The Flinchum File

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Clap…clap…clap…

08/19/2009

Was I the only person applauding Monday when the Dow dropped 186 points? It blew a little froth off the market, which is a good thing! There is a loose but direct relationship between the financial markets and the overall economy. The Conventional Wisdom is this: if the economy improves, the market usually senses this and starts improving 5-8 months sooner. While we have clearly enjoyed a strong V-shaped recovery in the markets, I expect a long U-shaped economic recovery. While we are at or near the economic bottom now, does anything expect a rapid rebound in the economy? The market is ahead of itself and needs to blow off steam . . . and froth too!

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