Tuesday, June 29, 2010

Pile On: Hussman & Pragmatic Capitalist - Recession/Depression On

Prag Cap - The Third Depression

I was going to post these two links yesterday, but I wasn't feeling well (perhaps because I read them). I believe Hussman's post is a must read for everyone.

Whether these individuals are right is not really the point, the point is to be prepared because the probability they are right is very high. Whether the markets recover from this point or continue to crash, what is clear is that the US and the world have not chosen wisely and they will be forced to pay the price at some point. We failed to bite the bullet last time around and endure the short term pain necessary to correct the excess, thus we will have to do so at some point in the future and it will hurt more.

Sorry if this feels like piling on, I swear I'm not a pessimist. I'd still be willing to buy stocks even during market turmoil if they were priced right (of course its not exactly easy to know when they are priced right).

I think one fear that is in the market now is that of another hedge fund/bank blow up from unexpected lower interest rates (which is not unexpected but predicted by many, including myself). You see, many big investors have been betting on inflation and thus a run-up in interest rates, this hasn't happen and is probably causing big losses which could lead to short squeezes or illiquidity.

Fun times.

Scott Dauenhauer CFP, MSFP, AIF