jordanlawman83 (![[info]](http://l-stat.livejournal.com/img/userinfo.gif){kind=small} jordanlawman83) wrote in caffeineguy, |
Fun times!
This won't be like the easy recessions we've grown up with (it'll be worse), but keep in mind that Roubini is one of the most bearish out there, and he has been for some time.
Usually, when people who aren't involved in the market start carrying on about their favorite stocks, it's time to sell. On the flip side, when a well-traveled ad guy (not picking on you here) starts writing about the economy for the first time that I've ever seen, and uses an article about the most dour economist of note, then it is a time to buy.
I only wish this maxim were true today. The good news is, even if the stock market looks overpriced (and will likely get even more so in the next month or two), credit markets are still fucked. You can get lots of screaming deals on high grade corporate bonds.
Right now, wouldn't you rather be higher in the capital structure, given that lots of smart people subscribe to the gloomy Roubini outlook? Less upside potential, but in the event of bankruptcy you have a higher priority claim on assets versus common stockholders.
But, what if Roubini and his ilk are wrong? Yes things are terrible now and will probably get worse in the next few months, but you have to consider Rumsfeld's 'unknown unknowns'. The last time we had a deflationary environment brought on by a collapse in asset prices and the velocity of money was the Great Depression. That only ended once World War II broke out.
While it may be wishful thinking, who knows if some exogenous event like war might drag us out of this funk? Maybe Obama might magically conjure some spending and investment program that'll do the trick (I doubt it...). Don't get too depressed by all of this, but DO pay down any debt you have and keep your job!
This is a super-long winded response that is all over the place, my apologies. I work in research for an investment firm, so I get all excited about this stuff. I could discuss this for days.
This won't be like the easy recessions we've grown up with (it'll be worse), but keep in mind that Roubini is one of the most bearish out there, and he has been for some time.
Usually, when people who aren't involved in the market start carrying on about their favorite stocks, it's time to sell. On the flip side, when a well-traveled ad guy (not picking on you here) starts writing about the economy for the first time that I've ever seen, and uses an article about the most dour economist of note, then it is a time to buy.
I only wish this maxim were true today. The good news is, even if the stock market looks overpriced (and will likely get even more so in the next month or two), credit markets are still fucked. You can get lots of screaming deals on high grade corporate bonds.
Right now, wouldn't you rather be higher in the capital structure, given that lots of smart people subscribe to the gloomy Roubini outlook? Less upside potential, but in the event of bankruptcy you have a higher priority claim on assets versus common stockholders.
But, what if Roubini and his ilk are wrong? Yes things are terrible now and will probably get worse in the next few months, but you have to consider Rumsfeld's 'unknown unknowns'. The last time we had a deflationary environment brought on by a collapse in asset prices and the velocity of money was the Great Depression. That only ended once World War II broke out.
While it may be wishful thinking, who knows if some exogenous event like war might drag us out of this funk? Maybe Obama might magically conjure some spending and investment program that'll do the trick (I doubt it...). Don't get too depressed by all of this, but DO pay down any debt you have and keep your job!
This is a super-long winded response that is all over the place, my apologies. I work in research for an investment firm, so I get all excited about this stuff. I could discuss this for days.
