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Where the economy is heading, and why...

  1. Tony C.

    Tony C. Ωf Jury member Jan 4, 2016

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    As some readers are aware, I have, in recent months, occasionally made references to an impending economic crisis. Usually they are glancing references, but I also have expanded a bit at times.

    I have received a few private questions, primarily about where I source my information. So for those who interested, here are a few links to sites that I consider to be very valuable in gaining an understanding of where the economies of the U.S. and the world are headed.

    The best, relatively succinct, regular (i.e. weekly) synopses are provided by John Hussman (Husband Funds) and Doug Noland. They are both excellent, and even if you don't have any background in economics, you are likely to find their insights to be reasonably digestible. Hussman's most recent post ("The Next Big Short...) provides a particularly good overview. Note that both of these first two links are market-centric, but they shed light on the broad strokes of how and why the economy is in serious trouble.

    http://www.hussmanfunds.com/weeklyMarketComment.html

    http://creditbubblebulletin.blogspot.pt/p/credit-bubble-bulletin.html

    Here are a few other excellent sites that I can recommend:

    http://www.nakedcapitalism.com

    http://www.acting-man.com

    http://www.ftense.com

    Cheers,

    Tony C.
     
    Edited Jan 4, 2016
  2. repoman

    repoman Jan 4, 2016

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    Interesting reads, thanks @Tony C. 2015 was a rough year. I compare notes with my buddies at the end of the year, to see how we all did with our investment portfolios. For the year 2015, I was down 2%. In the USA, our averages looked like this:

    2015 Averages:
    Dow: -2.23%
    NASDAQ: +5.73%
    S&P 500: -0.81%

    So on the whole, I wasn't lagging the market all that much. Seems my friends were largely the same, ranging from -5.5% to +2%. The scary thing is there is no safe haven, no sector performed well, no geography, although of course, a few individual stocks will always do spectacularly well which is only really helpful to Nostradamus. I tend to agree we are headed for very choppy waters, and investing in 2016 is not for the timid. Looks like I will continue to invest in stainless steel, leather, a bit of gold and titanium. aka watches :D
     
  3. ulackfocus

    ulackfocus Jan 4, 2016

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    The economy is headed in the same direction as the entire planet: down the drain. The human race is becoming more selfish, narcissistic, and less tolerant of other humans. Some enlightenment better be coming before we make ourselves the next extinct species.

    First thing I'd do is banish all organized religion because the biggest atrocities of man were committed in the name of religion. Only greed can rival the horrors done to one race/sect of people by another in the name of their God.

    Short of one giant epiphany for the entire planet, I guess it's time to start stockpiling ammo, food, supplies, and precious metal. Anyone know where I can get a deal on construction equipment so I can build a bunker?
     
  4. wsfarrell

    wsfarrell Jan 4, 2016

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    The S&P 5 year return is 76%. The returns for Hussman's funds with 5 year histories are -8%, -.4% and -2.4%. For this he charges fees of 1.1%, .7% and 1.6% respectively. I for one am not impressed.
     
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  5. Tony C.

    Tony C. Ωf Jury member Jan 4, 2016

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    Apparently you didn't bother to read his recent post. He freely admits to having been early in his anticipation of the 2008 crash, and even more so the impending one. If you are/were smart enough to time crashes really well, more power to you. But most investors continued to hold stocks through the crises, and those who did in 2008 fared much more poorly than those positioned in Huffman's funds. The same will be true of the upcoming crash.

    Furthermore, there are certain (junk bond) funds that have recently frozen, or "gated" their clients' accounts. They won't be the last, and any investors in those funds would, right now, be far better off in conservative funds such as Hussman's.

    Finally, he outlines very clear reasons why he remains convinced that a major downturn is coming. Pointing out that he was premature in his warnings does not in any way contradict his well-supported assertions of what lies ahead.
     
  6. repoman

    repoman Jan 4, 2016

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    @wsfarrell I love ycharts too :thumbsup: This is the problem with the gloom and doomers, they eventually are right in calling the massive corrections, but in the meantime, their overall investing performance usually sucks because they always miss the big run ups. Calling a market correction is way less important that having a long term perspective on investing.
     
  7. calalum

    calalum Jan 4, 2016

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    Ask 10 economists for their predictions on the economy and you will get 11 opinions.

    I am hoping for a massive correction in the vintage watch markets so that I can pick up a few pieces that I would like to chase if the prices were rational.
     
  8. MikiJ

    MikiJ Likes songs about Purple spices Jan 4, 2016

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    BOATs - Bust Out Another Thousands :(
     
  9. Tony C.

    Tony C. Ωf Jury member Jan 4, 2016

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    The problem with this sweeping criticism is that it suggests that most – let alone all – of those who ride markets up into bubble tops sell before they burst. Which they don't, of course.
     
