# 8 scary predictions for 2009 - Dow to 4000, Food shortages



## hotbmw (12 December 2008)

8 really, really scary predictions:
Dow 4,000. Food shortages. A bubble in Treasury notes. Fortune spoke to eight of the market's sharpest thinkers and what they had to say about the future is frightening.

http://money.cnn.com/galleries/2008/fortune/0812/gallery.market_gurus.fortune/index.html


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## prawn_86 (12 December 2008)

Im sure 18 months ago they had 8 awesome and prosperous predictions for 2008


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## derty (12 December 2008)

I like the sound of this from Jim Rogers, though he fails to mention that while commodity supply is shrinking demand is also declining.



> Virtually the only asset class I know where the fundamentals are not impaired - in fact, where they are actually improving - is commodities. Farmers cannot get a loan to buy fertilizer right now. Nobody's going to get a loan to open a zinc or a lead mine. Meanwhile, every day the supply of commodities shrinks more and more. Nobody can invest in productive capacity, even if he wants to. You're going to see gigantic shortages developing over the next few years. The inventories of food worldwide are already at the lowest levels they've been in 50 years. This may turn into the Great Depression II. But if and when we come out of this, commodities are going to lead the way, just as they did in the 1970s when everything was a disaster and commodities went through the roof.


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## hotbmw (12 December 2008)

well if u read it u will see that Nouriel Roubini, Jim Rogers and Meredith Whitney have been warning us about this for 18 months ))


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## professor_frink (12 December 2008)

hotbmw said:


> well if u read it u will see that Nouriel Roubini, Jim Rogers and Meredith Whitney have been warning us about this for 18 months ))




can't say I've heard of Whitney, but I'd hardly call it interesting reading when Roubini and Rogers beat their chest about being right on the US. Rogers is bullish on China and commodities. You'd still have been smoked this year trying that one. Don't think I've ever read a bullish comment from Roubini, no matter what direction the market is going

Don't suppose Schiller and Schiff are in the article making comments too? For some reason I can't get the link to load


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## hotbmw (12 December 2008)

Robert Shiller
The Yale professor and co-founder of MacroMarkets called both the dot-com and housing bubbles.

We don't currently have anywhere near the level of unemployment that we had in the 1930s, but otherwise there are many similarities between today's environment and the Great Depression, with things happening today that we haven't seen since then. First of all, there's the magnitude of the stock market's move up and down. The real (inflation-corrected) value of the S&P 500 nearly tripled from 1995 to 2000, and by November 2008 was down nearly 60% from its 2000 peak. The only other comparable event was the one in the 1920s where real stock prices more than tripled from 1924 to 1929 and then fell 80% from 1929 to 1932. Second, we've had the biggest housing bust since the Depression. Third, we've seen 0% interest rates. We've actually seen briefly negative short-term interest rates. That hasn't happened since 1941. There was a period from 1938 to 1941 when we were bouncing around at zero and sometimes negative, but that hasn't happened since.

And the list goes on: Our numbers don't go back as far as the Depression, but consumer confidence is plausibly at the lowest level since then. Volatility of the stock market in terms of percentage changes day-to-day is the highest since the Depression. In October 2008 we saw the biggest drop in consumer prices in one month since April 1938. Another thing is that it's a worldwide event, as it was in the Depression.

I'm optimistic that we'll do better this time, but I'm worried that we're vulnerable. One of the lessons from the Depression is that things can smolder for a long time. What I'm worried about right now is that our confidence has been hurt, and that's difficult to restore. No matter what we do, we're trying to deal with a psychological phenomenon. So the Fed can cut interest rates and purchase asset-backed securities, but that only works in really restoring full prosperity if people believe that we're back again. That's a little hard to manage.

In terms of the stock market, the price/earnings ratio is no longer high. I use a P/E ratio in which the price is divided by ten-year average earnings. It's a really conservative way of looking at it. That P/E ratio got up to 44 in the year 2000, which was a record high. Recently it was down to less than 13, which is below the average of around 15. But after the stock market crash of 1929, the price/earnings ratio got down to about six, which is less than half of where it is now. So that's the worry. Some people who are so inclined might go more into the market here because there's a real chance it will go up a lot. But that's very risky. It could easily fall by half again.


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## chops_a_must (12 December 2008)

professor_frink said:


> can't say I've heard of Whitney, but I'd hardly call it interesting reading when Roubini and Rogers beat their chest about being right on the US.



Whitney is the chick that called Bear into bankruptcy ages before it happened. Was right about all the others as well iirc.

Dhukka had a thing for her as well I think. Some kind of freaky bear love.


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## strudy (12 December 2008)

At this time of the year you get all sorts of predictions,both good and bad.
If you stand back and look at the situation objectively you will find that basically it all boils down to supply and demand.

Not only the share market but also in other areas as well.

If we look at China as an example it is currently cutting down on raw materials ie. Iron Ore, but its energy requirements are outstripping supply.So as one investment door closes another investment door opens.

From my point of view I find that if I take all what the media is saying with a grain of salt and sift through all the hype and emotions that are running riot, and look at the basic facts behind the story it will give you clues as to what to look for in the way of investments for the future.


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## professor_frink (12 December 2008)

chops_a_must said:


> Whitney is the chick that called Bear into bankruptcy ages before it happened. Was right about all the others as well iirc.
> 
> Dhukka had a thing for her as well I think. Some kind of freaky bear love.




nothing wrong with a bit of freaky bear love every now and then


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## Green08 (12 December 2008)

hotbmw said:


> Robert Shiller
> The Yale professor and co-founder of MacroMarkets called both the dot-com and housing bubbles.




HOTBMW - not sure how hot your BMMMer is now

Could you please learn to cut and paste in quotations and refenece/s.  I read the article, so do the editor and copywirte laws a favour.


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## IFocus (12 December 2008)

professor_frink said:


> nothing wrong with a bit of freaky bear love every now and then




Is that about a fur thing?


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## professor_frink (13 December 2008)

IFocus said:


> Is that about a fur thing?




it is too. Didn't word that very well did I


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