The great crash ahead?

[young-gun]

Hi,

I have been doing alot of reading lately, and i have just recently finished a book called the great crash ahead by harry s dent. Now this guy has some fairly controversial and extreme views and outlooks for the world economy, but his views also make quite alot of sense.

I'm only young and very in-experienced in the sharemarket, but for those of you that still have hope in trading long on the sharemarket i ask, when is it going to get better?! Everyday i watch business channels(not hoping to get anything from them other than some news updates) and i see economist after economist getting up and saying " the market is definitely oversold, and we see some real bargains coming through now" and have been saying this since the asx was at 4900?

Governments have now had 4 years to repair broken and debt plagued economies and have all but completely failed. In this book the main force behind the research is demographics. It looks at peak spending patterns of generations, and guess what, the baby boomers are at the end of theirs. Hasn't anyone wondered why the hell after the amercian fed has pumped TRILLIONS of dollars into the economy that the US growth has simply stagnated if not dropped marginally?

Why you ask? Because the fed is working against a force beyond their control, and one that no one has ever experienced! Deflation. Can anyone tell me what would have happened if the fed had of printed 3 trillion dollars in 2005 when the dow was sky rocketing, and pumped it into the economy? inflation would sky rocket?! but it hasn't has it.

It's only a matter of time before governments run out of cards to play, and the world has to face the music. Baby boomers have inflated prices to unsustainable levels for gen y'ers like myself, and something has to give. If your a baby boomer just ask yourself where your at in your life. Are you in the market to be buying a new 7 piece lounge set and a new tv, spending 400$ a week on groceries to feed growing teenagers,and then maybe upgrading your home in 6 months? OR are you thinking, the kids have left home, i need to downsize, and oh sh#$ my supers taken a big hit, and i better start saving for my retirement!

Its this worldwide shift in spending habits that caused japan to crash(which 20 years later they still havent bounced back from) and that i personally believe will cause the next crash that is knocking on our door. Europe has an ageing population, and have been sitting on the edge of financial meltdown for months. America has an unrealised debt in excess of 60 trillion, yes thats right 60 trillion in private, finance, and government sector debt. It will surely all have to come to a head will it not?

Anyway sorry for all the doom and gloom but my main reason for posting is to see what other people thought about the above opinions, and would appreciate other users views and arguments.

Thanks!

 

[explod]

You are on the right track in my view.

It is not all gloom and doom either. The sun will come up tomorrow and yes a lot of people are going to learn what it is like to be poor. However people like yourself and others that you can alert will be okay. Just battern down the hatches.

A mate of mine, acknowledegements Steve, sent this to me this morning:

http://www.fourhorsemenfilm.com/video/

 

[young-gun]

You are on the right track in my view.

A mate of mine, acknowledegements Steve, sent this to me this morning:

http://www.fourhorsemenfilm.com/video/

Looks like quite an interesting doco. Hopefully we'll get to view it over here.

I'd also like to raise awareness for those that think "Australia is immune, China will keep us afloat".

China's inflation rates are possibly the most unsustainable figure in the world today. Just recently their growth is coming under pressure and being pulled into question. China has been building entire cities to house millions of people, and not a soul is living there! All to keep their workforce ticking over and in hope of future growth. It won't happen over night, but when china does collapse, we will be sucked into this debt crash just as bad as any other nation. And how do you think the government is going to plug its spending deficits when they can't tax the resource sector due to drastically slashed demand? By taxing you and i.

 

[LostMyShirt]

According to Dent and his reviewers; his prediction of a great boom did come to fruition, thus his accuracy trend is said to continue. I have not read tha book, but looking at Dent's interview, he seems adament on his view. Is there any other self proclaimed Market Guru out there that is not adament on their own perceptions of the market? Why arn't the likes of Buffet commenting on such an outlook?

Unfortunately, I am slightly with dent in the sense that; yes there is going to be some sort of downward trend and correction providing the current situation continues, which it very well may due to the lack of long term fixes and bandaid solution being applied to the markets. We have seen the fruits of the FED and how quickly they rott.

