Hot headlines about the Dow “storming back soon,” soaring to the “Next Stop, Dow 20,000” is nothing more than a new cycle of irrational exuberance. After losing an inflation-adjusted 20% the last decade, a prediction that the Dow will roar back 80% anytime soon is misleading, pure speculative hype. Reminds me of book titles like “Dow 36,000” and “Dow 100,000” back in 1999 – and memories of those mutual funds selling with absurd multiples over 40, with annual returns in excess of 100%. Worse than the tulip-bulb mania of the 1590s. What’s really roaring back is hype, happy talk and irrational exuberance. Words: 531
June 11th, 2011 | Posted in Investing,Stock Indices | Read More »
We have had massive monetary creation for decades now which we have finally come to the day of reckoning. We do not know if the top will be next month, next year or even later but we certainly are getting to the top where we cannot buy our way out of the problem through a new stimulus injection… The truth is that a terrible, deflationary depression is probably starting in the coming months. Words: 1581
July 7th, 2010 | Posted in Economic Overview,Inflation/Deflation | Read More »
The crucial factor in the crash of 2008 is that it was not due to some exogenous event or extraneous shock but by the system itself. That means that the prevailing paradigm, the efficient market hypothesis basically has been proven wrong. As such, the task ahead is not to restart the economy and the financial system but to create a new system because the old system has broken down. Words: 1285
April 13th, 2010 | Posted in Economy | Read More »
the US Government is on a trajectory to default on their obligations, and the same can realistically be said for the UK and Japan. The answer put forward by the US, UK and Japanese governments? Quantitative Easing and 0% interest rates. Have they learned nothing from the past decade?! Words: 2355
March 24th, 2010 | Posted in Economy | Read More »
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