Hefaistos

The Case Against Investing in the Dow Industrials (For Now)

Concept for this article is nice... but it is a fundamental error to do this kind of technical analysis of long-term developments based on a linear scale chart. If you redraw the chart with the needed log scale, you will get another picture, other conclusions.

John Hussman: Based on Okun's Law Obama's Stimulus Plan May Fall Short

Regarding the last paragraph, that consumers change their preferences for more savings in times of crises is a well known pattern. The most famous example is Sweden, which at the end of 1980's had a slightly negative savings rate. Then a banking crisis erupted, and over the course of only two years, the savings rate rose to a whopping 8%. That of course put an enormous drag on the real economy, since what is saved, isn't consumed. We now see a similar development in the US.

How Will Markets Perform in 2009?

Thanks for a very informative article.
Your forecast for record bankruptcies in 2009 is likely to be fulfilled, especially since many small companies will do it by choice, as you say: "Corporations with debt levels well above the recapture value of the enterprise will have managers and equity holders choosing bankruptcy to cram down liability obligations and redistribute the option value on the equity. In this unique era, there is no shame of bankruptcy for not only the home mortgage holder but also the corporate debtor." I don't see why there should be any 'shame' in a bankruptcy like that. This is more a process of creative destruction, or, it could also be seen as a variant of management buyout, since I believe managements will be the only winners in this.

No Apology for the Banking Crisis

"...we demand an apology."
What you ask for is in reality a collective apology from a whole system.
For it's a failed system of 'arms-length' banking, relying on markets and rating agencies to provide necessary transparency and confidence.
The article never gets down to some of the major culprits, the ones hiding inside banks: THE problem has been the lax credit policies, lack of true risk management in banks. Not so much the preferences of the consumer to take on excess credit and consume, but more with sub-optimizing banks, always to prone to forget the persistent history of bank-related crises.

Economy in Crisis: Three Bears and a Missing Goldilocks

sorry, forgot to say that the quote in the previous comment was from "prudentinvestor"

Economy in Crisis: Three Bears and a Missing Goldilocks

"The disease is lack of savings and overconsumption" I don't agree that this was the real cause. If there were enough investments during normal years, there was no problem of a lack of savings in the aggregate.
I'd suggest that the real problem was the lax credit policies, lack of true risk management in banks. The problem was not the preferences of the consumer to consume, but entirely with sub-optimizing banks.

Let's Just Say It: Print More Money

"...where's the money? Where's the quantitative easing? Not token hundreds of billions. Trillions. Dollars. Without sterilization. The kind of money that will create - no, force - inflation."
That's the spirit! Bring it on! ... if it only were so easy...
Trouble is, that as well as inviduals can be classified as 'subprime' and default on their debt, so can nations.

The Obama Inauguration Rally Begins

It's hardly a breaking news that Obama will be inaugurated, it might be futile to think that it will move the markets any more than it already has.
He is indeed a great speaker, but I believe his Words are all discounted since long.

Market Outlook: The Golden Cross Won't Happen for Months

If there would be a rally over the next few months, that golden cross cannot happen for at least four months as you say, keeping investors out of the market. Then they will also not profit from what is often the most powerful part of the turn to the upside, which usually comes in the beginning of the upturn.

However, it's more likely that the bear market will last for another half year, or so. If we assume that the index will move more or less sideways within that time frame, the 200 MA will come down nicely towards the 50 MA, and they will both linger together at a low level after another 150-200 days. In that case, this indicator will have a quicker reaction time, bringing investors aboard earlier.

Preparing Precisely for Bottoms in the Markets

"Financial markets are a zero sum game." ... "wealth is never destroyed, only transferred"
These statements are Not correct. The market has an inherent long-term trend, we might say it is positive in the very long-term perspective. Either way, the market either creates wealth, or destroys it. It's only in the derivatives markets we have zero sum games.
Actually, long-term there is a correlation with GDP growth, the wealth that is created in the real economy is reflected in the market valuations.
Also, it's not a given thing that Treasuries are a bubble: They will not be a bubble if the period of deflation continues, which it probably will for some time.
Otherwise, I agree!

The Market's Making Me Nervous

Nice take. The one thing you don't mention, is the dollar, which is again strengthening in the latest time. This is a bit strange to me: Interest rates are zero, which gives really no incentive whatsoever to hold dollars. Apparently, we again see a flight to safety. Prospects are also lousy for the dollar, due to the stimulation packages due out, increasing the deficits in the balance of payments, increasing the risk of inflation. All of this should really bring the dollar down, instead we see the reverse. Supposedly we face another period of stress in the financial system, with redemptions, etc.