Recession - A Reality
September 29th, 2008 | Investing, News & UpdatesToday’s drop in the US equity market is going to confirm the idea of a recession in the minds of many Americans. Hopefully your sitting on a substantial pile of cash that you can invest with in the coming months and year. If the government and the Fed have their way we’ll get inflated out of this deflationary crisis and into yet another bubble.
What I found the most disturbing today was how wrong the market was on the bailout vote. A lot of very smart people (think Warren Buffett) were betting on the bailout being passed. With so many people caught on the wrong side of the trade, you have to think that if we don’t rally soon (this week) the market is going to ‘crash’ if earnings season is bad.
With so many conflicting thoughts on this matter, one thing is for certain. This is probably one of the best investing opportunities you will come upon in your lifetime.
Previous thoughts:
2007/11/01/equity-markets-something-just-doesnt-seem-right
2007/10/19/subprime-mortgages-cdos-explained
2007/09/07/recession-coming-in-2008
2007/08/15/10-correction-in-the-stock-market
2007/08/12/prosper-subprime-and-market-volatility
September 30th, 2008 at 11:42 am
“A lot of very smart people (think Warren Buffett) were betting on the bailout being passed.”
True statement; conversely a lot of ‘very smart people’ got us into this mess. In 2006, I was speaking to ‘Blue Collar workers’ that are at the lower end of the socioeconomic ladder. They concurred with my estimation that the subprime mortgages and HELOCS were going to throw us into a serious recession. We saw it coming 10 miles up the road. Similarly, economist Lawrence Kudrow infomed us in 2006 that the amount of disposable debt that Americans hold is as high as that leading into the Great Depression. During the housing boom, the amount of disposable income was -2.5%. Can you imagine what it is now? This crisis affects many, many people. What isn’t being talked about is the fact that the numbers of people with 30 yr. fixed loans that are failing to pay their mortgages is rising, too.
October 2nd, 2008 at 8:53 pm
Jana: I think most financially savvy people saw that the housing boom was going to crash in flames. After all, did we not just go through a .com bubble prior? The main problem in this whole situation was that too many smart people were making too much money off this to put an end to it. As a result, less financially savvy people were downright tricked into taking out mortgages they couldn’t afford. Pretty depressing stuff…
December 10th, 2008 at 2:07 am
what fixed the great depression…
I cannot agree on everything you say in this article, but perhaps I missed some of the points you were trying to make….
December 30th, 2008 at 11:27 pm
hey…
usefull…
December 31st, 2008 at 9:41 am
hi…
wow…
December 31st, 2008 at 9:22 pm
hello…
I have already seen it somethere…