Five years ago today, I made the luckiest market call of my career. A few details and some context first, than an explanation as to why this was so lucky.
In 2005, I knew something was amiss in the global markets. The various metrics we track showed that credit had become a full on bubble, and was manifesting itself in residential housing. We discovered this by looking at such factors as median income to median home prices – at the time it was two going three standard deviations from the norm. Cost of owning versus cost of renting was also flashing warning signals, as was Housing value relative to GDP. Indeed, half of all new jobs being created were Real Estate related. That in itself was a giant red flag. All other signs pointed to a major correction in Housing, despite the denials from pundits
In 2006, I had done a huge analysis as to the fair market value of the Dow Industrials. At the time, the Dow was heading to 12,000, but by my calculations, was worth only 9,800. My expectations was that to reach fair value something was likely to have gone wrong in housing, and that could lead to a 3,000 point panic. My best guess was that Dow 6800 – and that hitting this was more a greater possibility than most traders might bet.
It was just a guess – and an early one at that. But after Housing began to reverse, it was apparent it would spill into the real economy. The stock market stubbornly ignored the collapsing residential real estate market until October 2007 – making that time feel like the longest year in my career. But as equities started rolling over, I began to wonder if my guess might come to pass. And so I made a promise to myself, not to become one of those one-way pundits who got one thing right in their career, and never changed their stripes ever again. There is a laundry list of such one hit wonders, and I vowed not to become one of them. Continues here
Seafood, aka the Mercedes of food, is deemed an inappropriate food source for America’s low income diners.
What Not To Buy
Daily Show 04:09
Herman Cain struggles to define food stamp assistance, and Fox News shares a myriad of concerns surrounding welfare and its intended use.
What Not To Buy – What Would Jesus Soil
It’s Now Mainstream Economics that Runaway Inequality Hurts the Economy … But Corrupt Government Policy Is Still Pouring Gasoline On the Fire and Dramatically INCREASING Inequality A who’s who of prominent liberal and conservative economists in government and academia have now said that runaway inequality harms economic growth, including: Current Fed chair Janet Yellen Former…Read More
> My Sunday Washington Post Business Section column is out. This morning, we look at the 401k. The print version headline was What’s the problem with 401(k)s? You while the online version was There’s nothing wrong with 401(k)s, except the players involved. Here’s an excerpt from the column: “What’s wrong with these plans? Human behavior,…Read More
My Sunday morning reading materials: • The market is up 170% since 2009, but are you? (MarketWatch) • Your Wilting Retirement: Company 401(k) Plans Get Stingy (Businessweek) • Things You Can Do That Wall Street Can’t (Motley Fool) • Is Gold Becoming Another Regular Old Commodity? (Pragmatic Capitalism) • Highest Minimum-Wage State Washington Beats U.S. Job Growth (Bloomberg) • How…Read More
Category: Financial Press
Captain Dave Anderson of Capt. Dave’s Dolphin and Whale Safari in Dana Point, California, at great personal risk, has recently filmed and edited a 5-minute video that contains some of the most beautiful, jaw-dropping, footage ever taken with a drone from the air of a huge mega-pod of thousands of common dolphins stampeding off Dana…Read More
Death is not distant, it’s inevitable, and ever-closer. No one knows anything. Confidence is a front. Everybody is insecure. No one cares about your SAT scores unless they aced the test. We’re all lonely looking to be connected. You’ll regret choices earlier in your life, but you’ll accept them. You’ll want the decade back when…Read More