I have had the pleasure of meeting and interviewing Charles Nenner and his associate David Gurwitz here in the past and look forward to doing so again in the future. Mr Nenner’s newsletter, of which I am a recipient, has proven to be spot on in most of its forecasting for various markets over the past few years. His cycle research is well respected and worth a listen. In a phone interview conducted today from Israel Nenner had the following to say about the markets and the US economy:
1. Investors may wish to use this latest bounce, which may last a few more weeks into late August, to reduce holdings or exit completely.
2. We are currently experiencing a situation much like 1990s Japan: deflationary bent with huge bear market rallies. Mr Nenner sees this continuing to unfold over the next few years. Therefore, it will be difficult for investors to make money in the years ahead. In fact, Mr Nenner says investors should “just be happy if they do not lose money the next couple of years.”
3. The economy will not begin to recover until 2020.
4. We will test the lows of 2009 again within the next two years. We may not “fall out of bed” the end of this year but the highs for the year are around 1155 for the S&P. [We currently sit at 1100].
5. S&P 1085 is an important level to hold but if 1025 is broken “it may be all over.”
6. Concerning the DOW AVERAGE: on average the Dow advances 10% a year. The DOW was much above the average in the late 90s. The average currently sits at 7000 so in order to revert back to the average the DOW will need to “reach my downside target of 5000.” For long term investors waiting for the 5000-7000 level may be the most appropriate course of action.
As with any forecasting from any individual or firm consideration should be made for your own analysis. Obviously, shorter term stock trading will allow for trading the ups and the downs within any long range bull or bear case scenario. Always keep in mind what Keynes said, “Markets can remain irrational longer than you can remain solvent.”
You can listen to another phone interview here, and view another succinct Nenner commentary here.
