Legg Mason Monthly Commentary by David E. Nelson: ... we believe 2008 could well turn out to be a volatile and difficult year. It certainly has been to this point. The market currently is weak, and it could remain so through the first quarter.
On the other hand, investor sentiment, according to AAII survey data, is about as pessimistic as it ever gets, suggesting that a powerful rally may be in the offing. On balance, market valuation is quite supportive of higher prices, in our view. A near-term key to the direction of the market is satisfactory resolution of turmoil in the mortgage market. Easing of tensions there could trigger a powerful rally in stocks, but continued turmoil could drag the economy into recession and precipitate a bear market in equities.
Read the complete article
On the other hand, investor sentiment, according to AAII survey data, is about as pessimistic as it ever gets, suggesting that a powerful rally may be in the offing. On balance, market valuation is quite supportive of higher prices, in our view. A near-term key to the direction of the market is satisfactory resolution of turmoil in the mortgage market. Easing of tensions there could trigger a powerful rally in stocks, but continued turmoil could drag the economy into recession and precipitate a bear market in equities.
Read the complete article
