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Strategies & Market Trends : The Millennium Crash
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To: Arik T.G. who wrote (8)8/1/1997 3:30:00 PM
From: Stingray   of 5676
 
Hello Arik,

Interesting idea for a thread. I think the danger of a major recession in the US, something that the baby boomers have not seen, is greater now than it has been for some time. The US seems to be particularly vulnerable give the strong dollar, which makes it harder for US companies to sell overseas, and the high level of US debt which is owned overseas.

My main goal is to make sure that whatever happens I end up landing on my feet financially. I don't know for sure that when the stock market bubble bursts that it will inevitably lead to recession. The high level of personal debt has me much more concerned. Cash looks good right now because as long as we stay in the Goldlocks state it will stay ahead of inflation - if we slip into recession cash will be king. Stocks look miserable as a long term investment and could easily be no higher than they are today a full 20 years from now. It's hard to play the downside though because stupidity knows no bounds and few investors really question the rules they use to value stocks (for example why is it reasonable to buy a stock whose P/E equals it's growth rate?).

I'd be interested to know if you see anything that looks good as a long term investment. If everyone still thinks inflation is dead when the next set of inflation indexed treasurys goes on sale I might pick some up just to hedge my portfolio. If inflation does pick up I'll then sell them at a premium and buy long bonds at a decent yield instead. I'm not convinced that inflation is going to be a problem but I don't count it out either, if the money supply is increased to head off a recession then inflation becomes a real possibility.
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