Here or There: No Place to Hide
Michael Panzner is a twenty-five-year veteran of the global stock, bond, and currency markets and the author of three books, including Financial Armageddon and When Giants Fall: An Economic Roadmap for the End of the American Era, due out from Wiley in February 2009.
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Up until this past year, U.S. investors had been in a mad dash to invest overseas, spurred by the belief that international diversification would provide a cushion against problems at home.
In theory, investors stood to benefit in two ways: reduced exposure to a weakening dollar and direct involvement in fast-growing markets like China and Brazil, which were supposed to hold their own no matter what might happen here.
In reality, global equity markets have remained fairly well correlated in recent years, and Americans who thought they would somehow be insulated from the long-awaited return of the U.S. bear have learned an interesting lesson.
November 12th, 2008 at 5:13 pm
I’m counting on it with EEV.
November 12th, 2008 at 5:14 pm
The chances of a bounce tomorrow just got much lower, thanks Intel.
November 12th, 2008 at 5:37 pm
DP,
Agreed. It would take a lot to overcome the gloom of today’s action and Intel’s lowered guidance. Look like new lows probably early tomorrow — after that, who knows? But there should be another bounce out there somewhere…
November 12th, 2008 at 8:45 pm
I expect maybe one more down day before a bounce. Vix approaching 70. Barry mentioned possibility of a trading range. Thought Hussman had a good attitude towards the situation in his weekly comment:
“Presently, observable evidence suggests that stocks are no longer strenuously overvalued, as they have been for over a decade (with the consequence that stocks have lagged Treasury bills over that period). Observable evidence also suggests that the washout last month was spectacular enough (and the breadth reversal substantial enough) to allow for – not ensure – a sustained advance. This could occur even within the context of an ongoing bear market, if only to allow the natural ebb and flow of data to confirm or refute the fears already impounded into stock prices. On average, similar conditions have provided a basis for strong, if impermanent, recoveries – most likely beyond the extent that we observed through last Tuesday. The selloff we saw late last week looked a lot like a standard “re-test.” A large expansion in trading volume during the next advance, whenever it comes, would add to the sustainability of a rebound.”
I expect that there will be some unexpected good news, e.g. a sudden deal on GM, that will let loose some of the pent up demand waiting for an entry point.