Gloomy Gary Shilling expects operating earnings of S&P 500 firms to drop to $80 this year,...


Gloomy Gary Shilling expects operating earnings of S&P 500 firms to drop to $80 this year, ensuring a major bear market with a P/E ratio low of ~10, which implies an S&P index at ~800 - a 43% drop from its recent level. Meanwhile, Shilling is sticking with his "quartet" - long Treasurys, short stocks, short commodities, long the dollar.
Comments (36)
  • larocag
    , contributor
    Comments (1469) | Send Message
     
    Wow, the dude is really "out there".
    11 Apr 2012, 06:40 PM Reply Like
  • Tack
    , contributor
    Comments (16281) | Send Message
     
    When ECRI is finished with their crying towels, they can send them over to Shilling, another pundit, whose adherents got left entirely at the gate. I'd suppose, given what's happened to his followers, it might be required to get ever more shrill to get some TV time and catch their attention, again.
    11 Apr 2012, 06:44 PM Reply Like
  • Ted Bear
    , contributor
    Comments (700) | Send Message
     
    He is confusing fundamentals with market action. As long as Ben's helicopter has fuel, the market cannot come in.

     

    Should it? Of course, but a few billion of marginal buying is all it takes to keep the bubble alive.

     

    Oh, the pain when the chopper finally lands (crashes?) for fuel.
    11 Apr 2012, 06:51 PM Reply Like
  • bbro
    , contributor
    Comments (11223) | Send Message
     
    Quick..when was the last time Shilling was a bull???
    11 Apr 2012, 06:52 PM Reply Like
  • Furbonacci
    , contributor
    Comments (364) | Send Message
     
    lets see the spreadsheet
    11 Apr 2012, 06:54 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    My dog is better then him in predicting the future of the stock market. When I asked him whether the market will be fine this year he wagged the tail and with a friendly woof confirmed it.
    11 Apr 2012, 06:57 PM Reply Like
  • bbro
    , contributor
    Comments (11223) | Send Message
     
    Does your dog have a blog ???
    11 Apr 2012, 07:08 PM Reply Like
  • RK
    , contributor
    Comments (399) | Send Message
     
    I look for Gary Shilling's predictions on the internet. Here are what I found:

     

    For 2011, he predicted deflation will rule. Deflation did not occur in the US but bonds did better than equities in general.

     

    For 2010, he suggested to buy treasury bonds at http://bit.ly/HCtuuc.

     

    For 2009, he predicted S&P would go to 600. It did not. In fact S&P bounced up after touching a hair under 700 and is now close to double that level.

     

    It seems he is still on the deflation buy bond wagon since 2009.
    11 Apr 2012, 07:09 PM Reply Like
  • bbro
    , contributor
    Comments (11223) | Send Message
     
    The dude a long long time ago was the first chief economist for Merrill
    Lynch...he makes money by appealing to the gloomsters who want
    comfirmation....laughing all the way to the bank for years
    11 Apr 2012, 07:13 PM Reply Like
  • Econdoc
    , contributor
    Comments (2938) | Send Message
     
    not going to happen...lots of respect for Shilling...but just not going to happen

     

    but by all means bet the farm that way...if you are so inclined.

     

    E
    11 Apr 2012, 07:15 PM Reply Like
  • Joe Dirnfeld
    , contributor
    Comments (1124) | Send Message
     
    Shilling has outlived his usefulness.
    11 Apr 2012, 07:55 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4023) | Send Message
     
    Sure, the Shilling critics can point to the Fed-sponsored stock rally since 2009 and spit some venom at Shilling. But why start your performance measurements in March 2009? Why not start in 2007 to compare performance to Shilling's bond portfolio, or 2000, or even 1982. The long bond has beaten the performance of stocks since those dates. That's right, government long bonds have beaten stock performance for 30 years.

