Notices

Crisis could have happy ending

Old 11-20-2008, 09:49 AM
  #1  
Senior Member
Thread Starter
 
Join Date: Dec 2007
Location: Clearwater, FL
Posts: 529
Likes: 0
Received 0 Likes on 0 Posts
Default Crisis could have happy ending

I think we need a little bit of "looking on the bright side".

Source:
http://money.cnn.com/2008/11/19/maga...ion=2008112008

This crisis could have a happy ending
Investor Daily: Yes, it sounds like pie-in-the-sky thinking right now. But there's reason to think good things are in store for investors.
By Andy Serwer, managing editor
Last Updated: November 20, 2008: 8:08 AM ET

NEW YORK (Fortune) -- I was thinking about the financial mess the other day and I came up with this theory. I'm wary of it because it's comforting, even uplifting, and by definition any economic supposition that has a happy ending is suspect. So with that caveat here goes:

I remember talking to a wise man at the end of the last decade who was pointing out to me how much the market had gone up during the 1990s and how stocks couldn't possibly continue to go up at that rate. The market's historical annual mean gain is about 8%, and yet between 1990 and 2000 the market had climbed some 15% per annum.

There is only one way to revert to the mean, the wise man pointed out, and that is for the market to go up less than that for quite some time. So we were looking at low single digit gains - or worse - for years.

But how could that be, I asked? Remember, the world looked pretty damn good back then. Sure tech stock prices were ridiculous, but other than that, what could possibly make the market tank? I have no idea, the wise man said, it's just very likely to happen.

And of course it did happen. First tech stocks crashed - and for sure, a few people saw that coming. But who envisioned the horror of 9/11 and its fallout? Who saw Enron, Worldcom and the wave of corporate scandals? Who saw Hurricane Katrina? And who saw this current financial meltdown. No one did. Back then our big concern was Y2K.

At the end of 1999 the Dow was around 11,400. Today the Dow is at 8,400, which means the index has fallen some 26%, a decline of almost 3% per year. With just one year left in this decade - even if 2009 is a humdinger - it is increasingly likely that first 10 years of this century will be one big washout for investors. A lost decade. (Just fyi, if the Dow had climbed up 8% a year from 11,400, the index would be over 22,000 now.) As for the Dow since 1990 - the entire 19-year period - the market has climbed on average some 6% per year.

The next big thing: Green tech?
So what does this mean for us going forward? Well, we don't really know, but we can make assumptions. First, at some point the carnage will end. The government and the markets will somehow figure a way out of this mess. Stabilization and confidence will return, and the economy will recover.

Second, at some point stock price returns will revert back up to the mean. In fact, to revert to the mean, stocks will at some point have to exceed the mean, in other words go up more than 8%. I know it could be years off, but you see my logic. It's just math.

And there's the rub. I believe that in order for the market to achieve a sustainable advance that is above the mean, we are due for some unforeseen positive event or events. Think about it. In the 1990s stocks went way up because of an unanticipated revolution in technology, i.e., networking and the Internet. In this decade we had a slew of unexpected negative events - bookended by 9/11 and this current meltdown. At some point, and it may be a few years from now, we will likely be subjected to an unforeseen positive.

What will it be? Of course no one knows. If we did, it would be priced in. But you could see how something like this might work. Take, for example, the discovery of a sustainable energy source or sources. You can see the incredible boost this would be to our economy and our markets. Imagine the geopolitical benefits. (And how it might defang our enemies.) Imagine the boost to our national psyche. And on and on.

I know you might think this is wishful thinking. And, of course, it is. Right now we are in for the toughest slog we've had in decades. We are going to have sacrifice in unimaginable ways. It's probably even true that George Soros is right and that we are at the end of the era of American dominance. (That's okay. Who wants to dominate anyway?)

The bigger point is this: Somewhere over the horizon is an unrealized economic benefit that will lift us up in a way that right now, in the gloom, we can't even imagine. We have much work to do in the meantime, but some day it will come.