All in all; I don't know. It would be best to stay alert, follow the news, and manage your risk a great deal. I suppose that is the only advice I can give myself.

 

[young-gun]

According to Dent and his reviewers; his prediction of a great boom did come to fruition, thus his accuracy trend is said to continue. I have not read tha book, but looking at Dent's interview, he seems adament on his view. Is there any other self proclaimed Market Guru out there that is not adament on their own perceptions of the market? Why arn't the likes of Buffet commenting on such an outlook?

Unfortunately, I am slightly with dent in the sense that; yes there is going to be some sort of downward trend and correction providing the current situation continues, which it very well may due to the lack of long term fixes and bandaid solution being applied to the markets. We have seen the fruits of the FED and how quickly they rott.

All in all; I don't know. It would be best to stay alert, follow the news, and manage your risk a great deal. I suppose that is the only advice I can give myself.

He has made numerous predictions that have come to fruition. Perhaps not in the same year as predicted but definitely within a year or two give or take. If governments didn't go on the emergency stimulus spending sprees that they have we would already be well into the worst deflationary period we will ever see in a lifetime.

I'm by no means saying his work is gospel! he has made some outrageous claims in the past that have not been correct. But he has a different view to that of traditional economists, and as far as i can recall none of them predicted the debt collapse of 07/08, hence the huge losses everyone incurred. Present economists are brilliant at explaining what just happened, not so great at whats about to happen.

I'm not familiar with Buffet but will start researching him also.

 

[ROE]

"The market can stay irrational longer than you can stay solvent."

That said enough about boom and bust prediction

4 years since Keen predict housing melt down ...sold his house and pay rent.

look like the market will stay irrational longer than he can afford to buy the next house

 

[howmanyru]

I don't see a great crash coming, just a slow erosion of peoples wealth. I think the panic & shock of 2008 was the great crash. The bubble burst but was not allowed to run its course. With the bubble re inflated, it will now gradually deflate to where it was going anyway. Now our children will pay for our greed !!! It's not all bad, frugality will return & maybe we will be less materialistic? thats gota be a good thing? also good for the environment if we are making and disposing of less stuff.

 

[Bill M]

Good ol Harry Dent hey? He predicted 40,000 on the DOW. He was so wrong.

---
Demographic trends guru Harry S. Dent is making the rounds again, and touting his latest book, The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History ...." In his 2006 work, Dent predicted, “The Dow hitting 40,000 by the end of the decade, the NASDAQ['s] advancing at least ten times from its October 2001 lows to around 13,500, and potentially as high as 20,000 by 2009 … The Great Boom['s] resurging into its final and strongest stage in 2007, and even more fully in 2008, lasting until late 2009 to early 2010.” Of course, those who read The Roaring 2000s, Dent's 1999 masterpiece, should soon be buying each of us a turkey with all the fixin's. According to the book, only a year remains before the Dow breaks 40,000 and the Nasdaq hits 20,000

Link here: http://en.wikipedia.org/wiki/Harry_Dent
---

 

[medicowallet]

"The market can stay irrational longer than you can stay solvent."

That said enough about boom and bust prediction

4 years since Keen predict housing melt down ...sold his house and pay rent.

look like the market will stay irrational longer than he can afford to buy the next house

Actually, he could probably buy it now for what he sold it for.

Wonder what it could be worth in 2-3 years time.

I owuld take $500k in cash as opposed to $500k property at the moment, no troubles.

 

[pilots]

We have just returned from three months in Europe. I watched the money shows most nights they finished the show with this, don't worry about the return on your investment, WORRY ABOUT THE RETURN OF YOUR INVESTMENT.

 

[Smurf1976]

Looking at the US, they've pretty clearly been going backwards in real terms for more than a decade now. The market may well have gone sideways in nominal terms, but with pathetic dividend yields and after inflation it's gone backwards in reality.

As for other things, I can only point out that one wage was perfectly adequate to purchase an average house and raise a family 35 years ago. Two incomes struggle to achieve the same thing today. Sure, cars and TV's might be cheaper, but the cost of housing relative to incomes has literally doubled and that's the real killer since it's by far the largest expense for most.

