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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: John Vosilla who wrote (108394)3/7/2008 3:19:03 PM
From: TommasoRead Replies (4) of 306849
 
Here's what I am trying to figure out.

If these things are true:

1. The actions of the U. S. government guarantee a continued decline of the dollar and guarantee inflation of food and most commodities, especially oil and natural gas, and of any wages or services that have any pricing power.

2. The decline of housing prices is a problem in and of itself, and actually is just a reversion to more reasonable price levels. There is also a glut of drivable automobiles.

3. The Fed will not act to control inflation until official government figures confirm that it is a serious problem, and maybe not even then for a while.

My questions are:

1. What are the general stock markets likely to do?

2. Will they anticipate the eventual need of the Fed to raise interest rates to stop inflation?

3. Or will stocks be bought as if they were an inflation hedge, postponing the eventual disastrous bear market?

The reason I ask these questions is that I have about 20% of my investable assets in various kinds of bear market funds. I admit that I never anticipated such a reckless course of action by the Fed, so that even now (with let's say a 15-20% decline in equities from the peak) the markets are not in what I would call a serious bear market.

I am trying to figure out if I should convert my bear market positions into more commodity positions, specifically food and gold (I think I have enough oil/natural gas), or whether to go on waiting for a more severe market decline in equities.

It really is about time for a major bear market (down 50% from the top---or more). Foreign investors have seen the falling dollar make U.S. stocks cheaper, but at some point that may inspire fear instead of greed.

On the whole, I am leaning to maintaining most of my bear market positions because all sorts of financial arrangements seem to be falling apart and collapsing and the Fed has little room to do anything further about it.
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