jadziasman

John Hussman: The Market Is Not in Uncharted Territory

What is it that prompts an investor to buy stock?

Future sales and earnings are the usual reasons, right? And, considering that dividends are becoming more rare these days, price appreciation of stock is the only return an investor receives on what is typically the riskiest of all investments. I don't remember seeing spectacular sales or earnings results from any sector other than financials or commodities recently.

Buy and hold if you must but be prepared to go really long. And, if the inflationistas are correct, you're never going to realize a true ROI - not in this lifetime anyway.

Regulations and Markets: Making a Bad Situation Worse

Alex, you wrote,

'Should leverage have been allowed to be employed on the scale that it was? Clearly not. That is a specific issue that can be addressed.'

Clearly you understand the problem, yet you offer no solution other than to criticize an attempt to rein it in. Who's side are you on anyway?

Excessive leverage is always the problem. And it seems every time a speculative bubble gets close to its bursting point, common sense is thrown out the window.

Does it make sense to make a home loan to a borrower who has no proof of income and is permitted to buy a property with nothing down, which has just rapidly appreciated in value with an interest only 40 year term just to make the monthly payments affordable????

True, common sense varies with the situation and the times but it should be obvious when rational takes a holiday. Hence, there must be limit switches or circuit breakers in place to prevent an overload. Call them regulations if you will but there must be some and they must be enforced.

"It's always funny until someone gets hurt, then it's just hilarious".
The Late Great Bill Hicks

So We Find a Bottom - Then What?

The bottom of all bottoms will primarily depend on the moves made by the world governments and the outcome of the Great Unwinding in the next few quarters.

It is foolish to predict one and even worse to buy into what you believe surely must be THE one. The smartest move is to wait out the volatility and then carefully reinvest the bulk of your funds.

It's absolutely frightening to consider that 20% single day advances and declines could become common the next few months. Participants in 401K plans usually cannot direct their retirement administrator to invest their current month's salary contribution on a day of their choosing - even though in all fairness they should have this privilege.

If it wasn't for the fact that the Christian fundamentalists haven't been raptured, I'd say we are experiencing the Great Tribulation right now.

The U.S. Economy Is Still on Life Support

Finance is technology driven.

Remember; not that long ago, transactions were calculated with an abacus.

Now, with ever more powerful computers, it is possible to create and track a myriad assortment of instruments that a select few understand and manipulate to their own benefit. The rest of us are along for the ride, like it or not.

Is the sky falling, as John B says? More likely, no. These current events really represent the birth of a new world order which will continue the inevitable march toward one government very much like that of Aldous Huxley's Brave New World. Credit is soma, people. Huxley had the right idea but the wrong substance I'm afraid.

Do you really believe that credit is going to be tightened and level off? Don't bet on it. There are millions if not billions of people in China and India who can and will afford a "modern" lifestyle. The unborn in these countries will not know or be able to comprehend the suffering their ancestors experienced.

Eventually we will all be rich and unfortunately only we, a few animals, insects, virus' and bacteria will be around to enjoy it. I'm glad that each of us extremely intelligent yet selfish creatures is mortal.

But as the late George Carlin said, the Earth will eventually shrug us off like a bad cold and move on without us. That much is as reliable as death and taxes.

When does God plan to get off of his lazy butt and rescue us from ourselves already. The Bible is notoriously bad at telling us the date of His return. Wow! Marx was right after all wasn't he? I'll take two, please.

But as they say, I have digressed.