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The case for a quick recovery
Old 01-12-2009, 10:33 PM   #1
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The case for a quick recovery

With all the press over the past few months regarding "the end of the world as we know it", it's nice to see an opposing view:

"Some economists think that because the current downturn has been so sharp, that sets the stage for a stronger and faster rebound than many now expect."

"The crisis in financial and credit markets sparked by the Lehman Brothers bankruptcy in September caused businesses to slam the brakes on production much harder than justified by reduced demand alone, according to Joseph Carson, chief economist at AllianceBernstein.
"

"...when things start to show signs of improvement, the economy could well be helped by pent-up demand from consumers who sharply curtailed purchases in recent months."

Note the qualifying phrase "when things start to show signs of improvement." Guess that's considerably more optimistic than saying "if things start to show signs of improvement."

Current economic pain could lead to gains ahead - Jan. 12, 2009
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Old 01-12-2009, 10:37 PM   #2
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I would be quite content with a slooow recovery, thank you.

Slow as in getting back to my Nov 2007 high in 2 or 3 years. Let's see, at 26% loss and 4% SWR, that's my living expenses for 6 years I am getting back. I can be patient.

PS. I forgot my signature. Buy, buy, buy.
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Old 01-13-2009, 06:57 AM   #3
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REWahoo, I don't believe for a minute that the recovery will be any faster than any other, but it is sure pleasant to consider!

If the Dow would just get back into the 11,000's in 2009 or 2010, I will be extremely happy and content. Those heady 14,000's of 2007 would be great, but it is hard to imagine that we would be experiencing that kind of market any time soon.
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Old 01-13-2009, 07:13 AM   #4
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Old 01-13-2009, 08:43 AM   #5
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Also interesting are the predictions of just what the Market will look like once things "settle down":

The Inevitable Consolidation of Retail Brokerage | Cake Financial

Information Arbitrage: Wall Street, Circa 2010: Disaggregation and Specialization
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Old 01-13-2009, 12:40 PM   #6
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Okay. I'll keep pumping air into this thread.

Today's MarketWatch e-Newsletter comes with this insightful Editorial comment:

Quote:
The string of infamous investment scams goes back nearly 300 years in an unbroken line that tracks the gullibility of people whose greed overcomes their common sense and the ability of scurrilous characters to take every advantage of human foibles.

... And it isn't necessarily our penchant to buy into get-rich-quick schemes or trust scam artists who talk a good game about big returns that gets us in such trouble. It can be nothing more complex than believing in predictions that are just that -- predictions.

... For so many people with battered nest eggs, that is a pretty enticing view to embrace.

A lead up to this article:

Doomsayers warn: "No Recovery before 2010"
(A fairly lengthy article by Paul B. Farrell)
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Old 01-13-2009, 12:55 PM   #7
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Note that I timed my rebalancing to the exact top of the dead cat bounce (Jan 2).

But I expect a better than expected recovery.
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Old 01-13-2009, 01:01 PM   #8
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Note that I timed my rebalancing to the exact top of the dead cat bounce (Jan 2).

But I expect a better than expected recovery.
No reason to think the future will continue to be like that, but since mid-October anyone who alternated between going long with a 7900 Dow and going short with an 8900 Dow has made quite a bit of money...
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Old 01-13-2009, 01:42 PM   #9
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Originally Posted by RonBoyd View Post
Doomsayers warn: "No Recovery before 2010"
(A fairly lengthy article by Paul B. Farrell)
I've come to believe Farrell must own controlling interest in the black paint market. Does he ever write anything that doesn't boil down to gloom, despair and disaster await us just around the corner?
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Old 01-13-2009, 01:56 PM   #10
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gloom, despair and disaster await us just around the corner?
It doesn't?

Actually, the last time I read anything by him was a couple of years ago so couldn't prove it (his leanings) by me.
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Old 01-13-2009, 02:18 PM   #11
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Does he ever write anything that doesn't boil down to gloom, despair and disaster await us just around the corner?
We'll have to pair him up with Grantham at a party and see if we can get a couple drinks in them...
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Old 01-13-2009, 07:48 PM   #12
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To me a good investment plan isn't based on hope. I'll take Shillers view on the matter.

Leading economist fears decade of weakness in US


Leading economist fears decade of weakness in US - Times Online
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Old 01-13-2009, 08:25 PM   #13
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We'll have to pair him up with Grantham at a party and see if we can get a couple drinks in them...
Pair me up with anyone and you can get a couple of drinks into me.
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Old 01-13-2009, 08:36 PM   #14
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Quick recovery or slow recovery, it is OK to me.

As long as it does recover ... at some point in my lifetime.
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Old 01-13-2009, 10:30 PM   #15
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I saw more hope than analysis the original link, but we al need hope, i suppose.

Hey, we should be proud of our economy! What used to take 660 days we can now accomplish in half the time! (link)




In the big scheme of things, it doesn't matter much to me on a personal level whether the market recovers in one year or 10. What really matters is the overall performance of all the relevant asset classes over the next 20-50 years--compared to inflation.
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Old 01-14-2009, 09:22 AM   #16
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I see the housing market prices almost reaching the level where they should be. Banks certainly have been given a grand boost from the TARP, and the banks are the fertilizer that make good business grow.

The Obama stimulus plan should pump in another $1 trillion into the economy, so something could happen quickly. If Obama puts the money to create jobs - that means he will be growing companies.

With many people deep in debt and credit scores low, it may be a few years until consumers can get credit again. This would keep American consumer spending at a reasonable level, which keep inflation relatively low. It could increase investment in the market again.

Growing companies, low inflation, full employment - this could quickly grow the GNP quickly along with exports. Ergo, fast recovery.
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Old 01-14-2009, 09:29 AM   #17
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I see the housing market prices almost reaching the level where they should be. Banks certainly have been given a grand boost from the TARP, and the banks are the fertilizer that make good business grow.
Many banks are still on perilous ground, even after TARP.........

Quote:
The Obama stimulus plan should pump in another $1 trillion into the economy, so something could happen quickly. If Obama puts the money to create jobs - that means he will be growing companies.
Most of the jobs he will create will be GOVT jobs, those jobs don't raise GDP long term.........

Quote:
With many people deep in debt and credit scores low, it may be a few years until consumers can get credit again. This would keep American consumer spending at a reasonable level, which keep inflation relatively low. It could increase investment in the market again.
So, Walmart will succeed and 20 other retailers will fail, how is that going to spur on the economy??
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Old 01-14-2009, 09:43 AM   #18
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Many banks are still on perilous ground, even after TARP.........
In Michigan, Bank Lends Little of Its Bailout Funds
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Old 01-14-2009, 09:56 AM   #19
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Hey Sam, can you extend those curves to show the recoveries?
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Old 01-14-2009, 10:05 AM   #20
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Hey Sam, can you extend those curves to show the recoveries?
I'd be worth a lot of money if I could extend the blue line about 200 days to the right!

The graph was a cut and paste from something found at the linked site. I'll see if I can find a more complete graph elsewhwere.
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