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2005 and Beyond:The BEAR is BACK?

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Re: 2005 and Beyond:The BEAR is BACK ?

Oooh!! More delicious bear stuff here, yummy said Pooh bear:

http://sprott.com/pdf/marketsataglance/01-17-2005.pdf

http://sprott.com/pdf/marketsataglance/05-16-2005.pdf

I love the quaint American investment writing style, like something from the 50's a la Ben Graham or Edwards & Magee.

I wonder if anyone will blame Mr 'Irrational Exuberance'? or will he escape as Henry Kissinger has in other spheres despite his naughty deeds? As one of the articles suggest, if the US economy was a company all the directors would have been fired by now.

Reminds me of some of the stuff Investor posted, if he is still around he would have liked this stuff- c'mon mate, when are you coming back? Drop in for a chat...

A quote extracted from the second link:

Dr. Kurt Richebächer:
“A bubble economy implicitly accumulates two growing problems: debt excesses and structural distortions. The most striking, and most important, features of the structural distortions in the U.S. case are the virtual abolishment of domestic saving and the exploding current account deficit. Generations of policymakers and knowledgeable economists would have been horrified by such macroeconomic self-destruction. In today’s America, they cause no more than a yawn.”
(“The Richebächer Letter”, no. 383, May 2005)
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Re: 2005 and Beyond:The BEAR is BACK ?

Wow.... three more years or less before we're all down the gurgler.. :goodnight
 
Re: 2005 and Beyond:The BEAR is BACK ?

DTM said:
An interesting read showing a looming bear market.

http://www.kitcocasey.com/displayArticle.php?id=162
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This comment ties in nicely with the technical charts discussed in the link DTM posted ("Bubbles cast long shadows after they burst"). The comment is from the second article I posted in post #62
“… history tells us that major asset bubbles have long and lasting consequences that are not easily remedied by conventional policies. While the painful experience of the 1930s is the most obvious example in modern times, Japan’s persistent deflation fully 15 years after the bursting of its bubble is hardly a lesson to be taken lightly. Nor, unfortunately, is the state of the US economy as it faces what may well be yet another pitfall in its own post-bubble journey.”
(Stephen Roach, “Global Daily Economic Comment”, May 2, 2005)
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Re: 2005 and Beyond:The BEAR is BACK ?

Good articles Rich,

I personally believe in a lot of what they say, maybe not to the same extent, but in general I think thats where the big boats heading. It does make it hard to hold equities when you believe in this stuff... sort of like playing with knives. The only reason I'm still in for the upside ATM is the US housing boom.... I think this effectively results in;

1) Hitting a delay on any reality check and giving the most important consumers in the world a shot in the arm.

2) Ensuring that when reality does hit it'll probably be much worse than it could have been.

The problem with economics and especially macroeconomics is it can generally outline the SEQUENCE of events reasonably accurately, but it gives no indication of when the events will occur. I think thats whats happening now, macroeconomics says its out of whack so it needs to find an equilibrium - the financial markets are rebutting with no.... not yet.

TJ
 
Re: 2005 and Beyond:The BEAR is BACK ?

Two articles that I found particularly important at the moment;

An economist with the Commonwealth Bank, Michael Workman, said NSW's economy probably shrank in the June quarter as it did in March, meaning the state was technically in recession. "It's a pretty good chance of it happening when the data is released on September 7," he said. "You're lucky if you've got a full-time job in NSW."

Sydney house prices have fallen 7 per cent since December 2003 and NSW building approvals by 23 per cent.

Population figures show that for every four immigrants arriving, three people leave NSW. Retail sales are also among the weakest in the country.

"I ask myself every day what's going on, but I know every shop in the street is struggling," said Kristy Jones, owner of Gate-One, a streetwear shop in Newcastle. She said her Darby Street precinct was booming 18 months ago but had recently grown "pretty lonely".
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link http://www.smh.com.au/news/national/job-boom-turns-gloomy-for-nsw/2005/08/11/1123353449455.html

And

http://www.aireview.com/index.php?act=view&catid=8&id=2441

The second link is about data from the UK Department of Industry and Trade, apparently individual insolvancies are at an all time high in England, Scotland and Wales (up from peak in 1993)

Why did these resonate with me.....

