7 Reasons to Expect a Bear Market in 2011

While it seems that a lot of analysts and people are bullish about the new year, here's an article that states the contrary. 

Cheers,
~K


Taken from an article written by Mr. Claus Vogt of Money and Markets, entitled "The Contrarian View"

7 Reasons to Expect a Bear Market in 2011

1) The stock market is highly overvalued. It follows then that stock investments are nearly guaranteed to deliver poor, long-term returns.

2) The rally since August 2010 isn’t based on sound and sustainable economic factors, but on unsound and fragile faith in the Fed’s ability to inflate asset prices.

3) Longer term interest rates have risen considerably since the Fed’s first announcement of QE2. In the past, bull markets were usually on borrowed time during a rising yield environment — even when fundamentals were much sounder than today.

4) Stocks are extremely overbought when momentum indicators and the number of stocks reaching new 52-week highs stay below their cyclical highs, thereby not confirming the current run up.

5) There is a debt crisis brewing, not just in Europe, but also in Japan and the U.S. The U.S. municipal bond market is already under pressure.

6) The financial sector’s problems have not been solved, but only papered over with money printing and a suspension of mark-to-market (fair-value) disclosure.

7) In China a huge bubble economy has developed. Since Beijing has already implemented a turn in monetary policy, this bubble is prone to pop in 2011, posing a major threat for a still very fragile global economy.