March 28, 2019
By Peter Bower
Some never get over a trauma and others are forever scared. Some investors who went through the 2008-2009 financial crisis are victims of it. So when the stock market goes into a swoon, some investors over react and accentuate the downtrend. Quick to react, slow to come back; that is what the trauma hangover looks like. A little bad news gets extrapolated to the worst possible conclusion.
Yes, there are data points that could be interpreted as indicators of a slowing economy. The Lonely Bull wrote last fall that many companies filled up supply chains and inventory from China and other areas to get ahead of the imposition of tariffs and their potential increases. Many of these companies even needed to keep inventory in parked trailers, there was so much.
After a rush of forward buying, what happens? Correct, there is a slowdown in new orders until the inventory is worked off. That will happen over the next few months. The Bull believes it is a mistake to extrapolate this normal push-pull in the economy as a harbinger of a recession; that would be fear, not logic at work.
Stay steady, my friends.
The Lonely Bull
