"Never could I imagine this level of insanity. I would say over the next two years stocks down 70-85%, residential real estate down 60-70%, and government bonds down 10-15%, junk more equity like, large number of defaults. Ten year returns stocks down 5%, residential real estate down 4%, and bonds up 1%."
A more correct assessment of this “prediction” would be a strike price at the lows in each asset class, which would miss the mark, but still be substantial. I don’t believe this bear market is over, and have noted the reasons in past posts.
In regards to real estate, our daughter and husband looked at a couple of houses last weekend. Their assessment is sellers desperate, and prices way too high for product. My house is down about 30% from the high, and still that is optimistic. There has not been a sale in our neighborhood in the past six months.
I'm starting to think we'll soon be in a 'good news is good news' situation...some of these economic numbers are starting to roll over. Interest rates will fall and inflation fears will end. The new worry will be scraping together some economic growth.
Which is probably ok for stocks, and GREAT for bonds.
I'm starting to think we'll soon be in a 'good news is good news' situation...some of these economic numbers are starting to roll over. Interest rates will fall and inflation fears will end. The new worry will be scraping together some economic growth.
Which is probably ok for stocks, and GREAT for bonds.
Well since most of your so-called economic growth is hitched to Government spending I see no good news. If past Fed cuts are an indicator for stocks the answer is Not good.
I'm starting to think we'll soon be in a 'good news is good news' situation...some of these economic numbers are starting to roll over. Interest rates will fall and inflation fears will end. The new worry will be scraping together some economic growth.
Which is probably ok for stocks, and GREAT for bonds.
Well since most of your so-called economic growth is hitched to Government spending I see no good news. If past Fed cuts are an indicator for stocks the answer is Not good.
yeah it will be interesting. Fed spending as a percent of GDP has been falling like a rock but is still well above pre-covid rates. We've had good economic growth so far but things are clearly slowing a bit right now. I assume spending will continue to fall so we'll see how much of a sweetener that has been.
The figure I saw the last few days was 5.2% of which 5.5% was Government spending. Interestingly as I type is just this question as Bank CEOs testify in the Senate, the enormous Treasury issuance, and future ramifications.
This post was edited 6 minutes after it was posted.
The figure I saw the last few days was 5.2% of which 5.5% was Government spending. Interestingly as I type is just this question as Bank CEOs testify in the Senate, the enormous Treasury issuance, and future ramifications.
This post was edited 6 minutes after it was posted.
I find it fascinating that Hussman, Igy, Agip (just noting the predictions of others), Mike Wilson and others have been predicting the demise of the markets for all of 2023. Of course they were all drastically wrong (excluding Agip). They were dead wrong but will they ever admit it? And WHO predicted that the NASDAQ would be up 37% this year. THAT PERSON is the one I am paying attention to. Not Igy. Not Mike Wilson. Not Hussman. Not Morgan Stanley. Not JP Morgan. I am paying attention to whoever predicted a 37% increase in the Nasdaq.
I find it fascinating that Hussman, Igy, Agip (just noting the predictions of others), Mike Wilson and others have been predicting the demise of the markets for all of 2023. Of course they were all drastically wrong (excluding Agip). They were dead wrong but will they ever admit it? And WHO predicted that the NASDAQ would be up 37% this year. THAT PERSON is the one I am paying attention to. Not Igy. Not Mike Wilson. Not Hussman. Not Morgan Stanley. Not JP Morgan. I am paying attention to whoever predicted a 37% increase in the Nasdaq.
That would be the Insiders selling the Magnificent Seven. All you really need to know. :-)
I find it fascinating that Hussman, Igy, Agip (just noting the predictions of others), Mike Wilson and others have been predicting the demise of the markets for all of 2023. Of course they were all drastically wrong (excluding Agip). They were dead wrong but will they ever admit it? And WHO predicted that the NASDAQ would be up 37% this year. THAT PERSON is the one I am paying attention to. Not Igy. Not Mike Wilson. Not Hussman. Not Morgan Stanley. Not JP Morgan. I am paying attention to whoever predicted a 37% increase in the Nasdaq.
yeah step 3 of this prediction review would be for someone to go find what the guys who have been accurate are saying now.
Although it's just luck, getting predictions right. So whatever they are saying now probably doesn't mean much.
"Semiconductor inventory levels remain extreme, and we could see some destocking over the coming quarters, -40% putting pressure on demand. This is likely to translate into weaker pricing and margins for the sector." https://t.co/TgBSiDpoBM via @dailychartbookpic.twitter.com/KMq7oyiKIf
'Even if inflation declines, soaring debt levels, deglobalization, and populist pressures will keep rates higher for the next decade than they were in the decade following the 2008 financial crisis.' https://t.co/dNLSgf5EnA by @krogoff
On 12/20/21, two years ago, Igy predicted stocks would be down 70-85% in December 2023.
Instead, the SP500 is exactly, precisely where it is today vs where it was on 12/20/21. Add the dividend we'll say there's been a 3% return.
Igy also predicted home prices falling 60-70%. Instead, they are up 12%, going by Case Shiller.
Government bond returns....eyeballing it, looks like down 8%, close to the 10-15% prediction. So that was a good one.
Junk down 3%, not 60-70%.
I'll have to call this an incorrect prediction from Igy, although he was right to be pessimistic in general and almost got his government bond prediction correct.
This is page 2519 if you all want to go back and take a look.
"Never could I imagine this level of insanity. I would say over the next two years stocks down 70-85%, residential real estate down 60-70%, and government bonds down 10-15%, junk more equity like, large number of defaults. Ten year returns stocks down 5%, residential real estate down 4%, and bonds up 1%."
