Sunday, May 17, 2009

V, U or W - What Letter Do You Prefer?

Green shoot or yellow weed?
Is the worst behind us? Are green shoots taking root and will form the basis of another bull run? Is it time to get back in the market? Or is this a bogus sucker's rally? Is the worst still ahead of us?

V, U and W signify the type of recovery economist and market analyst are predicting. So why is this speculation important? Although none of us can accurately predict the future - we can form some reasonable opinions about the future. Probablity is high that the world will not fall off a cliff tomorrow. Probability is also high that emerging markets will emerge and developed markets will develop some more. Probability is also high that innovators will innovate and consumers will spend.

So at the end of the day you have to ask yourself - what macro level assumptions are you willing to make? Obviously these assumptions should be based on sound fundamental due diligence and research. Ultimately your investment strategy will align with your short/long term perspective of where the world is headed.

So what is it gonna be - V, U, W or something else?

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