Don Dion's Weekly ETF Blog Wrap

This week on RealMoney, Don Dion blogged on his bullish outlook, Goldman Sachs and emerging-market ETFs.

In the Dip-Buying Camp

Posted 8/27/2009 2:19 p.m. EDT

Doug Kass' excellent article yesterday continues to generate interest. I don't foresee a market top here, but if Kass' call is right, I place myself in the dip-buying camp with Jim Cramer.

Kass says the market has topped for the year, but I'm bullish for the next 12 to 18 months and a dip sometime in the next four months would make me more bullish due to attractive valuations.

Low interest rates and Federal Reserve policies already healed much of the credit market and the Fed remains committed to its low interest rate policy. We're seeing a surge in home-buying as first-time buyers take advantage of the tax credit, the same way we saw a surge in auto sales. This will accelerate the drawdown of existing housing inventory and lay the ground for a solid recovery.

From speaking with clients and other business owners, the inventory need is real. Panic on Wall Street spread to Main Street and many businesses battened down their hatches. They didn't just deal with the tough economy; they anticipated the next shoe to drop. As they restock, we'll see fourth- and first-quarter earnings improvements. Favorable year-over-year earnings comparisons will build confidence and lead to a sustained recovery.

Consumers also increased their savings in anticipation of a worse situation and we're seeing consumer confidence improve. Savings in the bank are good for confidence and the move to higher savings rates will not move in the almost straight line we've seen in the past year, but adjust over years.