some investment thoughts

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tourbillon_IHB

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After last week's sell off, I think the next two weeks will be quite interesting. As IR probably recall, I said earlier last month that I believed the bull market would come back some time the end of this year. I am now moved away from that position. My recent trip has shown mr just how much US has weakened herself in the past five years. The fact that OPEC is now seriously discussing using Euro as its trading unit has me worried. Although oil price has reached record in terms of dollar, in terms of Euro, it hasn't moved all that much. The fact EU central bank has refused to cut rate as aggressively as US central bank worries me the most. I am now only 25% invested in the current market and all the remaining shares are in oversea stocks, especially Russia/Indian (I am less sure about Chinese stocks), and I have stop on all of them. I am going to cut my losses fast if the market tanks. To hedge my risk further, I have brought some SDS ETF. I have no idea how long the recession will be and when it will hit, but I think if the end of year shopping season turns out as bad as everyone thinks, we will be looking at a full blown recession next year. Any thought??
 
"Any thought?? "



My thought--we're already in a recession. We just won't know for sure until all the numbers have been counted and revised as the data firms up.
 
I wouldn't rule out a equities bull market in nominal dollars around the first of the year. I think an equities bull market in nominal dollars would be caused by monetary inflation resulting in actual purchasing value being decreased.
 
almon

I just returned on Saturday for the holiday. It was not as fun as I thought it would be. But then again, few things in life turn out the way we want.



awgee

That was my original position as well. That a market will suffer a correction the end of this year and then a bull market will follow. However, I am less certain about that position now, I think the bull market may not appear until the second half of next year. My worst fear is that we may enter a epic bear market that lasts more than 4 years.
 
<p>I am 100% invested in equities with a 25% international stake. I feel that the stock market is approaching fire sale values relative to earnings - the exact opposite of the late 1990s.</p>

<p>Plus, the collective balance sheets of american business haven't looked this good in 50 years. Just do what you can and steer away from financials and builders for a while.</p>

<p>The reason oil is almost a hundred bucks a barrel but it's almost the same in euros is because our currency is weakening and oil is an arbirtage with the dollar. I don't know why everybody freaks out about it. If our dollar weakens, oil moves up accordingly. </p>
 
tourbillion - You may consider that in real dollars or relative to gold, oil, and commodities, we are in a bear market and have been for some time.
 
<p>Have been reading various economic posts (ex. <a href="http://globaleconomicanalysis.blogspot.com/2007/12/things-that-cant-happen.html?ref=patrick.net">http://globaleconomicanalysis.blogspot.com/2007/12/things-that-cant-happen.html?ref=patrick.net</a>) which keep referencing Japan. So, was curious and looked for some historic Japanese data, just in case we get deflation, so I have some idea of what might happen.</p>

<p>The housing and stock market graphs are definately startling, make me realize that my assumptions about a "bottom" imply that the general curve continue upwards as I'm used to, not downwards...</p>

<p>From <a href="http://www.dailykos.com/storyonly/2005/6/17/112229/299">http://www.dailykos.com/storyonly/2005/6/17/112229/299</a></p>

<p><img alt="" src="http://www.eurotrib.com/files/3/050618_anglos_vs_Japan.gif" /></p>

<p>NiKKEI Stock market graph</p>

<p>http://www.chartsrus.com/chart.php?image=http://www.sharelynx.com/chartstemp/free/chartindCRU.php?ticker=^N225</p>

<p> </p>

<p> </p>
 
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