Hi Jerry,

Here are some actual and forecast numbers:

December 1961 (followed by 28% market loss over 6 months)

January 1973 (followed by a 48% collapse over the following 20 months)

August 1987 (followed by a 34% plunge over the following 3 months) )

March 2000 (followed by a 49% collapse in the S&P over the following 30 months)

My forecast (It ain't pretty):

October 2007 followed by a 50% collapse in the S&P over the next 18 months. I believe this bear market will be very severe because of the huge pull back in consumer spending brought on by higher fuel prices and inflation that will be stopped only after a lot of pain.

Take care,

Tony 

Geeeeeeeeeeze Tony, I shouldn't have asked. I'll hang on to my non-bear market forcast for the time being. :-)

Thanks,
Jerry

Have to agree, Tony, there appears to be little reason to think we don't have quite a bit of downside remaining. I would love to hear from those who can see reason to think we are nearing a bottom.

Take care

Tim

OK - Oil is a big voluminous bubble which will eventually pop, and when it does the market will resume an upward trend and at a rapid pace. I wouldn't want to be left watching on the sidelines. Trees do not grow to the sky. There's nothing in the supply-demand equation to warrant the horrendous increase in oil price we've seen between now and one year ago. I know, I know, global demand, peak oil, ...it's different this time.

Let me add that none of this speculation on future market direction will affect my investment philosophy. It is all noise in the long run in my view.

Regards,
Jerry

Oil may drop, but how far, Jerry? Demand will, in my opinion, keep gasoline prices above $3.50 for a long time and they may never drop below that again. Add the demand for commodies along with the increasing  demand for oil products in developing countries, credit problems beyond just mortages, property taxes, increasing taxes if the Democrats make the WH.....................

The noise is deafening!!!!!!!!!!!!!!!! Let the fireworks begin.

Take care, Jerry, and have a safe 4th, all.

Tim

While I asked for opinion (on Tony's thread BTW - sorry, maybe I should delete?), we are all speculating here are we not? I heard Jack Bogle recently state on Fox Business, I believe, that if you are a speculator, you should get out of the market. He said if you are an investor, you should stay the course. Which are we? At first I was taken back by his statement, but after reflection I know what he meant.

Spectulators are just that, gambling on the future of market returns. We as investors should not be gambling but investing for the long term. Gamblers are historically known to lose, i.e., Las Vegas does not turn a profit by losing to those who gamble there. There is only one approach to winning the investment game - "Stay the Course".

That's how I see it. It's more or less a "no-brainer".

Jerry

If you are young you can afford to sit back and “stay the course”. If you are retired and in distribution an extended bear market can ravage your nest egg. Staying the course when the course has been straight down is a retiree’s nightmare.

I would have to agree more with Tony. I don’t see any light at the end of the tunnel for real estate, financials and consumer discretionary. These are large sectors of the market that are in trouble.

My opinion is that the “no brainer” is to reduce one’s exposure to current risk in domestic and foreign markets.

Tony, does your estimate of a 50% drop in the S&P over the next 18 months include the almost 20% drop we've already seen?

Playbook

Sorry, I see now that you began with October 2007 in your estimate.

Playbook.

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

My situation

I’m retired, heavily invested in both domestic and foreign securities and get my income from good commercial real-estate. I’m wondering if I should stay or get out of that schizophrenic market…

First, let’s talk briefly about Confluence

The Confluence

meeting of two or more things: a meeting or joining of two or more things, or the place where two or more things meet or join

Our economy and markets are currently at a critical confluence. Unlike previous crisis, several huge factors are simultaneously at play:

-         Real estate price collapse (began in the USA, starting to develop in the UK, etc.)

-         Financial liquidity crisis (started domestically, but spreading fast into the rest of the world) and relatively low interest rates leaving central banks limited options

-         Skyrocketing commodities and food prices

-         Widespread globalization with a level-playing field that will drag income down in the so-called “developed countries”

What in my view could happen in the next six month? (to December 31)

NEGATIVE

-         Real estate will remain “constipated,” that is, prices not falling