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Strategies & Market Trends : SiliconInvestor All Stars Forum
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To: blazenzim who wrote (1643)4/2/2008 11:18:11 AM
From: John VosillaRead Replies (2) of 1718
 
'To me, the biggest disconnect in the stock market right now is that somehow the bottom is in. Housing has bottomed, financials are near bottom and the contagion won't spread from here. It's human nature to be optimistic. I think this is just plain wrong.'

Perhaps when everyone and their brother in the media and on the street is talking about it the damage has already been done and priced in? Have you guys looked to see the devestation in stock prices since November in areas that have nothing to do with the housing/credit crisis? Also, home prices in areas near me are down a stunning 60%+ and back to 2001 prices. This is not to say financials are a buy here or overpriced NYC or San Francisco RE. But so many things are so dirt cheap reflecting depression like conditions. So much hinges on long term interest rates while keeping some steepness in the curve, a tough balancing act no doubt. Keep em this low with back end monetezation and 15%+ MZ growth while the rest of the world lowers rate supporting the dollar here and we might be amazed where we are at in another 2-3 years as the deflationary forces so often talked about help spur recovery in a very low rate environment.. It is also probable down the road on recovery nominal GDP grows at 10%+, interest rates are substantially higher, and it feels like recession for J6P.. It probably is a no win situation for financials over this next complete cycle of huge losses first from the current writeoff cycle and later from discounting fixed rate paper in a rising rate environment but not the end of the world for everything else either..
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