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Strategies & Market Trends : SiliconInvestor All Stars Forum -- Ignore unavailable to you. Want to Upgrade?

To: blazenzim who wrote (1643)	3/31/2008 8:27:08 PM
From: SouthFloridaGuy	Read Replies (1) \| Respond to of 1718

Bear market and bull market is too black and white. There are shades of grey, especially right now. Dissecting current profits one will see that while financials are certainly being killed, non-financial is flatlining and exports are on an absolute tear. We cannot discount the importance of a weak dollar or a steep yield curve. The stock market in Zimbabwe or Weimar went up everyday. Everyday is/was a bull market for commodities in those societies. None of the above means we aren't getting poorer as a country. We are in "real" terms. But it has very little to do with the trajectory of stock prices because those are nominal and the discounting factor is absurdly low. I do think the Fed is once again attempting to thwart deflation. And I think they will be successful in the short run. But each "success" is yielding worse and worse results. I believe the elephant in the room is an inflationary spike that will force the Fed's hand. It can occur in many ways, but depegging is the most likely. This may be the final move that gets us the inevitable deflation, dollar appreciation, and commodities crash which you and others believe. It will also give us the horrific profits collapse which I believe we are 1/3 of the way through. However, as a trader, one has to be flexible. I think you'll find ample opportunities on the short-side. Contrary to what people think there were shorting opportunities in 1999 - they just weren't in technology. In the same way I think those attempting to short commodities plays right now will get crushed. I firmly believe rates have to go up before this game is done - probably to about 4%. And even then, it will take MUCH higher rates to kill commodities in the same way Volker did. There is no free lunch as Bernanke and the US Govt will soon see. I suspect the magic number is about a 3-4% real interest rate for a sustained period of time.

To: blazenzim who wrote (1643)	4/2/2008 11:18:11 AM
From: John Vosilla	Read Replies (2) \| Respond to 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..