Friday, September 09, 2005

Market Rally Confusing? Not Really

At a time like this, I'll often hear questions like this from confounded investors:

"..How can there be a rally in the stockmarket after a hit to our economy and country like Katrina?"

Umm, simple.

The market isn't here.

It is over there.

"There" is 6-12 months foward.

The market looks forward -- never forget that mantra!

What the market is doing now is shaking out all the weak longs.

If you're still long now, you're either extremely confident or simply trying to reap some short term gains off "Katrina plays" a la Caterpillar and Home Depot.

(DISCLOSURE: The author has a position in Home Depot).

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