The Crackpot Returns

First off, sorry to all for not posting for such a good stretch of time.

If you have been reading my posts here, you know that I have been anticipating some significant changes in the status quo of the US economy. Last summer I started to get the notion that things were out of control on a number of fronts, including the stock market. I had good reason to be concerned. I personally saw nearly $250,000 evaporate courtesy of the stock market in 2000 / 2001, and was in no mood to start rebuilding retirement accounts and investments again.

I was so convinced that something was going to happen, I took every last penny I had for investment and put it in cash. At that time I considered myself a bit of a crackpot. My conscience told me I should tell people I care about what I had done and why. I am sure most of them though I was going to miss out. Months went by and yep, I was missing some good sized appreciation. But for the life of me I could not understand the fundamentals of why the market would go higher, when there was an increasing downdraft on it. I make it a point to never again invest in something I don’t understand the basic mechanics of.

On February 27th we had a small rout in the markets. It was impressive to watch, but its not the correction I am expecting. That one will take several weeks, and will be at least 20% of the current index. That means the Dow back in the 10,000 range. I still expect it within the next few months.

The reasons behind my expectations – massive leverage in the markets, the break down of the Yen carry trade, and run-away inflation in China. I know I am probably wrong, but lets see how it turns out.

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Category: China, Economics, Main, Recession Watch