Griz

Wrong Great Depression Lessons Will Haunt Equities in 2009

LOL.

Kunst you got it exactly!


On Jan 01 04:41 PM Kunst wrote:

> Like more heroin is the answer for the addict.

Wrong Great Depression Lessons Will Haunt Equities in 2009

I have one question: Is more credit the answer?

Fundamentals Remain Negative This Week

I'm just not sure that the S&P's 43% decline (1,576 to 880) has fully reflected the worst economic data to be seen in 25 - 80 years. Every time I hear a new statistic, it begins with: "the worst since 1991", "the weakest reading since 1982", "the lowest data point since records began collecting in 1964, or 1957, or 1948..." and now the big one: "possibly the worst recession since the Great Depression"...

If I stay on the sidelines and I am wrong then what could I miss out on? A 35% run-up to say S&P 1,200 (there's no way we'll be marching any higher than that back to 1,500 or even new highs any time soon).

If I jump in and I am wrong then how much could I lose... Could the S&P get cut in half again, and again? I know that in "normal recessions" a 43% correction would probably be closing in on the bottom, but is this a normal recession or is it going to be worse? How much worse? Will this one be truely multi-generational? The kind of world-wide economic contraction that they say only comes around after the people who have experienced the last "big one" have all died off.

I'm ok right now but am afraid if I lose a lot more then what financial situation I might be in. The upside just isn't so attractive right now vs what could yet potentially still happen on the downside.

The Shallowest Generation

An interesting tale comes to mind: Would you rather die owning a million or oweing a million? I think I've had it wrong all of my life by living within my means... I'm going to go run-up as much debt as I possibly can and then just squat in my house for a couple of years before they even can find me :)

Is the Dow's Worst Yet to Come?

In 1930, after already losing 35% of it's value, many pundits were commenting on the Dow saying: "but this market has become very "investable" for those with a 10 year horizon"; the Dow promptly lost 80% of it's value from that point as it sank to it's depths of June 1932...

Please Close the Markets

Only thing that I'm scared of as I sit here gleefully getting in and out of put contracts on various ETF's, is that the gov't takes back the cash I have on the sidelines in CD's. I have been very quick to mop up all loose cash before the "Force Majeure" sets in because I believe (possibly foolishly) that these vehicles will be protected.

At some point the only thing left that really has value might be some farmland in Indiana...

Our Coming Depression

James Quinn your words are right on the money.

The Fannie/Freddie Bailout: Consequences to the U.S. Taxpayer

I bet the losses on Fannie's and Freddie's book swell to $1T before its all said and done...

Jeremy Grantham: Global Incompetence Is 'Officially' Scary

HARM IS HILARIOUS

Housing as an Inflation Hedge: It's Not Magic, It's Leverage

Yes, leverage is a good tool on the way up... But what happens when nominal housing prices contract (say, by an additional 25% or more - as everyone is now coming to grips with). Your 80% leverage wipes out your 20% investment and then some; welcome to the new down-side reality of leverage. It's likely that even at today's prices (approx 10% off the 2006 peak), anyone buying a house will be just lucky if nominal values recover back to their purchase price in 15 years. Sounds like Tom is trying to reinforce the old myth that real estate never goes down...