A Leap of Faith

I don't think I could have articulated it any better than ISI strategist Francois Traha:

"The market pullback of the past week or so has rattled the conviction of many investors. This is not surprising to us since the recovery in stocks is really about hope rather than concrete evidence of an economic recovery. Thus far, so-called "green-shoots" have been concentrated in indicators that tend to be anticipatory of economic growth (i.e. leading indicators). It always takes a leap of faith to buy into a rally at an economic low since it begins about six months or so before coincident indicators of growth recover. We believe the evidence is overwhelming at this stage, but the "bullish" call on stocks will not become the mainstream until investors see actual growth, which will probably occur later this year."

I don't necessarily agree with his conclusion, but I think he captures the essence of a view.