Old 11-20-2008, 01:49 PM
  #2  
Senior MemberCaptains Club MemberPLEDGER
 
Join Date: Jul 2003
Location: Raleigh/Atlantic Beach
Posts: 2,096
Likes: 0
Received 4 Likes on 3 Posts
Default Re: Crisis could have happy ending

wow...........something positive here. That is refreshing to read regardless if it could happen or not. Thanks for posting this.
Old 11-20-2008, 02:47 PM
  #3  
Senior Member
Thread Starter
 
Join Date: Dec 2007
Location: Clearwater, FL
Posts: 529
Likes: 0
Received 0 Likes on 0 Posts
Default Re: Crisis could have happy ending

wolfpack03 - 11/20/2008 4:49 PM

wow...........something positive here. That is refreshing to read regardless if it could happen or not. Thanks for posting this.
Thanks for the thanks ! Maybe it justs takes a woman (sorry !!! couldn't resist)
Old 11-20-2008, 03:49 PM
  #4  
Senior MemberCaptains Club Member
 
Join Date: May 2004
Location: Indian River, De
Posts: 3,115
Received 218 Likes on 106 Posts
Default Re: Crisis could have happy ending

LittleM, I like the way you think. Thanks for posting. We need more posts like your's, and less of the ones like Eyeball's. It makes sense, a viewpoint that balances all the negative sky-is-falling stuff we hear so much. WTG!
Old 11-20-2008, 04:30 PM
  #5  
tka
Senior MemberCaptains Club Member
 
Join Date: May 2005
Location:
Posts: 750
Received 15 Likes on 8 Posts
Default Re: Crisis could have happy ending

It sounds like he is expecting a new bubble fairy to come riding in on a unicorn with another bowl full of koolaid.Oh well. Now back to our special presentation: The great depression 2.0 The crash of the Jones's
Old 11-20-2008, 05:37 PM
  #6  
nat
Senior MemberCaptains Club Member
 
Join Date: Oct 2001
Location: upthecreek
Posts: 4,873
Likes: 0
Received 177 Likes on 115 Posts
Default RE: Crisis could have happy ending

it's all a big bowl of cherries with whipped cream on top



http://www.financialsense.com/fsu/ed...2008/1120.html
Old 11-20-2008, 06:09 PM
  #7  
Senior MemberCaptains Club Member
 
Join Date: Jun 2001
Location: CT
Posts: 18,409
Received 812 Likes on 401 Posts
Default Re: Crisis could have happy ending

Yea. I always wanted to know what the next big thing will be - any ideas? totally electric cars. Totally clean energy? Bio-tech ? I think we are overdue for an extraterrestrial visit or event.




Old 11-20-2008, 06:20 PM
  #8  
nat
Senior MemberCaptains Club Member
 
Join Date: Oct 2001
Location: upthecreek
Posts: 4,873
Likes: 0
Received 177 Likes on 115 Posts
Default Re: Crisis could have happy ending

LI Sound Grunt - 11/20/2008 8:09 PM

Yea. I always wanted to know what the next big thing will be - any ideas? totally electric cars. Totally clean energy? Bio-tech ? I think we are overdue for an extraterrestrial visit or event.




You really don't know?



1. America’s credit rating may soon be downgraded below AAA

2. Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"

3. Congress has no oversight of $700 billion, and Paulson’s Wall Street Trojan Horse

4. King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets

5. Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this yea

6. AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers

7. American Express joins Goldman, Morgan as bank holding firms, looking for Fed money

8. Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states

9. State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt

10. State, municipal, corporate pensions lost hundreds of billions on derivative swaps

11. Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up

12. Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns

13. Fed also plans to provide billions to $3.6 trillion money-market fund industry

14. Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars

15. Washington manipulating data: War not $600 billion but estimates actually $3 trillion

16. Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs

17. Commodities down, resource exporters and currencies dropping, triggering a global meltdown

18. Big three automakers near bankruptcy; unions, workers, retirees will suffer

19. Corporate bond market, both junk and top-rated, slumps more than 25%

20. Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall

21. Unemployment heading toward 8% plus; more 1930’s photos of soup lines

22. Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists

23. China’s sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai

24. Despite global recession, U.S. trade deficit continues, now at $650 billion

25. The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities

26. Now 46 million uninsured as medical, drug costs explode

27. New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt

28. Outgoing leaders handicapping new administration with huge liabilities

29. The "antitaxes" message is a new bubble, a new version of the American dream offering a free lunch, no sacrifices, exposing us to more false promises

No. 30:
At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan’s Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America’s problems will take years and will burn trillions.

He sees "nothing but large increases in the deficit … I think it would be worse than the depression. … Before I go to sleep at night, I wonder if tomorrow is the day Moody’s and S&P will announce a downgrade of U.S. government bonds." It’ll get worse because "the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government."

Reuters concludes: "Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. ‘I just want to get people thinking about this, and to realize this is a road to disaster,’ said Whitehead. ‘I’ve always been a positive person and optimistic, but I don’t see a solution here.’"

