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Don't buy the hype, Gary Shiller says - "stocks are anything but safe." The stock market is...
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Tuesday, March 22, 2011, 5:35 PM ETDon't buy the hype, Gary Shiller says - "stocks are anything but safe." The stock market is rising because Fed policy is making it rise, but the economic recovery is much less than meets the eye. Housing isn't any better, Shiller says, expecting another 20% drop. So is anything worth investing in? Treasury bonds.
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"There is no place in a fanatic's head where reason can enter." -- Napoleon Bonaparte
FED was pumping up with funny money and now with, EU austerity, earthquake, tsunami, nuclear radiation, middle-east fights and who knows what else is still out there. Bears or no bears, they are real. Have to be a smart bull to watch all traps!
That's the whole point. Shilling (and Whitney) were each accurate one time, each about one item (her, banks; him housing). Now, they have been singing the same repetitive gloom-and-doom tunes nonstop, ever since the original correct calls and major crashes that made them famous. Now, due to fame alone, they're "experts" on muni bonds, the general economy and whatnot.
The only problem is that those who worshipped at their self-flaggelating churches missed a 100% rally in the stock market.
Treasuries make absolutely no sense unless one is betting we're headed back in short order to a major recession. They're not far removed from their recent all-time low yields, so on what basis would one expect their low-yields, and consequent high relative prices, to present a good risk-return equation? It makes no sense at all. It's a continuing appeal to buying fear, rather than common sense.
It doesn't really matter whether the economy gets cooking or falls into some form of semi-stagflation from currency expansion; neither would be good for Treasuries, in the least. Treasuries could only perform if some new (Euro debt, Middle east and earthquake/tsunamis weren't enough, apparently) disaster would send the entire world rushing to dollars.
In many other threads we're equally being admonished that the dollar is a "loathed" terminally-ill currency. So, the dollar is doomed to inflation hell, but, Treasuries are a safe bet? Yes, someone explain that curious dichotomy, please.
As far as Shilling, I think the codger needs to check in at the front counter. Its time.
Gross is reinvesting where he sees better risk and return relationships. The US is not the only place for investments.
What Gross is saying and acting on is that the risk/return no longer makes sense. How can anyone in their right mind take the measly returns offered by US Treasury while anticipating that inflation is poised to take off. The capital losses would be horrendous.
What I am saying about Shiller is that his views don't add up. If housing drops another 20% then the US government will own more homes, more banks going insolvent and the deficit will jump dramatically. How can anyone recommend US Treasuries in that scenario?
So let me see...........Bill Gross or Gary Shiller who is only talking so he can shill his book. Sorry, I am going with BG.
I listen to bulls and bears. Gary Shilling is someone I always listen to for uniques and interesting perspectives. He has made money with his strategy as well I note. That said he is bearish and his latest guidance was a list of fears that werent that persuasive to me.
You are a kind of person who shouts every morning there is a fire in the forest. You are right there will be fire in the forest one day but that does not make you expert. You are incorrect another 364 days.
How is your sister Meridith Whitney doing? How about your brother Rick Santelli from CNBC? How is your other brother Mohamand from Pimco? How is your crazy brother Schaffer? Say hi to everybody.
Here is a tip for you on Housing.
In any economic scenario Housing market is last to recover. People buy house when weath building is done. So Stock market goes up first then after 3 to 4 years housing start going up.