423 thoughts on “Trader's Blog Contest For August

  1. Hello,

    I see this as a temporary lift (induced by govt. spending and inventories rebuilding). There are big problems ahead: a decline in commercial real estate has finally started and it's strong, credit card losses are mounting, unemployment is high and moving up and personal defaults as well as foreclosures will continue.

    A peak in credit is in and a change in attitudes towards debt has finally arrived; and the FED can't do much about it (they can print money, but they can't force people to borrow and banks to lend).

    In a larger picture, this is a secular bear market which might last another 5-10 years; boomers are retiring and they are to the gilts in debts; they are scared to death the pension won't suffice in the coming years and they save like crazy: this will imply lower demand for everything and lower corporate profits. A picture like Nikkei from the 90s to date is highly probable for the S&P 500, and this is an optimistic scenario.

    The deflation continues no matter what the FED does (the 50$ trillion debt bubble is too big even for the US government to substitute with public spending); this was the biggest credit bubble in history; the bust will be the biggest.

    By the end of this story, we'll go in and out of recession many times (WWW).

    To answer blog's contest's question, yes, we go out of recession as per NBER's review; but another one is around the corner and the odds of sleeping back are quite high.

  2. I am new in this and can only judge on what I hear and read.
    I just started in june 2009 with investing in stocks to make sure to you how new I am.
    As far as I can tell I suspect a new comedown will arrive within, I think, 3 to 6 months. Probably starting in Asia, but mayby in Europe first. The US, I think, will have a little easing, but then also will comedown again.
    The world easing will probably start around 2011-2012 or in the worst scenario around 2015-2016, depands on the actions all the national banks will take to get the easing get started. And, sadly, that depends on the decissions the goverments of the US, Europe countries and Asia countries will make. Hopefully together, but history made clear that that could a problem.
    To be clear, I have to admit most national banks are allready busy to make solutions for the comedown we are in now. Still I do believe there will be a new comedown in the nearby future as I stated in the beginning of my comment.

  3. To quote James Garner's standard answer to questions, "Does a pig waller (wallow) in mud?" The answer is, 'of course.' Putting 50% down on my house doesn't seem like such a stupid idea now.
    For five months, investors ignored bad news generally. Now the market is ignoring good news, and that's a sign it is about to make a 'correction.' The foreclosures problem is finally getting the attention it deserves, and the financial sector is about to lead the market down.
    The good news is that in FX we can go short as easily as going long. Until some government Czar proposes foreign exchange controls to roll us back to the 60's, we can cope. I guess I shouldn't have said that, it will only give someone an idea we don't want to think about.
    Consumers are essential to a recovery and they won't start spending like they want to until taxes are reduced. Hold your breath.

  4. I don't see any real improvement economy wise on the horizon. Better than expected earnings are mostly result of cost cutting and the consumer is not spending, more and more people are losing their jobs and foreclosures are still soaring so the larger picture in my opinion is still down. In Europe the picture is even uglier because our economy is mostly export driven and exports are falling constantly and the same goes for China. Who will buy the stuff if consumer is not spending ?

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