As I was working on today's
edition of the Sterling Prime
Stock Newsletter, I was listening
to CNBC in the background as
I do every morning. A discussion
was going on about the upside
potential of the stock market.
There was actually two separate
discussions; one about the upside
target of the S&P 500; and
a second about the life of the
current bull market and when
the next bear market would start.
I think that second conversation
was with Ken Heabner, who always
seems to be on the bearish side;
and I'm not totally sure I would
call what we've had since early
2004 a bull market either. However
both those discussions brought
up an important topic for discussion;
what is driving the current
market and what will create
the next bull market.
I've said it many times, and
I'll say it again; politics
is the single biggest influence
on the market. Bull markets
are created by two things; new
technology and the deregulation
of existing industries. There
has not been any ground breaking
technological discoveries in
the last 5 plus years, and there
has not been any significant
regulatory relief for any industry
since the last telecom deregulation
act in the early 1990's. None,
nada, not a thing! Any chance
for the deregulation of anything
has been held up by either the
Democratics in the Senate or
Republicans who can't seem to
remember the results of the
last two (2) elections.
Let's face it, Charles Grassley
(R-Iowa) has been as effective
as any Democrat in sidelining
Social Security reform. Not
to pick on Mr. Grassley, but
I am from Iowa and proud of
it, so I pay attention to how
the politicians from my home
state represent us to the rest
of the country. But rather than
being a leader, Mr. Grassley
seems intent on protecting the
status quo and his place in
it. And yes, I saw Mr. Grassley
on CNBC last week defending
the "pork spending"
he secured for our state; the
rainforest in Iowa. Mr. Grassley,
you are an embarrassment! I
am not proud of your defending
that project or the spending
associated with it. I am ashamed
of it. You had the chance to
be the first politician on CNBC
to stand up for fiscal responsibility,
but you didn't take it. Instead
you offered lame and hollow
excuses in defending irresponsible
spending. If you can't provide
the necessary leadership, then
you step aside for someone who
can.
Sorry about that little tirade
against Mr. Grassley, but he
deserved it. The point I set
out to make earlier is that
without any new deregulation
there is not going to be very
many new technologies discovered
or created (think of the potential
surrounding stem cell research),
and without any additional deregulation
there is not likely to be bull
markets (sector based) except
in industries where the current
regulatory environment restricts
competition; like domestic oil
drilling and refining. Until
this changes, expect more of
the same a range bound market
that tracks sideways.