     

    Were you guys ridiculing Shilling in early 2009 in the weeks and days before the McBank crony-capitalists used scare-tactics to persuade their government servants to bail out the McBanks (and indirectly the stock market) at the expense of the general public?
    It sounds like it'll take another market collapse to provide some humility to the Shilling critics.
    11 Apr 2012, 08:09 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    Someone who "takes another market collapse to provide some humility to the Shilling critics" urgently needs to be medicated........man, how can one wish that? I think you definitely need to take a humility pill yourself.
    11 Apr 2012, 08:17 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4023) | Send Message
     
    How quickly people forget. Gary Shilling, in December 2006, predicted the following events would occur, some in 2007, some in 2008.
    -----
    "Housing prices will collapse...A bigger price plummet may start soon as many speculators give up on appreciation dreams and throw their properties on the market, triggering a downward spiral."

     

    "U.S. stock prices will fall, perhaps below the 2002 lows, in the midst of a major recession. A major decline in housing prices and activity will almost surely precipitate a full-blown U.S. recession. That, in turn, will send corporate profits down after a spectacular advance over the last five years."

     

    "And since houses are much more widely owned than stocks, the bubble’s likely demise will shake the economy more than the earlier bear market in stocks."

     

    "Treasury bonds will rally."

     

    "The dollar will rally, but only after the recession becomes global."

     

    "Commodity prices will nosedive."
    11 Apr 2012, 08:45 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    I like this post by you better. He was right 5 years ago but is he right now? Does time frame count? He is like a broken record playing the same thing over and over again: http://bit.ly/HCDJif? How right was he last year?
    11 Apr 2012, 08:56 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4023) | Send Message
     
    I don't respond to comments that are overly emotional, ignorant, or uninteresting (or all three). I'll let you deduce which of these adjectives I believe apply to your comments.
    11 Apr 2012, 09:19 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    Too generous of you, thank you.
    11 Apr 2012, 09:21 PM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1800) | Send Message
     
    Wallstreet,

     

    Bulls never acknowledge when they are wrong and they always criticize bears for being bearish.

     

    In answer to Truffel's question: "How right was he last year?"

     

    Very right, since long bonds were the top performing asset class last year returning over 30%. Funny how everyone has already forgotten that last year the S&P 500 returned zero.
    11 Apr 2012, 10:11 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4023) | Send Message
     
    CW, another great comment from you. I find it interesting that the few brilliant analysts who predicted the devastating bear markets resulting from the tech and housing bubbles are currently getting hostile disrespect again. These same men are--once again--lonely dissidents and market bears in the investing world. Rodriguez, Graham, Hussman, Shiller, etc.--they're all currently raising red flags. The only difference among them is the magnitude and timeframe of the next bout of severe economic turmoil.
    12 Apr 2012, 02:39 AM Reply Like
  • Tack
    , contributor
    Comments (16281) | Send Message
     
    WSD:

     

    You must love Meredith Whitney, too.

     

    Following pundits, based on how they did "last time," is a good recipe for losing money.
    12 Apr 2012, 08:51 AM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4023) | Send Message
     
    Not a smart comment. I would never bet against a government's ability to raise taxes (and "solve" state/municipal problems). In fact, the future increase in taxation is one of the headwinds that smart investors are factoring into future lower margins and under-performance of stocks.

     

    To compare Whitney to the names I mentioned reflects a lack of knowledge of the people named. She's a minor league bench-warmer relative to the others.
    12 Apr 2012, 10:44 AM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4023) | Send Message
     
    Ironically, you seem to be following (or heavily influenced by) a number of pundits yourself. Maybe you aren't aware of their influence on you.

     

    Another good recipe for losing money is not recognizing that you are buying stocks propped up by massive amounts of taxpayer money during a long-term deleveraging cycle--especially when the cycle is closer to the beginning than to the end.
    12 Apr 2012, 11:00 AM Reply Like
  • Tack
    , contributor
    Comments (16281) | Send Message
     
    WSD:

     

    I'll just categorize you as uninformed, as to my methods for choosing investments, although I've outlined them here in SA too many times to count. I don't even turn on a TV set or pay attention to punditry unless it coincidentally is similar to conclusions reached by my own analyses of data.

