The stock market is not overextended. It will be much higher ten years from now than it is today. But, for now, I am retreating to the sidelines. It has been a good run since last August and now the economy faces the reality of dealing with an Administration bent on its destruction. Even the American economy might buckle under the brutal pounding of current economic policy.
The threat of surging medical costs mandated on business, a host of bureaucratic bludgeons aimed at the energy sector and the financial sector, increasing threats of liability to business that make the mistake of adding to their work force and looming, massive tax increases scheduled for next January, the Obama team has created the perfect storm. The American economy will eventually recover, but it will never be its old self while this political team is in the driver's seat.
So, I would lighten my commitment to the stock market at this point and await developments. If the markets do sell off, the news background is likely to be so gloomy as to make the financial markets swoon for a quarter or two.
The US economy has put in an admirable showing in the face of economic policy that is mainly punitive. The roadblocks put in place by the Obama Administration are growing, not lessening, so there is a bumpy road ahead. So, time for more treasury bills, less stocks for a while.
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