Thanks for the decent haul last year. We particularly liked the surprisingly strong global economic growth. It went nicely with the benign global interest rates you got us the year before and the bull market we've received for five years straight. Sadly, the reindeer sweater's energy-efficient fluorescent red-nose light bulb malfunctioned. But thanks anyway.
Speaking of which, we've been especially good this year. We didn't panic during the W-bottom correction and regularly encouraged our readers to invest globally. We uncovered media hype and battled market misperceptions. We did our very best to point out myriad reasons to remain true to stocks this year, which is why we think we really deserve a pony. Or a yacht. Or a pony on a yacht. Failing that, below is our list of holiday wishes:
High oil prices. We've enjoyed firm oil prices the last few years, mostly because of increased demand from a growing global economy. More of that please!
Long-term interest rates . . . right where they are. The benign long-term interest rates we've had for the last few years are the gift that keeps on giving. We wouldn't mind if you renewed our subscription. Plus, benign global interest rates make equities look that much more undervalued, relatively.
Short, sharp market drops. No, Santa, we haven't been hitting the eggnog before lunch. Short, sharp corrections are healthy for sustained bull markets. We'd argue corrections help shake out positive sentiment and can prolong a bull market. Bull markets die with a whimper, not bang—so please send us more volatility and no rolling, grinding bull market tops.
More dour sentiment. Grouchy investors make our hearts gleeful—euphoria is what we fear. Investor sentiment simply doesn't match the many positive economic fundamentals we see, telling us ample upward buying pressure exists to push this global bull market still higher. So be grumpy, you Scrooges! It will make our 2008 all the more merry.
A strong economy . . . overseas. We don't need a healthy US economy, Santa. The one you gave us five years ago is still working fine. What we'd really like is continued global strength. Plus, since the US is just about 35% of the world economy and correlates with the non-US world, a growing global economy means the US can't slow much.
A totally feckless government fix to subprime. We might get to open this one early. The Bush-Paulson plan is increasingly looking like the "Yeah . . . What he said!" government bailout plan—recommending what many lenders are already doing to mitigate increasing foreclosure rates. Aggressive government intervention nearly always leads to unintended negative consequences—frequently making the "fix" far worse than the "problem." So thanks for working your holiday magic early, Santa!
More do-nothing Congress! Santa, you really delivered last year, but we're asking for this again—a shiny package of Congressional gridlock under the tree (though it might be a little difficult to unwrap—all that red tape). This is Bush's last year of his last term, so it shouldn't be hard—Congress historically hasn't passed much material legislation in "fourth years." Easing legislative risk aversion could help stocks to another positive year. We'd like that.
A bigger trade deficit and total obliteration of trade barriers. We really like America's trade deficit—it's symptomatic of our healthy, efficient, productive economy. A bigger one would be even better—signaling we can import goods built cheaply overseas to fuel efficiency, increased shareholder value, more competitive prices, and greater societal wealth at home!
Maybe the trade barrier thing is a bit much, considering you'd have to battle politicians world-wide, but everything else should be easy to deliver. Individually, some of us would like an R2 D2 Interactive Droid and a new pair of Jimmy Choos for our stockings. Oh, and world peace, but we'll settle for the trade deficit. Thanks Santa.
The MarketMinder staff.