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Do you fear a world wide bubble??
Old 04-30-2007, 03:13 PM   #1
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Do you fear a world wide bubble??

Here is another article from a well-respected investment columnist predicting gloom and doom. Although I suspect some gloom is on its way (especially with oil concerns), I am not convinced it is going to be this bad. But, what do I know...



http://www.thestreet.com/_breitbart/...&puc=breitbart
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Re: Do you fear a world wide bubble??
Old 04-30-2007, 03:16 PM   #2
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Re: Do you fear a world wide bubble??

Ah nothing like some good financial doom and gloom porn.
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Re: Do you fear a world wide bubble??
Old 04-30-2007, 03:45 PM   #3
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Re: Do you fear a world wide bubble??

Yeah, it worries me. But what do you do, hide under the bed with your gold? Gozzie
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Re: Do you fear a world wide bubble??
Old 04-30-2007, 03:47 PM   #4
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Re: Do you fear a world wide bubble??

Quote:
Originally Posted by Mwsinron
Ah nothing like some good financial doom and gloom porn.
Yep - I think we are overdue for one of those Bernsteinesque 'the markets go bonkers once every 25 years'.

Heck - at a drop to below DOW 7000 - greed might overcome fear and I'd consider going 100% stocks.

Not holding my breath though.

heh heh heh - my age dated Target Retirement says I'm getting too old for 'financial porn' - sooo whadda call stock market Viagra? Hormones and individual stocks :
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Re: Do you fear a world wide bubble??
Old 04-30-2007, 03:53 PM   #5
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Re: Do you fear a world wide bubble??

Piglet sodomizers, one and all.
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Re: Do you fear a world wide bubble??
Old 04-30-2007, 03:55 PM   #6
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Re: Do you fear a world wide bubble??

Isn't Grantham a "perma bear"? If I remember correctly he was saying the same thing in the spring of 2003

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Re: Do you fear a world wide bubble??
Old 04-30-2007, 04:34 PM   #7
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Re: Do you fear a world wide bubble??

Quote:
Originally Posted by janeeyre
Here is another article from a well-respected investment columnist predicting gloom and doom.
Gold, guns, ammunition and vacuum sealed food pouches in a reinforced concrete bunker. What could possibly go wrong?

Even if the economy does not crash, you can still eat the food and live in the bunker. Then, if the economy improves enough, you can use the guns and ammo to shoot yourself over the depression caused by the opportunity cost.
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Re: Do you fear a world wide bubble??
Old 04-30-2007, 04:49 PM   #8
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Re: Do you fear a world wide bubble??

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Originally Posted by Culture
Gold, guns, ammunition and vacuum sealed food pouches in a reinforced concrete bunker. What could possibly go wrong?

Even if the economy does not crash, you can still eat the food and live in the bunker. Then, if the economy improves enough, you can use the guns and ammo to shoot yourself over the depression caused by the opportunity cost.
MRE's really arent too bad.
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Re: Do you fear a world wide bubble??
Old 04-30-2007, 04:57 PM   #9
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Re: Do you fear a world wide bubble??

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Originally Posted by Mwsinron
MRE's really arent too bad.
It's not the novelty of the experience, it's the repetition & duration...
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Re: Do you fear a world wide bubble??
Old 05-01-2007, 07:17 AM   #10
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Re: Do you fear a world wide bubble??

if you believe in elliot wave theory and plot stock prices going back a few hundred years then we are at the end of the third and final uptrend that the theory says happen before a downtrend starts.

i think the guy who wrote that book stretched things a little too far to meet his theory, but it was interesting
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Re: Do you fear a world wide bubble??
Old 05-01-2007, 08:15 AM   #11
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Re: Do you fear a world wide bubble??

The last 2 paragraphs sums it up into "do nothing".

Quote:
As for timing, he concedes that's impossible to predict. But here's the kicker: Even Grantham thinks you probably need to be bullish right now. The reason? Most bubbles, he notes, go through a short but dramatic "exponential phase" just before they burst. Like Japan in 1989 or the Internet in early 2000.

"My colleagues," wrote Grantham, "suggest that this global bubble has not yet had this phase and perhaps they are right. ... In which case, pessimists or conservatives will take considerably more pain."

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Re: Do you fear a world wide bubble??
Old 05-01-2007, 08:37 AM   #12
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Re: Do you fear a world wide bubble??

Quote:
As for timing, he concedes that's impossible to predict. But here's the kicker: Even Grantham thinks you probably need to be bullish right now. The reason? Most bubbles, he notes, go through a short but dramatic "exponential phase" just before they burst. Like Japan in 1989 or the Internet in early 2000.
This journalist has given a very selective reading of what Grantham actually wrote. Here is Grantham's own writing of point #11, after 10 points establishing why he believes there is a worldwide bubble and why he believes it will pop.

