Hi folks!

Was flying overhead and saw that Tony T. had posted a thread.  Since I like his posts, I had to drop down and take a look.  Here's my 2 cents.

I have always felt that in my lifetime there would be one very large market downturn remaining.  And to me, the most obvious and likely cause would be what is called " the great credit unwind." 

I never suspected it could start with the subprime mortgage situation, but the kicker here was the amount kept "off the books."  That the Banks and Financial institutions left themselves "holding the paper", and thus eating the losses is incredible.  That said, we could still see a lot of other just as substantial credit unwinds, such as:  Margin retractment, as stocks drop in price. Derivatives retreating, as highly leveraged positions are unwound; Hedge funds unwinding, who have leveraged, to buy leveraged securities;  Hedge fund withdrawals by investors.  Most hedge funds have limited opportunity windows to withdraw from, such as semiannual, for one week each.  Some hedge funds have even closed withdrawals by investors.  Investors may panic here.

In short, take the fact that since 1982, the USA has had a huge bull market run, and

The earnings of many companies may take a large, and for some like banks, a structural decline, and

the USA as a country may be in decline, or at best, stay the same (yes, very debatable), and

We're due for a bear market, and

R48 was able to retire at 48 (he didn't really earn it)...

combine this with the great credit unwind, and, presto, down 50% not difficult to forecast.

OTOH,  I know. there are reasons to be positive, too..

My portfolio is now at 45% fixed income (highest ever), all short term, and I seek hedging positions to limit the effect if the great credit unwind bear market occurs.  The good news, my equities could go to zero, and I can still stay retired.  Whew!  Perhaps I beat the system.  Comforting.

 Just some thoughts...R48