Tuesday, March 22, 2011

Why Now is Not the Time to Buy Stocks. (video)

Gary Shilling is warning of  - of all things - a bubble in the stock market!

After the meltdown in 2008 and all the talk of a second depression, it may seem silly to say that the recent bull market is just another bubble, but he may not be as crazy as he sounds.

Here are some of the things he sees:

  • He's looking at deflation, not inflation
  • He says the dollar will rebound... eventually
  • Treasuries are the place to be.
He talks about how the rise in the stock market is largely due to government "stimulus" and not to fundamental performance or improvement. When the smoke and mirrors come down on the "recovery", so will the market (those are my words, not his).

 He points out that while everyone is warning about inflation, wages are actually stagnant or falling. Producers, like P&G, Kroger, etc.. are seeing their margins squeezed as consumers are simply putting the breaks on higher spending.

My take :

I'm thinking more stagflation than inflation or deflation. Prices are going up, and it's not because people are making so much they have the extra cash to throw around.

The dollar may eventually rebound, and the massive deficits may not be so bad... OR the dollar will lose its reserve currency status, leaving the country without the option of monetizing the debt. That would likely bring an end to Treasuries "safe haven" status as well.

I'm just a amateur investor and blogger, so what do I know? These are just things I'm working through and have yet to find any answers to.

Click the image to see the video interview


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