These two markets experienced the housing boom earlier than most. WayneL can correct me if i'm wrong but the UK housing market boomed before Aus, and specifically Sydney boomed before most Aus cities (and boomed most severly).

Window into the future - who knows

TJ
 
Re: 2005 and Beyond:The BEAR is BACK ?

LOLOLOL
 

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Re: 2005 and Beyond:The BEAR is BACK ?

Hahaha! Good find that one, WayneL! A classic ;o)

On a serious note though (no pun intended!), all these references to how things are shaping up like the 30's depression for the US economy dont seem to take into consideration the massive scale of some of the other world economies ... eg China, Japan. These both seem to be on a big rebound at the moment and I wonder how much (if they keep heading north for now, that is) they might soften the landing for any major downturn in the US? Obviously in the 30's, there were no other huge, growing economies outside the US. The European economies at that time were minnows in a stagnant pond in comparison to the US.

I just happen to think the current world economic situation is significantly different to the 30's (almost instant "corrections" via internet trading, vastly better accesss for millions of traders to economic and company data etc) and that some bearish pundits might be barking up the wrong tree to some extent. For all our financial futures, I'm hoping I'm proved right on that! ;o)

Mind you, the potentially looming oil supply crisis might throw a bit of a spanner in the works. It won't take much of a problem to the supply side to send fuel prices spiking way up overnight. I've hopefully hedged against that scenario by investing significantly in energy and utilities stocks. I thought the main US currency was $BOO - Barrels Of Oil - anyway..... ;o)

Cheers,

AJ
 
Re: 2005 and Beyond:The BEAR is BACK ?

Regarding the NSW economy, let's just get one thing straight.

In general property market slumps lead to recessions, NOT the reverse.

Why? Because all of a sudden consumers feel less wealthy when they see the value of their primary asset, their house, go into reverse. And then they get worried, realising that they will actually have to save for their retirement etc. and that their house isn't going to do the whole job for them. And then they stop spending in the shops...

Just something to remember whenever some real estate "expert" decides to blame Sydney's housing market on the state of the economy. Saying that, as I'm sure they will, is like saying that the once dry, now wet, washing that you left hanging on the line caused it to rain when the reverse is clearly true.
 
Re: 2005 and Beyond:The BEAR is BACK ?

YO!

Bush acknowledges the collapsing US economy

http://english.pravda.ru/world/20/91/368/15972_economy.html

US President George W. Bush released a remarkable statement a short time ago. The remark has not been highlighted in the world media yet, although there is every reason to do so. Bush virtually acknowledged that the USA was experiencing a serious economic crisis. Moreover, the US government was taking immense efforts to avoid a massive outbreak of social uneasiness, the American president believes......
 
Re: 2005 and Beyond:The BEAR is BACK ?

Hahahahaha.....LOL

Now they're going the way of Japan ie Spending so much on infrastructure to ensure every little village in Japan is accessible by a massive motorway. All it ended up doing was giving the friends (building companies) of the LDP (ruling party) massive contracts and nothing for anyone else.

Now the end is near for sure.
 
Re: 2005 and Beyond:The BEAR is BACK ?

Stocks closes down in New York last night after a bigger-than-expected drop in home sales raised concerns about consumer spending and the outlook for the economy. All three indexes were weak early, slipping after the National Association of Realtors said existing home sales fell 2.6% in July from a record pace in June.

The Dow Jones slid 50.31, or 0.47% to 10,519.58, while the S&P 500 dropped 4.16, or 0.19% to finish at 1,217.59 and the Nasdaq fell 4.16, or 0.34% to end at 2,137.25.

The market was expecting a downturn, but a much smaller one, which had many concerned that the housing boom is nearing its end. With a downturn in home sales, construction companies and home improvement retailers tend to see business slide.
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Not good news for all concerned, once the housing boom plays itself out in the US, DOW DOWN DOWN DOWN. I think these figures are a bit premature in signalling the end of the housing boom IMO, but it does show how sensitive the market is.
 
Re: 2005 and Beyond:The BEAR is BACK ?

So what would be a good idea in your opininion to hedge against such a disaster?

