Market Tumult
I haven’t had a chance to write in quite some time. Between the different projects I’m working on, client work, and what’s going on in the markets I’ve been completely swamped.
I must say that, while I was a bit late to the party (it took me until we moved a bit under 10,000 to be convinced that we were falling off a cliff) I’ve been preaching ProShares’ UltraShort ETFs for the last two months.
Why so bearish? Very simply, it has become crystal clear to me that costs of living have outpaced income by such a huge percentage that no amount of credit could make up the gap. Add to that the disappearance of credit at the end of September, and you have a completely broken system.
Now, with what we did in the housing market, pumping it up to absurd levels and allowing irresponsible borrowers to put nothing down, we’ve set ourselves up for the most viscous cycle we’ve ever seen.
Look, even after the markets closed at their 1997 levels (Dow 7500, S&P 750, Nasdaq 1300) the Dow30′s avg and median EPS is still close to 10. Now, in normal time that is a good value; however, going into a prolonged recession and with earnings forecasts sure to be revised lower, can definately see us moving a good 10% to 15% lower.