Sharp45

The Recession Is Already Priced Into Stocks

Bearfund - well said. You a mutual fund guy? I've owned Prudent Bear Fund (BEARX) for a while, and added some Grizzly bear fund GRZZX last month.

Basehitz - keep in mind that SeekingAlpha and other sites do NOT reflect your average investor.

Every non-financial-junkie I talk to keeps repeating the mantra of "just hold on through times like these, my financial advisor told me this is actually the best time to buy!"

The vast, vast majority of America and the world still have no idea about the true scale of the crisis. Most of them stocks are cheap now, but it's just everyone getting scared and selling in a panic. Scared is right, but scared about earnings that are likely to nosedive.

I'm not covering or buying anything until I see some convincing signs that things are actually improving. "Stocks are cheap" doesn't do it for me. Bear markets (or depressions) usually overshoot to the downside. I don't think we're even at fair value yet, let alone have we overshot to the downside.

The Recession Is Already Priced Into Stocks

I'll play devil's advocate. I think stocks are still overpriced, and that earnings are likely to crash worldwide:

2/3rds of U.S. economy is consumer spending. And that's just starting to nosedive, will get a lot worse. Consumer debt is at record levels (not to mention gov and corporate).

Layoffs just picking up speed now, don't see unemployment improving in the foreseeable future.

Non-saavy investors are just now realizing something is wrong. Many will be pulling their money out soon. Yes, there is a lot of $ on the sidelines, but I think most of that is very skeptical and has lost it's risk-appetite.

1/6 homeowners underwater on their mortgages. And his may be only the first wave of foreclosures. Alt-A loans and commercial are starting to look ugly.

Unfathomably large derivatives market adds to the chaos. Honestly, I don't understand this one completely. But what I do understand ain't pretty.

Add to this unfunded medicare and social security costs of around $35 trillion, with baby-boomers retiring.

Call me a pessimist, but I'm holding my short positions (while it's still legal) and not buying much yet. Looking to buy gold bullion once it gets cheap enough. Seems like deflation will eventually give way to inflation with the inevitable $ printing presses running.