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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ggersh who wrote (10094)	9/27/2008 11:48:36 PM
From: John Pitera	Read Replies (4) \| Respond to of 33421

Hi Ggersh, from my perspective the credit markets have crashed and frozen up. Starting with LEH and AIG and now Wamu I am pretty sure we have a full blown Category 5 storm on our hands. People are overallocated in stocks..... especially if we see a bigger contraction in earnings; and the management of Quarterly numbers. I remember discussing GS on this thread when it was back towards 200 a share and we were discussing if it was going to sell off. I predicted that it would go back down to at least 110... which it handily took out on the downside. Buffett's investment in GS is dillutive to common stock holders. What else is new that the baby boomers are over asset allocated in stocks. They have spent their adult life learning to believe in being over allocated to equities. It worked like a charm in the 1990's and we caught a Great "B" wave rally from the late 2002 early 2003 lows into the highs's of 2007. Harry Dent pointed out 10 years ago that the "Boomers" would flip over from being net purchasers of equities to net sellers of stock to finance their retirement. As I recall his turn over time frame was 2008 or 2009. The SPX and DJIA will certainly go back to their lows of late 2002, as this "B" wave of 2002-2007 had so many of the hall marks of late speculative mania excess. The only way that the indicies don't retreat to those levels is if we have the truly reinflationary lift off from pumping what will turn out to be well over a trillion and maybe several trillion dollars into reinflating assets across the board. Obviously that is very bullish for commodities. I also notice that Marc Faber is now using my 5 Trillion dollar figure in terms of credit destruction and funds that will be needed to fund the US Bailout. I am willing to take some credit for being on the front end of the curve of the magnitude of this once in a three century credit meltdown. JOhn