Is a Crash Coming? Ten Reasons to Be Cautious (WSJ)

Discussion in 'Wall St. News' started by zanek, Aug 15, 2010.

  1. zanek


    Could Wall Street be about to crash again?

    This week's bone-rattlers may be making you wonder.

    I don't make predictions. That's a sucker's game. And I'm certainly not doing so now.

    But way too many people are way too complacent this summer. Here are 10 reasons to watch out.

    1. The market is already expensive. Stocks are about 20 times cyclically-adjusted earnings, according to data compiled by Yale University economics professor Robert Shiller. That's well above average, which, historically, has been about 16. This ratio has been a powerful predictor of long-term returns. Valuation is by far the most important issue for investors. If you're getting paid well to take risks, they may make sense. But what if you're not?

    The Big Interview with David Rosenberg

    2. The Fed is getting nervous. This week it warned that the economy had weakened, and it unveiled its latest weapon in the war against deflation: using the proceeds from the sale of mortgages to buy Treasury bonds. That should drive down long-term interest rates. Great news for mortgage borrowers. But hardly something one wants to hear when the Dow Jones Industrial Average is already north of 10000.


    Discuss ....
  2. 1. You mention deflation in your post. I just bought milk, and price rose once again. In few months, it rose by 50%. 3.5 a gallon is the price now.

    2. Since a major newspaper is predicting a crash, I am worried about my shorts. Time to cover?
  3. nitro


  4. promagma


    Yep, Shadowstats inflation is running 8%, and even the official CPI is in positive territory
  5. You might want to switch grocery stores if possible. Here in Chicago burbs I pay around $2.15 or so a gallon (Sams Club, WallyMart, Dominics)
  6. TGregg


    Milk prices are as manipulated as some people here claim the markets are. I've paid $2.20 one week then paid $3.10 the next in the same store for the same brand o' moo juice.
  7. nLepwa


    You guys should come live here in Switzerland.

    Beside having stable prices (like developed countries should have...) we'll also arrange a nice fiscal arrangement provided you're rich enough.

    Seriously though, milk prices havn't changed in a long time.
  8. That's because its purple... :D
  9. "Have some … pus with your cookies? If you down a glass of cow’s milk, you will. It may be white, but researchers say that every cupful contains somatic cells, i.e., pus"
  10. pspr


    I'll never drink milk again! :confused:
    #10     Aug 16, 2010