Use access key #2 to skip to page content.

Re-test: check, Dead Cat Bounce: check, The Bottom: ?



November 20, 2008 – Comments (2) | RELATED TICKERS: DDM , RJA , USO

I'm tired, I've been working hard to keep folks around even.  I don't know what the bottom is.  Increasing the money supply a ton seems to be the right move.  Stagflation is a better option than depression, and I think Ben and Pauly are taking us there.  Congress needs to realize that BK in the auto industry is a bad idea due to chain reaction that would ensue.  What Congress ought to do instead of giving the car companies money though is du two things:

1. Absorb all pension costs.

2. Order a million additional cars each of the next three years with a lot of the money upfront instead of on delivery and rebuild the federal car fleets at the leisure of the industry as they reduce their labor force another 10-15% as a condition of #1.

Anyway, I'm covering my shorts probably tomorrow.  Though not reinvesting the cash just yet.  That'll put me at about 10% agriculture, 5% oil, 30% equity, 20% debt, 35% cash (spread among dollars, yen and swiss francs) and down less than 20% ytd across the board.  So if we get a good short term rally, which I think is likely, I could actually end the year about even.  That would be a hard working zero year no doubt. 

I'm expecting massive dividend cuts in financials the first half of next year so I don't see the rally lasting long.  I am thinking we'll skip off these bottoms at least 2x-4x over the next few years, so good traders could do well, as will those with cash who gradually establish long term conditions.

Oh, if I have to make a prediction, I'd say 7200s on the Dow and S&P 500 about 720 as new lows.  Will those hold long term?  Hard to say, but I do think we get a sharp few month hope rally after hedge funds are done liquidating in the next couple weeks.

2 Comments – Post Your Own

#1) On November 20, 2008 at 2:26 AM, Option1307 (30.63) wrote:

Order a million additional cars each of the next three years with a lot of the money upfront instead of on delivery and rebuild the federal car fleets...

So we should just keep spending money we dont have? This may work short term as you say, I agree, but don't we have to settle our score at some point? Meaning, don't we need to cut spending and suffer a bad recession/depression at some point in the future? Nobody wants a economic downturn, but can we really expect to have a "good" economy permanetly, I don't think this is natural and trying to force one will only cause more problems down the road.

Report this comment
#2) On November 20, 2008 at 10:03 AM, kirkydu (90.50) wrote:

Yes spend our way out of this leveraged mess.  Why?  Because in the end we're all dead anyway.  If our grandchildren are smart, they'll pass the debts along to their grandchildren. 

Although there will be some coming back to the pack with the dollar, so what.  We don't want the strongest currency nor the weakest.  We want to be in the middle.  Ironically, what this mess is doing is giving us a stronger currency v other developed nations and a relatively weaker dollar v developing nations.  That's good.  Think about it (actually I will post a long letter on this eventually).

Cutting waste makes sense, but realistically, that's a high single or low double digit pct of the govt spending- not some huge deal.  40:1 leverage did more to screw this economy than any earmark. 

Actually, the echo-boom will solve a lot more problems than people realize.  It's all demographics and geography (we have the greatest real estate on the planet as luck has it) for the U.S. in the long term ultimately.

And yes, we should generally expect the economy to be good most of the time.  There isn't a realistic reason given our resources not to, except when we really screw up, like this decade. 


Report this comment

Featured Broker Partners