Andre J. Peschong

That says it all.  I am out of the equity markets, no more stock, index funds or exposure to US companies.  At some point a line must be drawn and there has been a tremendous bear market rally giving many the peace of mind that finally the economic landscape is recovering.  Now, I may be early, and if the equity markets continue to climb people will surely jeer me and tell me I am a putz… but my belief is I would rather be 2 months early than a day late.  What do I base this rash decision on?  Well, just about everything.  The fundamental liquidity that drives the market still has not recovered and banks continue to pare back their exposure while keeping new loans at extremely high qualification levels.  My decision was based on 3 things and they were all grounded in common sense.  The first reason for getting completely out of equity exposure was based on human nature. There has been a 50+% run up in the market in the last 6-7 months.  The second was a Main Street perspective.  When my friends, neighbors and business associates are still struggling with jobs, liquidity and basic living expenses it tells me that there is no “recovery”, regardless of what Bernanke is told to say by the administration.  And the third reason was literally everything else.  Everything else would encompass the current deflationary environment, the continuing increase in unemployment, the staggering deficit, the cost of the healthcare reform bill, the fact that 5 hotels a week in this country are going into bankruptcy, massive commercial property loan defaults… I could go but why bother. So in true old school form I listed all of the positives and all of the negatives on a blank piece of paper and the decision was fairly easy to extract myself and my capital from US equity market exposure.  This may be a temporary exit but for now, unless something compelling happens to show me signs of a recovery, then I will probably remain sidelined.  Although, from time to time, I still find a number of interesting companies that I may buy into, mainly because those stocks or companies would have very low or no correlation to the overall market. 

I like to use common sense and human nature as the initial basis for this decision but I also like to back it up with fungible data.

I would love to hear from people whose rationale is the same as or different than mine.The Last Winter the movie

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