I am going to be quite a bit more supportive of Igy's post and I consider that in all fairness, one needs to take a deeper look, at least in so far as the stock market (not bonds, not real estate) prediction.
First, he said the markets would fall to a certain level and that fall would happen within two years. The markets did fall and precipitously so. He did not say if they would rebound (which they did), he only said that the market was in for a correction, and it would happen within two years - which it did. Grant him that, it did fall, and by a lot.
Igy picked a level - a rather bold move - and those numbers were much higher than what occurred. He said they would drop 70%- 85%, and instead, Nasdaq dropped a more modest -33% and S&P500 -23%. But if we interpret the comment more generally, the Nasdaq dropped an even greater 40% off it's October 2021 high to it low a year later.
Basically, all Igy was saying is something to the extent that the stock market is grossly overvalued and will suffer a massive correction/downturn in the range of 70% - 85%. So, it does do that, but just to a lesser extent of 40% (at least in the case of Nasdaq, slighly less for S&P 500).
Let's put this into perspective - he was making a general call to alarm - there would be a massive downturn and it would happen within a 2 year timeframe. That is what happened. He was correct to that extent.
He over estimated the severity, but make no doubt about it - it was a massive correction, as he was warning. And he was right in that it happened within a 2-year window.
What he missed, at least in so far as that particular prediction, is that it would rebound, though in all fairness, his proclamation does not address that possibility. And he missed the magnitude - his forecast was about double his estimation.
He was right in the direction and the timeframe.
And in my opinion, taken in the context of the time it was given, overall I would say that his forecast was not bad. I say that because he correctly called a massive downturn and he called that it would happen within the correct timeframe. And frankly, that was the central point he was trying to make, without trying to make some overly technical contract out of it.
I had some money come free from prior investments about 2.5 weeks ago and bought a handful of different BBB-rated corporate bonds maturing between 2029 and 2032, with an average yield of 6.4% over an average time to maturity of ~ 7 years. The price of those bonds has moved up 2.5% in 2.5 weeks, suggesting to me that the peak opportunity to scoop up investment-grade bonds with juicy yields might be fading into the rear view mirror.
On 12/20/21, two years ago, Igy predicted stocks would be down 70-85% in December 2023.
Instead, the SP500 is exactly, precisely where it is today vs where it was on 12/20/21. Add the dividend we'll say there's been a 3% return.
Igy also predicted home prices falling 60-70%. Instead, they are up 12%, going by Case Shiller.
Government bond returns....eyeballing it, looks like down 8%, close to the 10-15% prediction. So that was a good one.
Junk down 3%, not 60-70%.
I'll have to call this an incorrect prediction from Igy, although he was right to be pessimistic in general and almost got his government bond prediction correct.
This is page 2519 if you all want to go back and take a look.
"Never could I imagine this level of insanity. I would say over the next two years stocks down 70-85%, residential real estate down 60-70%, and government bonds down 10-15%, junk more equity like, large number of defaults. Ten year returns stocks down 5%, residential real estate down 4%, and bonds up 1%."
I am going to be quite a bit more supportive of Igy's post and I consider that in all fairness, one needs to take a deeper look, at least in so far as the stock market (not bonds, not real estate) prediction.
First, he said the markets would fall to a certain level and that fall would happen within two years. The markets did fall and precipitously so. He did not say if they would rebound (which they did), he only said that the market was in for a correction, and it would happen within two years - which it did. Grant him that, it did fall, and by a lot.
Igy picked a level - a rather bold move - and those numbers were much higher than what occurred. He said they would drop 70%- 85%, and instead, Nasdaq dropped a more modest -33% and S&P500 -23%. But if we interpret the comment more generally, the Nasdaq dropped an even greater 40% off it's October 2021 high to it low a year later.
Basically, all Igy was saying is something to the extent that the stock market is grossly overvalued and will suffer a massive correction/downturn in the range of 70% - 85%. So, it does do that, but just to a lesser extent of 40% (at least in the case of Nasdaq, slighly less for S&P 500).
Let's put this into perspective - he was making a general call to alarm - there would be a massive downturn and it would happen within a 2 year timeframe. That is what happened. He was correct to that extent.
He over estimated the severity, but make no doubt about it - it was a massive correction, as he was warning. And he was right in that it happened within a 2-year window.
What he missed, at least in so far as that particular prediction, is that it would rebound, though in all fairness, his proclamation does not address that possibility. And he missed the magnitude - his forecast was about double his estimation.
He was right in the direction and the timeframe.
And in my opinion, taken in the context of the time it was given, overall I would say that his forecast was not bad. I say that because he correctly called a massive downturn and he called that it would happen within the correct timeframe. And frankly, that was the central point he was trying to make, without trying to make some overly technical contract out of it.
Thanks for that Seattle. I am not alone in pointing toward traditional valuation metrics, investor behavior, Government policies, etc. to come to a conclusion, right or wrong over a given time period. The quoted numbers sound outrageous, but not far off what investors experienced 3/2000-10/2002 or 10/2007-3/2009. Also periods of turmoil caused in large part by Government unhinged policies.
Currently I am betting a 20% allocation that this current move is overdone, and we will be back at 4,200 in a couple of months, with the possibility of something more severe increasing into spring and summer. New market highs would crush that view, but would be supportive of my larger investment in EM Bond CEFs currently up 21%. And conversely I would expect to lose that capital appreciation on a general market retreat. So straddlling a fence hoping to not crack a nut. :-)
This post was edited 6 minutes after it was posted.
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