We see the Great Depression 2. Why? Wall Street’s self-interested greed. They are their own worst enemy … and America’s too.

Old 11-20-2008, 06:47 PM
  #9  
tka
Senior MemberCaptains Club Member
 
Join Date: May 2005
Location:
Posts: 750
Received 15 Likes on 8 Posts
Default Re: Crisis could have happy ending

nat - 11/20/2008 7:20 PM

LI Sound Grunt - 11/20/2008 8:09 PM

Yea. I always wanted to know what the next big thing will be - any ideas? totally electric cars. Totally clean energy? Bio-tech ? I think we are overdue for an extraterrestrial visit or event.




You really don't know?



1. America’s credit rating may soon be downgraded below AAA

2. Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"

3. Congress has no oversight of $700 billion, and Paulson’s Wall Street Trojan Horse

4. King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets

5. Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this yea

6. AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers

7. American Express joins Goldman, Morgan as bank holding firms, looking for Fed money

8. Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states

9. State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt

10. State, municipal, corporate pensions lost hundreds of billions on derivative swaps

11. Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up

12. Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns

13. Fed also plans to provide billions to $3.6 trillion money-market fund industry

14. Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars

15. Washington manipulating data: War not $600 billion but estimates actually $3 trillion

16. Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs

17. Commodities down, resource exporters and currencies dropping, triggering a global meltdown

18. Big three automakers near bankruptcy; unions, workers, retirees will suffer

19. Corporate bond market, both junk and top-rated, slumps more than 25%

20. Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall

21. Unemployment heading toward 8% plus; more 1930’s photos of soup lines

22. Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists

23. China’s sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai

24. Despite global recession, U.S. trade deficit continues, now at $650 billion

25. The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities

26. Now 46 million uninsured as medical, drug costs explode

27. New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt

28. Outgoing leaders handicapping new administration with huge liabilities

29. The "antitaxes" message is a new bubble, a new version of the American dream offering a free lunch, no sacrifices, exposing us to more false promises

No. 30:
At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan’s Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America’s problems will take years and will burn trillions.

He sees "nothing but large increases in the deficit … I think it would be worse than the depression. … Before I go to sleep at night, I wonder if tomorrow is the day Moody’s and S&P will announce a downgrade of U.S. government bonds." It’ll get worse because "the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government."

Reuters concludes: "Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. ‘I just want to get people thinking about this, and to realize this is a road to disaster,’ said Whitehead. ‘I’ve always been a positive person and optimistic, but I don’t see a solution here.’"

We see the Great Depression 2. Why? Wall Street’s self-interested greed. They are their own worst enemy … and America’s too.
aren't you just a ray of sunshine.

I never thought I could see so many things going so wrong at once.It seems to get worse by the day and I feel things are just barely getting started.
Old 11-20-2008, 07:39 PM
  #10  
Joe
Senior MemberCaptains Club Member
 
Join Date: Mar 2001
Location: Libertalia
Posts: 17,432
Received 1,408 Likes on 796 Posts
Default Re: Crisis could have happy ending

Y'all ever read those folks on the "lifeaftertheoilcrash.net" forums?

No? Well they are a bunch of folks who get some charge out of anticipating how they are going to grow their own vegetables and live in the mountains after we run out of oil when the world turns into some "Mad Max" type of existence. They call themselves "doomers", and seem to be pretty proud of that.

Yeah...this place is turning into that.
Old 11-20-2008, 07:49 PM
  #11  
Senior MemberCaptains Club MemberPLEDGER
 
Join Date: Nov 2005
Location: Central Jersey
Posts: 7,961
Likes: 0
Received 3 Likes on 3 Posts
Default Re: Crisis could have happy ending

No matter how it all turns out, SOMEONE will be right. Like touts picking winners at the track, the market bottom will be announced, the tide will turn and recovery will begin.

As for me, I tell my kids that this is the time for THEM to be maxing out their 401(k)s and IRAs, simply because they have a decent time horizon. Myself? I lose a bit of sleep wondering if my own (and VERY conservative) investments will last through my retirement. I am SO happy that Social Security wasn't "privatized" and this lesson of recent history proves that it will never be.
Old 11-20-2008, 07:53 PM
  #12  
Joe
Senior MemberCaptains Club Member
 
Join Date: Mar 2001
Location: Libertalia
Posts: 17,432
Received 1,408 Likes on 796 Posts
Default Re: Crisis could have happy ending

It seems to be a very positive lean towards being negative. It's just odd to read how some here seemingly compete whose proposed outcome will be worse.
Old 11-20-2008, 08:29 PM
  #13  
Senior Member
Thread Starter
 
Join Date: Dec 2007
Location: Clearwater, FL
Posts: 529
Likes: 0
Received 0 Likes on 0 Posts
Default Re: Crisis could have happy ending

Joe - there's no fun in being positive, donchaknow. I love the "calling the bottom thread" - should have been called "how low can you go".

