Oildog,

I certainly hope that you are right, and Gundlach himself suggests a 60% percentage that you are right.  But as he also writes "Never confuse hope with investment strategy."

By the way, the word "terrifying" was my choice of words, not Gundach's.  He used the adjective "catastrophic."
I guess it all comes down to your word against Gundlach's.

I also apologize for not getting the link right; I actually tested the HTML code elsewhere and it worked perfrectly. I guess there's a bug in Morningstar's application--sure wouldn't be the first time! 

Jagor 

So, a 80% chance that we retest March lows?  OK.  It will take some really serious trouble to take us below that, IMHO. 

I agree with Gundlach that the fundamentals are terrible.  I don't know what to do except watch the macro trends and try to figure out how bad the damage will be.  Of course the markets will probably be months ahead of me.

Looking at the CME city house price futures, Los Angeles is already off about 27% with no sign of a bottom.  But most other cities look healthier.  Should the market degrade from here with a leap in foreclosures, it would be trouble for a lot of banks.  The empty home level is already scary and will take years to work its way down.

So far this has been a consumer-led slowdown with few company credit defaults.  If insolvency trends start to climb ...

Just some quick musings ...

well? maybe so..but If one just uses History, it's a pretty safe bet to say things like he does for the upcomming April and May's of history..

> " The Sell in May and Go away till fall" method

To a 1/2 dozen other historically proven things that have happend 51%+ of the time

Can be said about the Bears that If One is Timing the market to Being a short Term Investor? Be my guest and play on it.. and  Just Hope and Pray you Get back in, intime to capitalize on the recovery ( ie: 03' )

But if one is " Well Diversified/Balanced" they best Stay In the market, for They will miss the Recoveries

Of course is one is Top Heavy in Large And Int'l? Not so much.. Those sectors got really burned in the last Bear Market ( 00-02') and took them several Yrs to recover to just break even.. ( LC- 42% and Int'l - 51% )

And if I was in this Top Heavy in  LC & Int'l  postions?, I WOULD be very nervous

All it's going to take is for the FED to make a turnaround and Strengthen the $ and Int'l goes down the tubes ( again) and it's just around the corner..

  It's a Crap Shoot

Gundlach articulates his "Havens from the Storm" in the last paragraphs of his report:

"I believe a break below the March lows in the mortgage sector would push a number of our banks into Bear Stearns-like insolvency. That in turn could touch off a massive sell-off in stocks and corporate credit…The only defensive strategy…would be a move to hard value assets—storehouses of value such as gold, gems, prime real estate and so forth..."

So, we have been warned. 

Jagor  

I'm actually saying he's wrong for a pure logical reason - in the event that the market falls further, he's assuming the results will be catastrophic.  I don't see why that should be the case.  Why won't we just have another routine bear market during which the Fed will intervene again to stave off financial disaster?  Personally, I'd be inclined to say this is the highest-likelihood scenario. 

Best,
Oildog

Wasn't it "logical" to assume that Bear Stearns, the nation's sixth largest security firm, wouldn't collapse "catastrophically" over one weekend?  A lot of investors and pundits--not forgetting Jim Cramer--certainly thought so.

Jagor