Market will correct but no one knows exactly when. IMO the correction will be significant and worse than last summer's once it plays out. One scenario I believe is likely is that a slowdown in earnings will slowly erode the market and that we may not see an 87 style crash, even though history seems to indicate bubbles explode rather fast (i.e., before most players can get out the exit door). Happy and confident investors, who have done rather well buying the dips and staying long, will use the Fall of 98 25% market come back as an excuse to hold on/buy more and will be greatly disappointed when this strategy finaly stops working. Notice that this is just one of many possible scenarios, I ahve no crytal ball. The market follows a random walk and has proven it can go on its own despite pretty strong evidence of poor worldwide fundamentals. Using Brazil as an example, I am down here I read the local press, This puppy is coming down, just as I and many predicted over a year ago.
A few days ago, I was visiting a Professor friend of mine who teaches here (University of Sao Paulo, I am now in Brazil) and he confirms things are much worse that WS thinks. Capital outflows continue, the country is broke. I would advice any MM putting money in Brazil to just go for a ride around the perifery of Sao Paulo and see how bad the roads are (you would think you are driving downtown Bagdag). This is an indication of lack of public funds and how poorly politicians manage the country. This is all anecdotal evidence but getting hard fundamental facts that back up what I see is not difficult.
Venezuela (my home country) continues to blow up as drug lords strengthen their control of the country. If you want a hint check out the people behind the PlayBoy deal. Same people KO does business with [in Venezuela]. IMO, this is all part of a huge money laundering operation. I don't think the ex-military guy who just got elected will be capable of doing anything to stop it. I better stop talking, these guys may read SI and they ain't nice.
Mexico is not too far from another crisis either. Let's see if uncle Sam comes to the rescue again. |
