I wrote this back on April 12th of 2008 and my friends scratched their heads at the time. It is my opinion that we are now, in 2010, only in the 4th inning.
I would like to share it with anyone who would like to read it.
I remember it all began when I began really studying the housing market back in late 2004. The bubble of all bubbles was in full bubble building mode. I have a good aquantaince who I respect dearly, who traded stocks and traded ideas at the time as we still do from time to time. We shared many thoughts about what we learning at the time and I took one of those ideas to heart. The housing market was of course booming during those days. I will never forget this lesson I learned about bubbles and extreme greed. The greed of an entire sector or industry which at the time, housing, was bathing in an ocean full of irrational behavior, prices were sky rocketing, and people were making small fortunes flipping their properties. He had bought a house as an investment and told me the studies the so called experts had done said the market in his area of California were seen at the time to be stable at least through 2007. He made a tremendous profit in only a matter of months and the first thing I asked him was, "did you sell yet for profit"?
"More than 45 of the world's biggest banks, including Citi. and UBS AG, have recorded a combined $232 billion in asset writedowns and credit losses since the beginning of 2007, including reserves set aside for bad loans. Falling U.S. house prices and rising delinquencies may lead to $565 billion in residential mortgage-market losses, the International Monetary Fund said in its annual Global Financial Stability report on April 8. Total losses, including those tied to commercial real estate, may reach $945 billion, the fund said."
The key word is may. It is my belief that it could be much worse.
At this time I have lost all faith in buying most stocks not including NYX which I stated I would begin buying and averaging into slowly. I have abandoned all plans for buying any stocks at this time( i own XMSR and SIRI) because my personal fear in what I see coming is too strong to form any conviction strong enough to buy. I just can not shake my own emotion, be it wrong or right, I am being totally honest. I may be proven to be the idiot I hope and pray I am on this call of the market going much lower to the depths not many are calling for. I pray I am wrong this tim., I hope I am 100% wrong this time because I do not want to see what I fear in every fiber of my being concerning the future of our economic system. I do not care if it damages any of my personal credibility with my studies of the markets. I would rather the DOW fly off to the 16,000 mark by years end as some predict than to see what I feel with 100% conviction, a nightmare in the making for our country, pain that our generation has not felt nor lived. It is already being felt to some degree but not on a massive scale. I feel over the next two to three years we are going to learn to live with much much less than we have ever had to in our generation.
Everything adds up for the coming massive change in our standard of living. People are in denial stage at the moment, they are in the struggle mode at this time and the forces of this massive new change to our system are well under way. Enough is finally enough, American consumerism built upon the backs of massive debt have finally crumbled into reality. That reality my friends is that the world has come into balance and we Americans are feeling the first real signs of that fact. We Americans have lived on borrowed money and borrowed time while the third world joined the first world. Welcome to the One World Economy where America is no longer KING KONG.
Our massive debt both federal and personal has gotten a bit out of hand has it not? Look at our U.S. Dollar, it buys less everyday.
It's time to go eat breakfast and ponder another day.