 

[sptrawler]

I don't see a great crash coming, just a slow erosion of peoples wealth. I think the panic & shock of 2008 was the great crash. The bubble burst but was not allowed to run its course. With the bubble re inflated, it will now gradually deflate to where it was going anyway. Now our children will pay for our greed !!! It's not all bad, frugality will return & maybe we will be less materialistic? thats gota be a good thing? also good for the environment if we are making and disposing of less stuff.

Agree with most of what you are saying, the bit about our children paying for our greed, is a bit off!!!!

I know a lot of people in their late 50's, most are tradesmen, that haven't a lot of money.
You have to remember that most of these guys have less than $100k in super and don't own their house.
Just because house prices where pumped up by the real estate agents, doesn't mean all the baby boomers jumped into debt to buy houses and made a killing.
Most grew up in hard times and were risk averse and didn't capitalise on the opportunities that were available. Some did but would have been burnt in the G.F.C.
I guess what I am getting at is there is not a lot of "normal baby boomers " out there,that I know,that don't have a lot of money.
The baby boomers are constantly demonised for the rise in house prices, but I feel the problem was caused by the real estate agents cranking prices, to increase commissions.
Most sellers look to the agents to give them an indicative price, the agents worked out just slowly ratchet the prices and you get a ponzi scheme happening.
Well now the elastic band is streched as far as it can go, everyone wants to blame somebody for the problem.
Greed was the problem but it was the real estate agents that caused the problem.
Most of the baby boomers who made a "killing" on their house, borowed money to buy another house.

I guess what I am getting at is, the greed wasn't as wide spread as some would have us believe.

 

[sptrawler]

Agree with most of what you are saying, the bit about our children paying for our greed, is a bit off!!!!

I know a lot of people in their late 50's, most are tradesmen, that haven't a lot of money.
You have to remember that most of these guys have less than $100k in super and don't own their house.
Just because house prices where pumped up by the real estate agents, doesn't mean all the baby boomers jumped into debt to buy houses and made a killing.
Most grew up in hard times and were risk averse and didn't capitalise on the opportunities that were available. Some did but would have been burnt in the G.F.C.
I guess what I am getting at is there is not a lot of "normal baby boomers " out there,that I know,that don't have a lot of money.
The baby boomers are constantly demonised for the rise in house prices, but I feel the problem was caused by the real estate agents cranking prices, to increase commissions.
Most sellers look to the agents to give them an indicative price, the agents worked out just slowly ratchet the prices and you get a ponzi scheme happening.
Well now the elastic band is streched as far as it can go, everyone wants to blame somebody for the problem.
Greed was the problem but it was the real estate agents that caused the problem.
Most of the baby boomers who made a "killing" on their house, borowed money to buy another house.

I guess what I am getting at is, the greed wasn't as wide spread as some would have us believe.

Maybe someone should do a study into what the " baby boomers " are really doing.
The last report I read there was a huge amount over 65's back in the work force.

 

[GumbyLearner]

 

[young-gun]

Good ol Harry Dent hey? He predicted 40,000 on the DOW. He was so wrong.

---
Demographic trends guru Harry S. Dent is making the rounds again, and touting his latest book, The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History ...." In his 2006 work, Dent predicted, “The Dow hitting 40,000 by the end of the decade, the NASDAQ['s] advancing at least ten times from its October 2001 lows to around 13,500, and potentially as high as 20,000 by 2009 … The Great Boom['s] resurging into its final and strongest stage in 2007, and even more fully in 2008, lasting until late 2009 to early 2010.” Of course, those who read The Roaring 2000s, Dent's 1999 masterpiece, should soon be buying each of us a turkey with all the fixin's. According to the book, only a year remains before the Dow breaks 40,000 and the Nasdaq hits 20,000

Link here: http://en.wikipedia.org/wiki/Harry_Dent
---

im glad you posted these figures as they are some of the ones i was referring to when i stated that not all of his predictions have been correct he may overemphasize losses or gains to scare people into reading his books, or he may simply be wayy off the mark, either way the general trends seem to head in the direction he predicts.

