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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: DebtBomb who wrote (253151)	6/9/2010 9:13:56 PM
From: RetiredNow	Read Replies (2) \| Respond to of 306849

That's true he did say there was no chance of a double dip in 2010. But think about it. He also said there was going to be a marked slowdown over the Summer and so far he has been dead on. As I've said before, the stock market can lose 50% of it value based on a marked slow down. We don't need a double dip to tank the markets. Imagine this scenario, which is what I think is likely: * GDP grows at 1-2% tops for the next 2-3 years * the only reason GDP growth continues even at those subpar levels is because of gov't deficit spending * jobs growth is so anemic that the unemployment rates continues to stay above 8% during the next 2-3 years * then at the end of 2-3 years of subpar growth, the up side of the business cycle ends and we dip back down into a recession with unemployment still at 8% Now, when the markets figure out the scenario above is the most likely, exactly what price do you think they will assign to the DOW? Hint: right now the markets are pricing in robust growth of 3-4% and unemployment coming down to 6-7% and the market is expecting a typical up cycle of 4-5 years. My guess is that the market is overvalue by at least 20%. Most probably it's overvalued by 50%, if my scenario above plays out. So I'm thinking DOW 5,000-8,000 is a reasonable range to expect in the next year or two. But we'll see.