Who is the stock market kidding?

Posted on Posted in Yatırım

It took almost 30 months to clear the last mess, or so we thought. 30% drop in the markets during the 2000-2001 dotcom bubble shook itself off and we were off to the races again. Credit markets, housing market, this and that, so we were down 50%. But we hit the bottom few months back, right? So up almost 30%. A nice V-shaped recovery seems to be in the works.

Come on folks.

I have to go on record to say that we will see DOW at 6,000 before we see 12,000, and it will be a long disgusting L-shaped recovery. I hope I am dead wrong on this. But…

Foreclosures are picking up speed because people are getting laid off, because businesses are not selling as much, because laid off folks do not have money, and the equity ATM has dried up because of such foreclosures. It sounds really that simple to my simplistic mind.

Yes, the spiral is really that simple and the US cannot get itself out of it by printing money. Gotta learn to do more with less – it is semi-permanently here to stay.
Practical advice for stock junkies: at the very least hedge yourself with long dated index puts.

Practical advice for folks who are going gaga over the 2005 prices in the real estate markets: Don’t pull the trigger until you see a 2000 price tag. More foreclosures are coming and not just in subprime (what do you think happens to the homes of all those laid off i-bankers and lawyers?). Banks have NOT capitulated yet and they will soon with fireworks…

Folks who think housing prices categorically only go up: Well, yes, they in fact do and I have the fund just for you Madoff-REIT makes 30% risk free annual returns, send me email for more details.

[TODAY, January 26, 2011, DOW hit 12,000 pretty much guaranteeing that I will never ever again open my mouth about the market. I wholeheartedly ask forgiveness from all my Nobel laureate finance professors, colleagues at various hedge funds, Goldman Sachs and CSFB – I have been done since January 2008 but talked every once in a blue moon. Now I am done done.]

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