 

[Bill M]

im glad you posted these figures as they are some of the ones i was referring to when i stated that not all of his predictions have been correct he may overemphasize losses or gains to scare people into reading his books, or he may simply be wayy off the mark, either way the general trends seem to head in the direction he predicts.

And now he is saying
---
"Gold and silver are going to crash, they're a bubble," he said.

Link here: http://smh.domain.com.au/tsunami-to-hit-australian-real-estate-20110911-1k413.html
---

At the end of the day he is just another one of the thousands of gurus who think they can see into the future. Why would he be right and all the others wrong? He has made some very bad calls. Good for selling books though.

 

[investorpaul]

And now he is saying
---
"Gold and silver are going to crash, they're a bubble," he said.

Link here: http://smh.domain.com.au/tsunami-to-hit-australian-real-estate-20110911-1k413.html
---

At the end of the day he is just another one of the thousands of gurus who think they can see into the future. Why would he be right and all the others wrong? He has made some very bad calls. Good for selling books though.

I agree no one would buy his book if he said X Investment Class is going up 10% even if he was right each and every time.

He needs to make outlandish statements to get free press for his book. I don't think he appeals to investors and traders who conduct their own research or analysis, but people chasing get rich quick schemes you love his stuff.

 

[young-gun]

I agree no one would buy his book if he said X Investment Class is going up 10% even if he was right each and every time.

He needs to make outlandish statements to get free press for his book. I don't think he appeals to investors and traders who conduct their own research or analysis, but people chasing get rich quick schemes you love his stuff.

im not sure that predicting a 10 year or so deflationary period is necessarily promoting a get rich scheme to investors? especially given the only way you would make money in a sharply falling market is by going short, which i know of a few people who don't want anything to do with, or even know about cfd's and derivatives.

he does claim the gold and silver are bubbles, and i believe gold is currently down almost 300$ an ounce from its staggering september highs? dent predicts that the US dollar will become the new safe haven once the US stops printing money(so to speak), they start working down their tremendous debt, and their dollar will start to become more valuable. any thoughts on this?

i have no doubt that extreme predictions helps sell books and triggers that little part of people that loves drama. i just find it interesting as he takes a different approach to everything else i've been reading, not to say hes right as you said. but for those of you that are technical/analytic investors, he produces some interesting graphs and trend lines( and yeah i know anyone can probably pull a graph and draw some lines on it to support your theory)

 

[ROE]

Actually, he could probably buy it now for what he sold it for.

Wonder what it could be worth in 2-3 years time.

I owuld take $500k in cash as opposed to $500k property at the moment, no troubles.

Unless properties price reduce significantly he already losing money
Price edge up slowly since he sold out...his place is in inner city Sydney
since 2008 price gone up around 5%

if he buy again he's up for stamp duties and various charges

at this point in time he's losing and the longer the market stay the same
the more money he bleeds.

losing capital gain free status for PPOR etc...

I'm not pro-properties I found most people who act on predictions
lose out through out history....

there are more losers than winners
in predicting market direction...

Only sure way to make money is spend less than you earn and
let time and compounding works for you

 

[medicowallet]

Unless properties price reduce significantly he already losing money
Price edge up slowly since he sold out...his place is in inner city Sydney
since 2008 price gone up around 5%

if he buy again he's up for stamp duties and various charges

at this point in time he's losing and the longer the market stay the same
the more money he bleeds.

losing capital gain free status for PPOR etc...

I'm not pro-properties I found most people who act on predictions
lose out through out history....

there are more losers than winners
in predicting market direction...

Only sure way to make money is spend less than you earn and
let time and compounding works for you

5% increase over 3 years does not justify the risk in the property market atm.

He is in a great position, and property is still under a lot of pressure

In fact, he is probably breaking even, if he invested in cash at 6.5% per year, after both investments count their outgoings involved.