Now we're all caught up. So what has the Wonk been doing since his last blog hiatus?
Overview: The economy is, in fact, still not quite recovering, but it has flattened and will stop declining shortly. Housing, which in the end is not really national but local, has, surprise, already begun to rebound in the states that led the housing crash: California, Nevada, Arizona, and a little tiny bit in Florida. The rotation will eventually take in all areas, including New York City (which was actually about the last to decline and which is still declining) but maybe never parts of the Rust Belt, a territory whose economy has nearly been obliterated courtesy of the lazy auto industry and public employees' unions who demand wage increases from unemployed taxpayers.
Since the market is a leading indicator, we enjoyed a nice move up, circa mid-March until about 2 weeks ago when the rally stalled. My guess is for sideways motion to somewhat down, particularly when bad second quarter numbers start showing up in July. But then we'll have some fun again this fall as the market plays a lengthy game of catch up.
Using no particular genius except common sense, I gritted my teeth and stayed about 75% invested in stocks during the horrendous days of late February and early March when I realized that the media--wrong as always--was consistently telling us we were all going to die. The media hysteria rose to such a pitch and to such great unanimity that I decided my favorite leading indicator had bottomed. The press had completely freaked out--which is always a buy signal. So I loaded up the rest of my nearly flatlined portfolio and got a hell of a ride for about the next 10 weeks.
My portfolio has now regained about 70% of its considerable losses during that brief period of time, and I've diversified somewhat into bonds, paring back several positions.
Short answer--I'm somewhat out of the woods now, but need to get that 30% back as soon as I can before I stop hawkeyeing my computer.
More later including a few observations on where the bargains might be today.