     

    You'll have to explain how my deep-value, high-yield strategy is a recipe for losing money, as it's outperformed the SPX rather substantially over the last 17 years. It's slow and steady and eschews market timing almost entirely, but beats the "hares" in the long race.
    12 Apr 2012, 11:25 AM Reply Like
  • Tack
    , contributor
    Comments (16281) | Send Message
     
    WSD:

     

    Hussman and Shiller are perpetual bears who happen to tell the right time once in a while then the clock hands pass their fixed positions.
    12 Apr 2012, 11:26 AM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4023) | Send Message
     
    There's some consensus among financial analysts and academics about the meaning of the phrases "intrinsic value" and "distressed asset". But your phrase "deep value" is jibberish that sounds like it was lifted from a brochure aimed at corporate mules during their annual Human Resources 401K meeting.

     

    Anyone can tout performance here without having any proof. So why bother doing it? I'm not convinced that you are well-informed about the smartest minds in the financial world.

     

    If you have the audacity to dismiss the brilliance of Hussman, Shilling, Bob Rodriguez, etc., then you probably consider yourself one of the brightest investors on the planet!
    12 Apr 2012, 12:51 PM Reply Like
  • Tack
    , contributor
    Comments (16281) | Send Message
     
    WSD:

     

    The term "deep value" is, in fact, one I coined myself to describe a strategy of buying deeply-depressed, out-of-favor sectors, coupled with a focus upon high-yielding issues within those sectors. I've discussed this at length over the years and how and why it has performed admirably.

     

    If you find being absorbed with nortorious punditry, and those who become celebrities touting their various views, beneficial, and that has made bundles of money for you, then, have at it. Mostly, I see stories from investors constantly confused, whipsawwed and led astray by various hyperbolic opinions that merely gain notoriety, but don't lead to any discernible investment strategy. Buy, buy, buy...sell, sell, sell, they scream. It's not beneficial in refining and executing investment strategies.

     

    I have confidence in my own methods and positive empirical results over many years to support that conclusion , so I don't find it necessary to rely on other "experts" for direction, although I read them, just for background. You may dismiss my approach, but it doesn't change the results.
    12 Apr 2012, 01:11 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4023) | Send Message
     
    I think it would be an appropriate gesture to send Hank Paulson and Ben Bernanke a thank-you note for their important roles in pumping up your recent stock market performance. Without their help, your stock portfolio might be showing 17-year losses today.

     

    While you're at it, you might want to write an open letter of apology to all the old and young people who are seeing their savings whittled away by inflation due to Bernanke's zero interest rate scheme. Try not to forget that your stock gains are a result of the federal government indirectly taking savings account interest out of the hands of people who cannot (rationally) invest in risk assets--many of whom are the weakest members of society (old and young people with small amounts of money).

     

    In short, be grateful for your good fortune as a welfare recipient of the crony capitalist state.
    12 Apr 2012, 01:21 PM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1800) | Send Message
     
    Wallstreet,

     

    http://bit.ly/HuPq9I
    "Luck vs. Skill In Financial Markets
    Posted on January 10, 2012 by Coke| 3 Comments
    Nassim Taleb on mistaking luck as skill in financial markets:

     

    There is one world in which I believe the habit of mistaking luck for skill is most prevalent – and most conspicuous – and that is the world of markets. By luck or misfortune, that is the world in which I have operated most of my adult life. It is what I know best. In addition, economic life presents the best (and most entertaining) laboratory for the understanding of these differences. For it is the area of human undertaking where the confusion is greatest and its effects the most pernicious. For instance, we often have the mistaken impression that a strategy is an excellent strategy, or an entrepreneur a person endowed with “vision,” or a trader a talented trader, only to realize that 99.9% of their past performance is attributable to chance, and chance alone. Ask a profitable investor to explain the reasons for his success; he will offer some deep and convincing interpretation of the results. Frequently, these delusions are intentional and deserve to bear the name “charlatanism.”"