" Of course the tricky bit, as always, is timing. Most
bubbles, like internet stocks and Japanese land, go
through an exponential phase before breaking, usually
short in time but dramatic in extent. My colleagues
suggest that this global bubble has not yet had this phase
and perhaps they are right. (A surge in money flowing
into private equity might cause just such a hyperbolic
phase.) In which case, pessimists or conservatives
will take considerably more pain. Again?!"

He knows that many of his clients are relative performance people- being right in the interemediate to longer term won't help them if they lose their clients or jobs from relative underperformance in the short term.

The best records will come to those who time it perfectly, but if one doesn't have to stay leaving a party too early can be better than leaving too late.

Ha
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Re: Do you fear a world wide bubble??
Old 05-01-2007, 10:44 AM   #13
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Re: Do you fear a world wide bubble??

S&P just even after a 7 year slump, Nikkei less than half what it was 17 years ago, and analysts are already yelling bubble? Maybe it is, maybe it isn't, but I suspect so many analysts missed the bubble call in the 90s that now everything looks like a bubble to them. And they all want to be the first to call it.
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Re: Do you fear a world wide bubble??
Old 05-01-2007, 02:22 PM   #14
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Re: Do you fear a world wide bubble??

NOPE.

Whenever I start to worry, I remember that these same so called 'experts' have succesfully predicted 45 of the last 3 recessions. Financial Porn, that's all that it is......
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Re: Do you fear a world wide bubble??
Old 05-01-2007, 02:29 PM   #15
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Re: Do you fear a world wide bubble??

Quote:
Originally Posted by Alex
NOPE.

Whenever I start to worry, I remember that these same so called 'experts' have succesfully predicted 45 of the last 3 recessions. Financial Porn, that's all that it is......
Maybe so, but Jeremy Grantham is no Bubblevision Tout. He is a very wealthy man with a very impressive client list and a very good long term record.

Just because active management is not easy does not mean it is not possible. One just has to be smarter than the average bear, and also have the right mindset. (Mind you I am not attributing those laudable characteristics to myself, only to J. Grantham.)

Ha
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Re: Do you fear a world wide bubble??
Old 05-01-2007, 02:35 PM   #16
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Re: Do you fear a world wide bubble??

Quote:
Originally Posted by HaHa
Just because active management is not easy does not mean it is not possible.
Absolutely true. But one must also wonder whether it is worth the trouble, depending on your circumstances.

Personally, I have gotten into the habit of incrementally selling off bits and pieces as things run upwards towards fair value. I then accumulate cash and wait for the next downdraft (like t he one in Feb). When I get into trouble is when I get impatient for the next downdraft.
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Re: Do you fear a world wide bubble??
Old 05-01-2007, 02:36 PM   #17
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Re: Do you fear a world wide bubble??

Quote:
Originally Posted by HaHa
Maybe so, but Jeremy Grantham is no Bubblevision Tout. He is a very wealthy man with a very impressive client list and a very good long term record.

Just because active management is not easy does not mean it is not possible. One just has to be smarter than the average bear, and also have the right mindset. (Mind you I am not attributing those laudable characteristics to myself, only to J. Grantham.)

Ha
So, what specific changes are you making to your asset allocation now that you have read this article?
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Re: Do you fear a world wide bubble??
Old 05-01-2007, 03:13 PM   #18
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Re: Do you fear a world wide bubble??

At this time all my stocks are in a taxable account. Fully half of their value is LTCG. Some I would likely sell but I hesitate because of the tax problem. One issue is being bought out, still at question is the composition of the deal as regards cash/securities, so I will have some realized capital gain foisted on me.

It sucks to be competent.
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Re: Do you fear a world wide bubble??
Old 05-01-2007, 03:17 PM   #19
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Re: Do you fear a world wide bubble??

Quote:
Originally Posted by HaHa
At this time all my stocks are in a taxable account. Fully half of their value is LTCG. Some I would likely sell but I hesitate because of the tax problem.
Never let the tax tail wag the investment dog.
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Re: Do you fear a world wide bubble??
Old 05-01-2007, 04:48 PM   #20
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Re: Do you fear a world wide bubble??

Quote:
Originally Posted by Alex
So, what specific changes are you making to your asset allocation now that you have read this article?
None. He's a perma-bear.

I'd like to see his actual portfolio compared to his thesis. Sorta like Saint Jack being busted with an actively-managed mutual fund...
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