Some of what is going on is BS, and some of it is real stabilization, even if its just mostly psychological atm. Half of the cynics say the the stimulus package hasn't done anything as it hasn't even begun to be spent yet, and the other cynical half say its trillions of dollars of deficit spending (which have yet to be spent then...other than Bush's TARP?) Not sure how you reconcile those two...
Regardless, I don't think everything is fairly valued when you've got a slew of stocks that are off 90%+ off their highs a year ago and have nothing to do with mortgages, banks, housing or the rest of this mess. Not everything is following the fundamentals. Things will come back, panic is subsiding, and the markets will move back up. Maybe not to their inflated highs under the housing boom, but 6500 (as in March) is not the proper place for the Dow either. One example of a stock I was watching, $14 stock in 2008, pretty stable. Falls like a rock oct/nov, falls again w/ the market in Mar to $0.38. Its back up to $2.25 Going back to $14 soon? Not likely, but a few $$ in a year or two? We'll see. Its hard not to find a stock that followed this trend. It will be hard not to pick winners long term.
Tons of people freaked out, cashed out of mutual funds and 401Ks and many positions were sold irrationally or under duress to maintain liquidity. Some will make out like geniuses if they were the first to get out, and get back in before the recovery. The much larger number of people will have sold off way too late, and will fret and not jump back in until much of the recovery has occurred and everything seems safe, ie when all the gains are over. They will have locked in the losses they would have never had had they just held fast and not sold anything.
I can't imagine history won't write that the significant intervention by the gov't staunched much of the bleeding. Was it the most effective way to do it? IDK, only time will tell, everyone else is FOS. The deficits are a huge problem, but revenues are way way down too, and they are not likely to get better if nothing was done.
I'm giving obama a pass on the deficits for a year or two, but after some decent recovery has occurred, we will have to face some major decisions about the budget and what the national priorities are. I'm talking hitting the big 3 in the budget that really acct for the bulk of the spending: Medicare, SS and defense. Given the lampooning & pushback to even the modest cuts to obviously useless programs Obama announced this week, I have serious doubts of the political will to do it. It will take a budgetary crisis to get Congress to move off their ass (ie a couple of $1T budgets passed before a looming election season.) I think/hope Obama knows this and letting them drive themselves to the edge of the cliff before they are willing to make a turn.