Shorting sounds too dangerous IMO because there could be an '87 style blowoff top; bye bye money.

What stocks could possibly go up? I was thinking gold producers otherwise ones with gold reserves (how do you know if they have gold reserves?). What else could benefit from a "global economic meltdown"?

Just on gold, does anyone know who owns the Kalgoorlie superpit?
 
Re: 2005 and Beyond:The BEAR is BACK ?

The bears will tell you that the only safe haven for this scenerio is gold, the metal. I reckon some would be a good insurance.

Maybe it would be possible to buy gold and give it to the bank as collateral for a loan (free storage?) otherwise not many of us would have much left to invest.

H
 
Re: 2005 and Beyond:The BEAR is BACK ?

Hanrahan said:
The bears will tell you that the only safe haven for this scenerio is gold, the metal. I reckon some would be a good insurance.

Maybe it would be possible to buy gold and give it to the bank as collateral for a loan (free storage?) otherwise not many of us would have much left to invest.

H
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Well, "ultimately" the safest haven is to own your own totally self-sustaining farm(let) with a stash of gold coins hidden in the ground nearby! I bet few in this forum have such a nice safe fallback position to retreat to! I certainly don't!!

Me, I'm trading ONLY in high volume ranging energy/resource and utilities stocks ATM. I see no reason to risk on discretionary shares that have no intrinsic long term DEMAND factor built in. If there is an overnight finance markets meltdown, cars still need to run on fuel and people still need gas and electrical power and energy sources. I remember an old saying that "all that glitters is not gold". Maybe we will find out sooner or later there is some truth in that?

I can also see a scenario where if you have all your emergency gold in the bank and the finance markets crash, you might just have a few heart flutters (or worse) trying to prise that gold out of panicking banks that will be sinking under a human wave demanding access to their gold/cash hoardings! Also, heaps of gold is now held in the form of shares/warrants etc - maybe in an overnight finance markets meltdown those holdings would be about as worthless as "fools gold"...

I take all these "bear" warnings that gold is the "only" salvation with a few big nuggets of salt. A diet of only gold would become a bit tastless after a while....

Cheers,

AJ
 
Re: 2005 and Beyond:The BEAR is BACK ?

Resource and energy stocks would more than likely cop a hit though, wouldn't they? Maybe not as much as some but still; with an economic slowdown there would be less demand for all non essential goods, therefore the resources that they are made from and the energy that powers their factories. Oil prices should fall given the weakened demand. Maybe anything that uses oil heavily and won't see a big decrease in demand would go up.

If our currency de-values against third world countries and europe and america can't afford to pay massive subsidies to their farmers; maybe agriculture? Maybe i'm just biased because I milk cows. Anything not heavily exported to the US or possibly europe and not heavily geared should be good buying. You can buy my share of the farm if you want. :D

What countries' currencies are likely to improve against ours?
 
Re: 2005 and Beyond:The BEAR is BACK ?

loakglen said:
Resource and energy stocks would more than likely cop a hit though, wouldn't they? Maybe not as much as some but still; with an economic slowdown there would be less demand for all non essential goods, therefore the resources that they are made from and the energy that powers their factories. Oil prices should fall given the weakened demand. Maybe anything that uses oil heavily and won't see a big decrease in demand would go up.

If our currency de-values against third world countries and europe and america can't afford to pay massive subsidies to their farmers; maybe agriculture? Maybe i'm just biased because I milk cows. Anything not heavily exported to the US or possibly europe and not heavily geared should be good buying. You can buy my share of the farm if you want. :D

What countries' currencies are likely to improve against ours?
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Of course! Don't the Watusi tribe live on a diet almost exclusively of milk/curds? ;o)

Staple foods sure would be in demand I would think....

AJ
 
Re: 2005 and Beyond:The BEAR is BACK ?

Aussiejeff said:
Well, "ultimately" the safest haven is to own your own totally self-sustaining farm(let) with a stash of gold coins hidden in the ground nearby!
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If I had to grow food to feed the family, we'd starve. I'm thinking of a farm up north with 1,000 tallow wood trees on it. Reckon I can use a chainsaw and timber will be in even more demand Post Oil.
 
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