in play in case he is wrong; which unfortunately occurs all too often. As the saying goes, "You got to get up and dance as long as the music is playing."...506 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.

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