"You look at every bear market and they've always basically occurred because of an up-tick in inflation and an up-tick in interest rates" -Paul Tudor Jones
Not a great timing tool though. The Fed's been tightening for two years. Just the same I can't deny that in the macro the serial correlation between a rising CRB and bearish stocks has been quite high.
Nov.: Back when the Berlin Wall fell in the late "80s and the world began to open up economically, the hope was that someday the developing economies would advance into consuming economies. While this is still work in progress, it is also exciting to see how much fruit is already on the tree! We cannot remember another recovery in the postwar era when so many previously insignificant players (China, Pac Rim, India, Mexico) were such a large part of the global recovery. Perhaps rather than wringing our hands over whether the U.S. consumer is about to perish, we should be smelling the roses and relishing just how far the world has come in diversifying contributions to global economic growth. Perhaps a U.S. economic slowdown is not nearly as important for investors and businesses in a global economic recovery that is no longer so highly reliant on just U.S. growth? We think people are currently underestimating how strong, diverse and sustainable the contemporary global economic recovery may prove to be. Not only are parts of the world currently exhibiting strong economic growth which will likely persist next year (China), but other parts (Europe and Japan) appear poised to experience even faster growth in the coming year. Perhaps, at some point in this recovery, ongoing global growth will be considered a cure for a U.S. economic cough.
=============== Thanks; Yes as Pabst said it seems to be a rather lengthy series of interest rate''upticks'' to matter. Better early than late on those warnings; executions are another subject.
http://www.dailyspeculations.com/bear/bearcorner.htm What is V.N. talking about anyone care to decode?
I wholeheartedly agree with this statement. While I'm tempted to be a bit of a permabear, I know factually that the likelihood of continued investment growth is reasonable. This is particularly considering 1) global expansion of world markets through new consumers entering via the development of the emerging markets, 2) targeted inflation built into the system and 3) the herd mentality of the boomers who will still continue pouring money into mutual funds for a while. Yes, if you bought the NAS at 5000 in Y2K, you're going to be waiting a long time for it to come back. There's one of those long periods of negativity that you can back calculate. But if you bought in either 1999 or at the end of 2000, you bought at about 2500. Now, the waiting period to come back to profitability isn't as bad (given the self-inflating nature of the markets). You earn your income in the country in which you live. (For me, that's the US). But you invest in those opportunities which are most likely to give you the appropriate combination of investment return and investment safety. For me, that's international equities (for the capture of the equity appreciation, and the FX benefits), US companies which are doing business with china (wal mart, etc...) and US value investment outside of the manufacturing sector. So basically, I'm hedged. If US does well, I make money (my income). If US does poorly, I make money (from investments). If the world falls apart, there's not much I can do about it, so I am not going to take that possibility seriously.