Another dark and scary forecast by Gary Shilling

[Architect]

Shilling made a comment something to the effect that all stocks [growth, value, income, international, etc.] were the same asset class. I found this interesting. The point being, if the bottom drops out, all equities go down.

All of my equity assets [value, international, income, REITs] have declined roughly the same amount, while the bonds and CDs have held up. Big Duh.

Yea, an unfortunate side effect of the tech boom is that it's trivially easy for previously uncorrelated asset classes to correlate. Just a click of the button and you can move billions across the globe. The other effect is all the hot money running around tends to end up on the same side of the same trade, according to Shilling. When that trade goes south, investors (hedgies) have to sell something unrelated to meet margin. Thus a bad trade in Dubai stocks means selling in US corn futures.

Keynes also termed market timing "credit cycle investing". He tried it in the early 30s, and abandoned it because he couldn't make it work for him.

There is a 12 volume biography and collection of Keynes, with many all of his works, much of his correspondence, etc.

I read the volume most concerned with investing AFAIK #8. That is where the above observation is found.

Wonderful writing too- the most subtle sarcasm I have ever seen.

I'll have to see if I can find a copy at a library around here.

(3) The "permabulls" don't tend to have an I-told-you-so attitude toward people who were more bearish when they were right. People who push gloomy forecasts are much more likely, in my experience, to say "I told you so" and taunt those who didn't follow their forecasts. Nobody likes to have salt poured on a wound.

Fair enough. But there is an equivalent which is the ridicule that the bear gets from the bull. I'm usually an optimist, but I turned very pessimistic a few years ago. I was looking for discussion on these ideas, but live people I talked to acted like I should be sent to a mental institution. Online people openly said I had a tin foil hat, etc. etc. So when the bear is right it's hard to resist pointing out they were correct, because the bear had salt, well, thrown in their face I guess.

Personally though my bearish bets are all over and I'm looking forward to getting back into the bull camp, maybe next year.

 

[Martha]

Fair enough. But there is an equivalent which is the ridicule that the bear gets from the bull. I'm usually an optimist, but I turned very pessimistic a few years ago. I was looking for discussion on these ideas, but live people I talked to acted like I should be sent to a mental institution. Online people openly said I had a tin foil hat, etc. etc. So when the bear is right it's hard to resist pointing out they were correct, because the bear had salt, well, thrown in their face I guess.

I never much liked the tin foil hat adage and yes, we can get into group think here.

So, for you bears who had salt thrown in your faces:

You were right. The market was too high. We know you were right because the market dropped substantially. Now go out and buy some undervalued stocks. You may get rich off of this. I won't. I don't have the cash to spend on stocks.

 

[Martha]

Fair enough. But there is an equivalent which is the ridicule that the bear gets from the bull. I'm usually an optimist, but I turned very pessimistic a few years ago. I was looking for discussion on these ideas, but live people I talked to acted like I should be sent to a mental institution. Online people openly said I had a tin foil hat, etc. etc. So when the bear is right it's hard to resist pointing out they were correct, because the bear had salt, well, thrown in their face I guess.

I never much liked the tin foil hat adage and yes, we can get into group think here.

So, for you bears who had salt thrown in your faces:

You were right. The market was too high. We know you were right because the market dropped substantially. Now go out and buy some undervalued stocks. You may get rich off of this. I won't. I don't have the cash to spend on stocks.

 

[lazygood4nothinbum]

ok ok ok, i'm buying (just as soon as it drops another 30%)