     

    http://bit.ly/HAlA7w
    "Taleb On Distinguishing Between Investing Skill and Random Chance
    Several weeks ago I found time to read Nassim Nicholas Taleb’s Fooled By Randomness. This book, entertaining and eminently readable, is something between a memoir and a treatise on the pervasive human tendency to discern patterns in places where they don't actually exist. Among many examples, he shows how easy it is to mistake a lucky idiot for a skilled investment manager.
    Here are some of my favorite quotes from Fooled By Randomness:

     

    As a practitioner of uncertainty I have seen more than my share of snake-oil salesmen dressed in the garb of scientists, particularly those operating in economics.

     

    I do not dispute that arguments should be simplified to their maximum potential; but people often confuse complex ideas that cannot be simplified into a media-friendly statement as symptomatic of a confused mind.

     

    Beware the confusion between correctness and intelligibility…. Any reading of the history of science would show that almost all the smart things that have been proven by science appeared like lunacies at the time they were first discovered."
    12 Apr 2012, 01:39 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4023) | Send Message
     
    Thanks, I'll check it out. I love books like that. I liked Freakonomics, even though it's just a fun book aimed at the masses.

     

    As far as Econ or Investment Analysis--I can't think of any widely respected field with as many people who attribute genius to what really is luck or politics or both.
    12 Apr 2012, 01:59 PM Reply Like
  • coddy0
    , contributor
    Comments (1199) | Send Message
     
    TruffelPig
    Someone who "takes another market collapse to provide some humility to the Shilling critics" urgently needs to be medicated........man, how can one wish that?
    ======================...
    it is not what he said
    is English your second language or my
    11 Apr 2012, 08:32 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    It is my third language, not my second. But I am sure you get the drift of my comment, or must I explain it in detail?
    11 Apr 2012, 08:42 PM Reply Like
  • jstratt
    , contributor
    Comments (3938) | Send Message
     
    I find Gary Shilling interesting and always consider his opinion.

     

    Gary has made his investors huge money in zero coupon 30 year treasuries for a long time. Those who have believed in him have done very very well.

     

    I have not invested as Gary suggests and I think his thesis is tired. Meaning bonds may not be a great investment going forward. However I always consider his opinion. For one willing to offer opinions far from the consensus he is often correct. I find value in contrasting my view with his view.

     

    The beauty of a world with Gary Shillings, Seeking Alpha's, CNBCs, Bloomberg's etc is that I am exposed to many quality ideas which I can evaluate on their merits. I would be a much poorer person if I operated on only my own thoughts and opinions.
    11 Apr 2012, 10:33 PM Reply Like
  • anonymous#12
    , contributor
    Comments (545) | Send Message
     
    With the 10YR at 2.00% and with the Federal Reserve aggressive monetary policy, I am not going to bet against equities.
    11 Apr 2012, 11:05 PM Reply Like
  • sethmcs
    , contributor
    Comments (3550) | Send Message
     
    What about betting against bonds?
    12 Apr 2012, 12:56 AM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4023) | Send Message
     
    If you're going to give that speculation a shot, now might be the time to do it. On the other hand, don't expect a grand slam. When the 10-year first hit 2% in the early 1940s, the 10-year stayed under 2.5% for nearly the next 10 years. And there is no rule that says the yield cannot drop to, say 1%, and stay there for a long time. After all, people drove the Nasdaq up to 5000 on sheer hype, momentum, and greed. Perhaps long bonds will have their own momentum bubble this year, including a parabolic blowoff bottom in yields.

     

    Here's a very long-term historical chart of 10-years:

     

    http://bit.ly/u1OK2z
    12 Apr 2012, 02:58 AM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4023) | Send Message
     
    To the Gary Shilling haters/losers on this board, read his April 11 market call again and next time save your herd-like consensus comments for when you call Jim Cramer's tv show. You couldn't ask for a better trade than this: Four out of four correct and timely calls for big short-term gains:

     

    "Shilling is sticking with his quartet- long Treasurys, short stocks, short commodities, long the dollar."
    17 May 2012, 10:02 PM Reply Like
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