GreatPig
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John Mauldin's Predictions for 2008
- Thread starter GreatPig
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Scuba
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GreatPig
Pigs In Space
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LOL, didn't notice that.
But then I did post another message after that one, so that one would have only been 2007.
GP
But then I did post another message after that one, so that one would have only been 2007.
GP
Scuba
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I had a look at new posts and it showed that as your last, so I'll leap to the conclusion that there was a conspiracy!
LOL
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In essence, John Mauldin says:
So let's get to the predictions. I think that we are in a recession for most of the first half of this year, and that we begin a slow recovery in the second half. It will be a Muddle Through Economy for at least another year after that. That would suggest that most companies will come under serious earnings pressure. If history is any indicator, that means we should see a bear market in the first half of this year. How deep will depend on how fast the Fed cuts, but I don't think we are looking at anything close to the bear market of 2000-2001. Still, I wouldn't want to stand in front of a bear market train.
Consumer spending is going to slow, and it will be slower to rebound, for reasons outlined above. That will also make the recovery in the stock market a little slower. But I expect to become bullish on the market sometime this summer, if not before. I'm looking forward to it.
I think we can all gel with his comments there, but I particually like this line:
There is never just one cockroach.
Refering to his belief that many financial institutions will be taking large losses every quarter for the next few quarters. At the end of each quarter, investors will hope that this is finally the end. "Surely this time they have gotten it all out in the open." It won't be, because banks can't write down loans until the counterparty risk problem is solved.
The "one cockroach" he mentions is ACA:
Never heard of the company? You will. ACA has dropped 95%, from $16.55 to $0.86 today. Why? Because the company sold credit insurance on CDOs. "If now junk rated ACA can't come up with an additional $1.7 billion in capital by January 18, it will be insolvent and the $69 billion in credit default swaps on CDOs it underwrote will be worthless." (Shilling) $69 billion? That is huge. Think that won't hurt balance sheets all over the world?
All nothing new to most of us I'm sure, but putting a spotlight on the scale of this crisis, and showing even the fencesitters and so called experts are finally coming to terms with the depth of this Global financial mismanagement. (Easy and Cheap Credit)
No bandaid fix this one!
So let's get to the predictions. I think that we are in a recession for most of the first half of this year, and that we begin a slow recovery in the second half. It will be a Muddle Through Economy for at least another year after that. That would suggest that most companies will come under serious earnings pressure. If history is any indicator, that means we should see a bear market in the first half of this year. How deep will depend on how fast the Fed cuts, but I don't think we are looking at anything close to the bear market of 2000-2001. Still, I wouldn't want to stand in front of a bear market train.
Consumer spending is going to slow, and it will be slower to rebound, for reasons outlined above. That will also make the recovery in the stock market a little slower. But I expect to become bullish on the market sometime this summer, if not before. I'm looking forward to it.
I think we can all gel with his comments there, but I particually like this line:
There is never just one cockroach.
Refering to his belief that many financial institutions will be taking large losses every quarter for the next few quarters. At the end of each quarter, investors will hope that this is finally the end. "Surely this time they have gotten it all out in the open." It won't be, because banks can't write down loans until the counterparty risk problem is solved.
The "one cockroach" he mentions is ACA:
Never heard of the company? You will. ACA has dropped 95%, from $16.55 to $0.86 today. Why? Because the company sold credit insurance on CDOs. "If now junk rated ACA can't come up with an additional $1.7 billion in capital by January 18, it will be insolvent and the $69 billion in credit default swaps on CDOs it underwrote will be worthless." (Shilling) $69 billion? That is huge. Think that won't hurt balance sheets all over the world?
All nothing new to most of us I'm sure, but putting a spotlight on the scale of this crisis, and showing even the fencesitters and so called experts are finally coming to terms with the depth of this Global financial mismanagement. (Easy and Cheap Credit)
No bandaid fix this one!
