Julian Robertson predicts trouble ahead (May 2005):
click for video
"I am more disturbed than I have ever been in my investment life."
He believes the U.S. consumer is all but exhausted (see yesterday’s comments on the same subject) , that the effort will be made to "inflate our way out."
He notes a soft landing is possible, but ala Japan, it could involve years of flat or no growth.
Hat tip: Random Roger
When I heard this interview originally what struck me was that Julian was pointing to Japan as a POSITIVE example of a potential resolution to our own current ‘imbalances’.
Wonder what a negative resolution might look like.
Argentina!
OMG, no way we’re going to have a softy like Japan. They had an investment bubble in stocks and property, like us, but they had a huge trade surplus rather than a huge trade deficit. There is no rosy scenario for us, only toast.
Remember how the Soviet Union spent itself into oblivion? That’s us folks.
I love the negative sentiment. I’m a BULL. The last time we had an extended period when real stock earnings yields were greater than real earnings yields was the summer of 1982. Senitment was very negative at the time. Summer of 1982 was a wonderful time to buy stocks.
Some folks compare 2005 to the energy crunch years of the 70’s. In the 70’s inflation was in commodities, wages and capital. Now, even the rate of change in the oil price has declined. CPI and PPI were both down. Money is available at cheap prices. The energy crunch may take a while to solve but so far this decade is no where near the crunch of the 1970’s. If this were a BEAR market, the market would be down big on the least amount of bad news. As it is, the market is up most days no matter what the news.
Another economic “armageddon” comment (which I personally agree with also). But the problem of course is one of timing. If the timing is unknowable, then for the most part much of the risk is unknowable.
Our lives are finite and for many of us we may not even see the repurcussions before we die. Our children and grandchildren on the other hand…
While I also like to look on the bright side Jack, ‘market is up most days no matter what the news’ ??? Last I looked the market was slightly down YTD… There are a lot of negatives right now. I have to look a little harder but I can also find some positives. Best to acknowledge both sides right now I believe, some exposure but also reserving cash and hey that gold is looking like a good hedge. Regards-
The stock market is a 12mth / 18mth forward discounting mechanism. Currently its going up and has been since Feb 03. Interest rates are approaching neutral yet the economy is still growing with controlled inflation. The period of super normal profits is starting to decline back to normal profits. Not on your nelly would I be an aggressive bear here. There is still plenty of upside in this system. The bears will be right – but not right now. Most successful traders/investors are bulls and bears and often are at the same time…….
I saw this comment on rense.com, what does this guy say about gold?