Final Phase of stock market bull run

What we just experienced in the stock market does not denote a bear market but it is just a deep correction of the final phase of the bull market.

Right now, people see value in stocks because it is relatively cheaper than 9 months back. In this final phase, people will enter the market and it will reach a peak again soon, to test the previous high. But the problem is that valuations are going to change. Profit margins are eroding due to inflation and wages. When it affects the earnings, the P/E ratio will not look cheap anymore. And because it is a ratio, the exponential effect is large when earnings change, thus causing a large change in the P/E.

The subprime issue is 'almost halfway' BUT, the ripples is yet to be felt hard enough in other industries. That is why Warren Buffett is diversifying out of the US because he does not see anymore potential or value from the US consumers. Recent acquistions derive major earnings from the rest of the world excluding US. Anyway, no major acquisitions from the stock market anymore it seems. Maybe there is no value left. The value is in private hands.

If US really rides this out safely, prepare for the next bubble that no one can save it anymore. Short it!!!

Maybe US will be the next Japan - "Asia excluding Japan". This is pure speculation.