I agree with most of what the author says, but I think he's missed a couple of important factors.

1. Over-issuance of stock. We've just had one of the biggest booms in Canadian resource history and as a result, if you could fog a mirror, you could get listed. In a downturn that translates into too many undercapitalized companies with marginal properties. Until they disappear, either through bankruptcy or takeover, expect a weak market.

2. Demographics. Many of the players from the recent boom are older folks approaching retirement, if they haven't retired already. Priorities shift as you get older - hanging on to what you have is more important than risking money in a weak market. Also, the next generation isn't as well off which means there are fewer players entering the game as older ones leave.

The first factor is corrected over time through the normal operation of the market - supply and demand come into balance and the risk-reward ratio starts to improve. I'm not so confident on the second factor though. Global unemployment/underemployment appears to be structural, not cyclical. That means the next generation and possibly the one after will have less disposable income, thus less risk capital to place in the markets. Besides having less risk capital it also means less disposable income which is not good for resources generally: less new construction, less discretionary travelling, fewer luxuries, etc. translates into weaker commodity demand.

Sorry to sound so gloomy, but it's what I see, and in fact what I'm doing. I'm getting older - not retired yet, but it's coming - and I'm spending much less than I used to. I have a few small positions, but for the most part I'm out and not looking to get back in. It would take a major shift in market dynamics for me to return, not the least of which would be a restructuring of the entire banking system and a return to honest accounting and honest money, and I'm not holding my breath on that. I think we go through the wringer before that happens and when we do, I want to have cash to buy, not lose it all at a time when I need it most.

ebear