Dancing market

The market has been dancing up and down. (The up and down did not apply much to HP, though, which seemed at one point to have lost close to half of its market value by changing marketing and manufacturing directions suddenly, perhaps admitting that it could not compete in the PC and tablet world. Mr. Market considered this capitulation and didn’t like it. Maybe Carly Fiorina will have the last HP laugh after all.) As to the market, expect volatility. Expect tests of the market bottom. Expect maybe more downs than ups. Expect what? No one knows. Gold is bubblicious, which worries me. Or is gold the new cash?

Jim Bowen, the CEO of First Trust, which oversees something like $30 billion, says that American companies have more cash than at any time in U.S. history. He argues that the birth rate here and immigration argue in our favor for long-term growth. (China and Japan have greater problems by far — fewer children and, therefore, too many old people and not so many workers coming on line.) India and the United States are first and second in what I call worker growth — we are the only positives in the major industrial world. I would add that businesses, particularly U.S. ones, hate uncertainty. If our political leaders will lead, we may be able to get rid of the uncertainty factor; then businesses can rock n’ roll.

Bob Carey, First Trust’s CIO and a friend, when asked about Greece on an interview program, said it “peaked around 250 B.C.,” which I thought was about right. Greece, since independence, defaults 51% of the time. It has an economy about the size of a gnat. At any rate, Europe has its problems, and its central bankers seem to be working on them. The churns in Europe affect U.S. volatility, clearly. The market here at times seems so fragile that almost anything can tilt it one way or the other. Russia says bad things about the United States, but it is a serial defaulter, too.

The United States is, I think, poised for a bull market. Stocks are cheap now. Stay tuned. Expect ups and downs. Berkshire Hathaway seems to be buying and investing. Buffett does get greedy when the rest of us are fearful. I don’t know that the bull is going to be tomorrow, in 2012, or — as expected by “The Stock Trader’s Almanac” – 2013. However, the market may be getting ready. And, as I said, many high-quality stocks are cheap.

Excited about Brazil? I am. Its economy is growing, but consider: today it is the size of California, and a troubled California at that. Yes, Brazil is exciting, but keep it in perspective. China and India are fighting (almost literally) over water. The United States has 21% of the world’s fresh water supply (China has about 7%). The United States is still the cradle of invention and creation and marketing. Apple did not invent the tablet. Do you remember when Bill Gates pointed to one in about 2000 and said, approximately, “This is the future of computing”? He was right, but he faltered, and Steve Jobs didn’t).

Stay focused on the ball, which is to grow capital over time.

Imitation is the sincerest form of flattery and some of the remarks here, as you may tell through the references, are borrowed from First Trust, which really is not even close to being the kind of trust company one thinks of when he or she hears the “trust” word. Instead, it offers investments: 18-month UIT packages, EFTs (its ETFs are among the fastest growing), and closed-end funds. First Trust had its yearly road show in Tulsa last week. If you ever get a chance to go to an FT road show, do it in a heartbeat. You’ll see and hear Brian Wesbury, the TV-friendly First Trust economist, as well as Bob Carey, its oft-interviewed CIO, to say nothing of CEO Jim Bowen, who may be the most pro-U.S. investor you’ll ever meet. The programs usually last from 11:30 a.m. to 6:30 p.m., and you’ll come out more refreshed and smarter than when you started. First Trust also has a fantastic website for producers. Check it out at www.ftportfolios.com. You can get weekly — and sometimes more often — commentaries from Messrs. Wesbury, Carey and other FT experts.

Have a great week and try to get to a First Trust road show.