Monday, April 30, 2007

Speed Kills

excerpts from this week's report

Friday’s blog commentary on “Decoupling”– will the world economy find other sustainable sources of consumption demand as US consumer spending slows? – puts the global growth story in the right context. And, should the global growth baton pass from the US consumer to the rest of the world and if goods and services that are designed for US consumption can transition effortlessly (not an easy task) to other sources of consumption with the same profitability dynamics, then the forecasts of nearly 5% global growth for this and next year are reasonably assured.

No doubt, the markets will like that scenario as it is being baked into the equity cake via higher market caps. However, there is another dynamic that is a part of the world economy that investors would be wise to heed. A dynamic that is one of those hard to quantify factors that bedevil traditional thinking investors - Speed.

There are three defining aspects to the two mini corrections of this current bull rally – the synchronized rally, little to no technical warning signals, and the speed with which the decline erupted. The first two points have been addressed many times in previous Blue Marble Research reports and blog postings. Now, let’s take a moment to appreciate the speed aspect...

Note: To read this week's complete report, which includes the ETF Model Growth Portfolio and other features, a subscription is required. For details, click on the Blue Marble Reseach services link to the left.

No comments: