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Sunday, October 19, 2008

The longer term view for Markets

Several bloggers I read have been coming together eerily to be calling for the same result.
The inflationary and deflationary bloggers now BOTH say Deflation has "won" for now, and has taken grip on the USA (and probably world).

Deflation basically means cash will be king, and prices will come down. Houses, Stock market, just about everything.

Many of the bloggers look at stock market charts and use various theories for stock market charting. I am not a chartist believer, but do respect the practice, since hoards of chartists can together make theory into reality. Basically if 100,000 chartists specialists in corporations, banks, and professional investors "see" the same pattern, use the same theories, to come to same conclusions, they will act in unison without confirming with each other. This could then become self-fulfilling prophecy.

In any event, the chartists are saying a few things in unison now.
1) We may see the start of a major dislocation in the market this week, most calling to be Wednesday or later.
2) The next leg down will be ..... disturbing? Bringing the market back to 2003 lows. That will be a moment of truth, if we hold we rally for a few weeks/months, possibly into next year.
3) If the 2003 lows don't hold, the charts think we WILL hold 1997 support levels, then rebound, fiercely for months into next year.
4) After the next rally, probably 2009, final collapse back to 1995 levels.

All of these scenarios are not good. We are talking decimation of 401K, pension plans, not good things.
I for one, will try to "profit" from this. My best scenario is I am 100% wrong, bottom is in, and I lose my shirt. Really, that's what I hope happens. But I believe that the chartists are correct, the USA is targeting wiping out over 13 years of gains. And that DOESN'T take into consideration inflation, which if adjusted for, could make it much much worse of a decline in real value.

What to do? Sit tight, STAY OUT of the market, stay in bonds.

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