Hi MeDroogies, you are refreshingly different ...
Message 15546856
Should your portfolio be fully invested or bullishly invested, I wish you luck in the short and intermediate term, as the long term and the long long term will invariably take care of themselves, every time.
The facts, evidence and historic precedents are everywhere one looks, except apparently where you look. All the variables are in place, and your formulae formulates not a bust.
I too accept your opinions for what they are, extremely dangerous in the short term, and intuitively obvious in the long term.
So far as I can see, your opinions are backed up by observation of possibly a single data point - core media spending is actually going up. It is a lot like saying core inflation is not up by much, as in inflation less inflation is zero, or that house money is not money, or that inflation, at least a little is good, because deflation is bad, or that you only lose money in a down market if you sell, as in the mistake is not having bought or held it earlier when one was supposed to evaluate the environment and think before buying or continuing to hold. Oops, you had mentioned all this already.
Should folks all wait around to observe the factual data flowing in as you would have it, it would be too late to run. This is what not panic early does.
You and I are not anticipating different events to occur, only magnitude, and possibly duration. We both say first down, then up. I say the equity markets will go up when it cannot go down anymore, you say it will go up for what NewEc reasons that passes for science these days, or rather, for those days gone by. The myths are being exploded one at a time (no bear market, no business cycle, interest rate no hurt NewEc stocks, ...).
More specifically,
<<Losing money means they've sold. That would be the mistake they made.>>
You are wrong. The mistake took place earlier, when they first bought or when they decided to hold.
<<At that point, selling begets selling and the scenario you envision occurs.>>
Yes, this is the qualitative psychological nostrums you do not like but rules the market place, not only these days, but for the past several years.
<<I'm not so sure the bubble has the arms people think it did.>>
When you are sure, its work will have been done already.
<<Right now there is fear, which is one of the 2 things that drive markets.>>
The other being fundamentals, or being euphoria? Oops, I spoke too soon ...
<<But people don't like being scared for long. They prefer to be greedy, the other thing that drives markets.>>
So, not a mention of micro and macro fundamentals, as in facts and figures. Ok, I can live in this construct for the duration of this posting.
<<As more economic information becomes available...as long as it is good/tepid...the fear will ease.>>
You mean the bad news will eventually ease up, as when the market cannot go down anymore. Issue is of course "when". Oh yes I see now ... all along, according to you ...
<<So far, most of the news is good. Inflation is up, but that's actually a good thing. The last thing you'd want to see at this stage is deflation....which is what happened in Japan.>>
Inflation and deflation are correctly termed by you as stages, caused by a bunch of exogenous inputs, such as financial shocks emanating from bursting debt induced bubble. The bubble in the US and Japan has different characteristics, but when a bubble burst, the effects are not that different ... people get poorer, unless they sold earlier, by correctly anticipating based on observations, historic precedents, and qualitative psychological nostrums.
<<Deflation would give the Fed more room to act, but would feed the selling frenzy. With inflation, you know somebody's buying...and that means inventory and capital are being run down.>>
Here I agree with you, but a matter of degrees. Folks do not necessarily buy equity during inflationary times unless the economy is bubbly. Stagflation may induce folks to buy things and not paper.
Chugs, Jay
For thread information, from Bill Gross ...
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