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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Investor2 who wrote (6474)	10/7/2011 8:56:17 PM
From: Boca_PETE	Respond to of 10065

"ECRI is not infalible." I've heard Liz say that before. P

To: Investor2 who wrote (6474)	10/8/2011 5:43:57 PM
From: rsie	Respond to of 10065

wow, thanks, that is informative. you can't fight the facts. after watching all the comments on all the threads- and seeing that nobody likes stocks, doom and gloom! and seeing the PE's on stocks, critical thought has to take over at some point and I conclude that this is a very good time to buy stocks. :)

To: Investor2 who wrote (6474)	10/8/2011 10:41:51 PM
From: marc ultra	1 Recommendation Read Replies (1) \| Respond to of 10065

<ECRI is not infalible. It's still possible to avoid a recession. Sorry but what Liz said about the ECRI is incomplete and misleading and in fact the 2010 situation with the ECRI is another reason I'm so confident they'll be right. The WLI, their weekly leading indicator, is one of the few ones they make public. So in the slowdown in 2010 the WLI fell to levels that some who follow it said was absolutely a recession call based on the history of the indicator. THE ECRI STRONGLY DISAGREED and said those people, some of whom were harshly criticizing the ECRI for refusing to make a recession call ,didn't understand and it's not about one indicator but they have to have a full range of their indicators unfold in a pattern for them to call a recession. Lakshman Acuthan and the other guy at the ECRI in fact wrote strong rebuttals to these people, saying they were trying to interpret the indicator and were absolutely wrong in doing that. The ECRI never did make a recession call in 2010 and in fact there was no recession. So what Liz is indicating as a possible fallibility in the ECRI was simply others claiming the WLI made a recession call and proved wrong but that was done by others and the ECRI itself steadfastly said their indicators did not suggest recession. If you listen carefully I believe Liz says something like the WLI was said to make a false call but I don't recall her saying the ECRI itself made a recession call which they did not. I don't even know if she follows it all that closely herself. So if you look at 2010 what it really shows is how conservative and careful the ECRI is in making a recession call and a recession has always occurred in I believe the 3 times they have made a recession call. Unlike virtually every other forecaster who has made a recession call, the ECRI has never had a false positive, i.e. a recession call that was not in fact followed by a recession. Again the events of 2010 along wit the rest of their history is why I assume they will be correct and have taken action accordingly. There is very little if anything that I would have thought could turn me from a strong bull to a bear overnight but this ECRI call turned out to be it. Since I thought market fundamentals were strongly bullish before the ECRI call, I went back and looked at one indicator, sentiment where Investors Intelligence is currently all the way down an extremely low 43% net bulls. Looking back to March 2008 when the ECRI last made a recession call (and I was still bullish) sentiment was down to 41% bullish so that didn't stop the bear. In fact when they made that March '08 recession call the S&P was at 1293 so from there the market went down something like 45% to the 666 March '09 low. One might say it's silly to compare anything to 2008 because we had Lehman etc. and I'd agree, but I think the ECRI is also correct when they now say it is possible the new recession could trigger another event of some type which would make things that much worse. Keep in mind in the recession upcoming budget deficits should get much worse from the weakness, any weak financial institutions particularly in Europe will probably have more severe problems, and the political situation in the US and Europe is just likely to get worst and more angry as things deteriorate so while I'm just assuming we'll have bear of some magnitude I can't rule out that this will again turn out to be something truly ugly. I do think if the ECRI is correct which I obviously believe it will be, then I see a near 100% probability that the recession will also mean a bear market.