As for me, I'm investing. I may lose a bit more in the short run but within a few years I'll be looking back and thanking myself for having some guts. I'll also be proud that I didn't join the doomsayers into adding fuel to the fire and turning this mess into a self fulling prophecy.
Old 11-21-2008, 03:19 AM
  #14  
nat
Senior MemberCaptains Club Member
 
Join Date: Oct 2001
Location: upthecreek
Posts: 4,873
Likes: 0
Received 177 Likes on 115 Posts
Default Re: Crisis could have happy ending

Okay

I'll make my call on the bottom

Feb 15, 2011

the bottom . bottom..............exclude bear market rallies



and tell me again why we are suppose to be cheerful about wall street and washington destroying the world financial system, I need more than the fairy tale piece posted
Old 11-21-2008, 03:54 AM
  #15  
Admirals ClubCaptains Club Member Admiral's Club Member
 
Join Date: Jan 2005
Location: Beaufort NC
Posts: 2,019
Received 294 Likes on 169 Posts
Default Re: Crisis could have happy ending

Chrisis or no chrisis... it is not going to stop my "second childhood"... it's coming and it is going to be a DOOZY !!!
Old 11-21-2008, 04:05 AM
  #16  
Senior MemberCaptains Club Member
 
Join Date: Aug 2006
Location: Central Florida
Posts: 8,402
Received 1,010 Likes on 549 Posts
Default RE: Crisis could have happy ending

With the hopeful change in direction for energy and medical research there is no telling what the next breakthrough will be. I think the point is that no one knows. Although it eventually led to a bubble in the stock market, the internet revolutionized just about everything we do. Personally, I didn't see it coming.

Perhaps our Big 3 will get their act together in connection with government assistance and design, produce and distribute reasonably priced vehicles getting huge mileage numbers. Better yet, a vehicle that will tow 10,000lbs getting 40mpg.
Old 11-21-2008, 05:56 AM
  #17  
Joe
Senior MemberCaptains Club Member
 
Join Date: Mar 2001
Location: Libertalia
Posts: 17,432
Received 1,408 Likes on 796 Posts
Default Re: Crisis could have happy ending

If I got up everyday and thought we are as doomed as some of y'all do, I'd buy a gun and rent a bullet, and just finish the party early. If some of you really think it's this bad..why do you keep living? What's the point?
Old 11-21-2008, 05:58 AM
  #18  
Joe
Senior MemberCaptains Club Member
 
Join Date: Mar 2001
Location: Libertalia
Posts: 17,432
Received 1,408 Likes on 796 Posts
Default Re: Crisis could have happy ending

LittleMrs - 11/20/2008 11:29 PM Joe - there's no fun in being positive, donchaknow. I love the "calling the bottom thread" - should have been called "how low can you go". As for me, I'm investing. I may lose a bit more in the short run but within a few years I'll be looking back and thanking myself for having some guts. I'll also be proud that I didn't join the doomsayers into adding fuel to the fire and turning this mess into a self fulling prophecy.
Well you can figure it this way--if it gets as bad as some here say it will be, when its all overyour money won't be worth anything anyway. Might as well throw it away on some investments when the stock market is low.
Old 11-21-2008, 06:18 AM
  #19  
Senior MemberCaptains Club MemberPLEDGER
 
Join Date: Jul 2003
Location: Raleigh/Atlantic Beach
Posts: 2,096
Likes: 0
Received 4 Likes on 3 Posts
Default Re: Crisis could have happy ending

Joe - 11/21/2008 8:56 AM

If I got up everyday and thought we are as doomed as some of y'all do, I'd buy a gun and rent a bullet, and just finish the party early. If some of you really think it's this bad..why do you keep living? What's the point?
Agreed.


Old 11-21-2008, 09:46 AM
  #20  
Senior MemberCaptains Club Member
 
Join Date: Jan 2006
Location: ny
Posts: 4,064
Likes: 0
Received 0 Likes on 0 Posts
Default RE: Crisis could have happy ending

Buy 100,000 shares of Sirius/XM right now at 12 cents ...........in 2 years when it goes to 10 your retirement is set.

Thread Tools
Search this Thread

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information -

Copyright © 2021 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.