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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 (6481)	10/9/2011 5:35:35 PM
From: marc ultra	1 Recommendation Read Replies (2) \| Respond to of 10065

I2 <If we do get a recession, and the market goes into a full-fledged bear, it is possible that the bear will reach a typical correction of about 30%, only 10% lower than we are now. I think that's definitely possible. The fact that housing and some other economic factors are currently so weak already, and don't have a lot more to go down, could make this a shallow recession which could translate into something like a relatively modest 30% bear as you mention. In fact I think Lakshman Acuthan has said the recession could be shallow. The problem is we don't know what it will end up being and Acuthan also notes that any new shock on the system which could be lot more likely with a new recession could make the recession a lot worse and I believe that in turn would make a bear market a lot worse. "We have an unstable situation in various areas like obviously Europe and to a less extent the US. If you look at the major underlying problem in both areas it is budget deficits and related fiscal issues. A recession will make the fiscal situation everywhere far worse. We're talking about a new recession at a time when there's a worldwide obsession with austerity and central banks are already extremely stimulative with monetary policy so it's simply not a time that a new economic strain can be handled. So I don't need to guess how bad a recession or bear will be or whether we'll have a new major shock with a new recession. I can simply largely get out of the way right now and if it's a shallow recession and modest bear that looks like it's run its course I can get aggressive if it looks like it's a good time to buy. If on the other hand there's a shock and we have a worse recession and bear I'll have avoided a bigger loss and things may be even a better buying opportunity. This secular bear that started in 2000 is 11 years old now so a new cyclical bear could possibly end up being the last in this secular bear and as grim as things look around the world at the moment it's possible we'll be in a new secular bull after this either modest or more severe cyclical bear. I'm keeping it simple and don't have to guess about these things. I think the ECRI call will be correct so we will have a recession of some type. I think a recession will translate into close to a 100% probability of a new bear so I want to be mainly out of the market now and I'll worry about my next move at the appropriate time.