  10. al128

    al128 unsolicited co-moderation giverer Jan 4, 2016

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    honest Q: what are watch models that today (on average) trade below their 2010 averages?

    i sometimes (inadvertadly) wade through 2005-10 threads on wus/etc but hardly ever see mention of a model that was more expensive then compared to now. the other way round you can easily find 100s of examples... eg speedy
    cheers Al
     
  11. LouS

    LouS Mrs Nataf's Other Son Staff Member Jan 4, 2016

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    Virtually any watch bought new.

    If you want to limit it to vintage, back it up a few years and the question is easy - just about any pocket watch you care to name.
     
  12. oddboy

    oddboy Zero to Grail+2998 In Six Months Jan 4, 2016

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    Does this mean I will be able to buy speedies for cents on the dollar in a few years more? That would be awesome!
     
  13. SirMaximilian

    SirMaximilian Jan 4, 2016

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    I did my undergrad in History and specialized on the beginnings of Capitalism - I can confirm that society as we know it will be going the shitter at some point.
     
  14. alam

    alam Jan 4, 2016

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    Hey! don't forget the wine!!! the wine!!! :D
     
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  15. gatorcpa

    gatorcpa ΩF InvestiGator Staff Member Jan 4, 2016

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    They all do eventually.

    Otherwise, we'd all still be worshipping Pharaoh or painting pictures of horses on the inside of caves.

    Hope I'm in the ground when it happens.
    gatorcpa
     
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  16. blubarb

    blubarb Jan 4, 2016

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    My recent diversion into statistics to estimate possible speedy Tintin production numbers has led me to some interesting stats about when humanity is likely to go down the shitter...

    60 billion humans have been born so far, so it can be estimated that there is a 95% chance that the total number of humans N will be less than 20 × 60 billion = 1.2 trillion. Assuming that the world population stabilizes at 10 billion and a life expectancy of 80 years, it can be estimated that the remaining 1,140 billion humans will be born in 9,120 years Depending on the projection of world population in the forthcoming centuries, estimates may vary, but the main point of the argument is that it is unlikely that more than 1.2 trillion humans will ever live on earth.

    Message to be taken from this, buy up your brand of choice and enjoy while you can. ;)
     
  17. STANDY

    STANDY schizophrenic pizza orderer and watch collector Jan 4, 2016

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  18. al128

    al128 unsolicited co-moderation giverer Jan 4, 2016

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    if we mask out the odd dinosaur segment that collapsed b/c the collectors died of old age and their collections were liquidated by the kilo by theirkids/grandkids (as it happened in pocketwatches)....

    think of anything we discuss here on a daily basis (omegas,rlx,longines,pp,ap,jlc,ug, breitli g,tudor)...has there anything devaluated (brand segment, certain vintage) over the past 5-10yrs? i think not (happy to be prven wrong)... isnt that also true for other vintage markets (cars,instruments,etc...)
    imho... that is mr. joe doe investor's $ looking for roi outside of the regular channels (eg wall street)
     
  19. arkstfan

    arkstfan Jan 4, 2016

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    Actually pretty rare for a civilization to just collapse.

    That generally only happens when there is population collapse. See North and South America just ahead of the European colonization. They faced an existing population that had been reduced 70% to 80% by disease. Had they arrived 100-200 years earlier the Native populations would not have been easily subjugated. In South and Central America the post collapse population was much larger and there was more assimilation.

    Roman Empire is the oft cited example but remember it grew so large it split the eastern part lived on until 1453 while the west became fractured and reunited and lasted to 1806 but Rome the Vatican and Catholic Church which morphed into running much of the western empire continued on.

    Even before the west was mostly reassembled into the Holy Roman Empire there continued to be progress in education, science, and agriculture. The imperfect feudal system that evolved was for a time highly efficient. Output of food increased and that saw the rise of more skilled workers which eventually lead to the feudal system not being efficient enough.

    Along the way the standard of living improved.

    The problem facing the modern capitalist manufacturer is they are running out of places with stable governments and incredibly cheap workers. More people around the globe believe they should have access to affordable food, healthcare and the right to spend a number of their final expected years not working yet having an income.

    Profit margins cannot be sustained much longer giant returns will become much smaller until the next disruption.
     
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  20. arkstfan

    arkstfan Jan 4, 2016

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    How many people born after 1990 or 2000 will collect wristwatches?

    I turn 50 later this month. My 26 year old son looked at me as if I were a bit nuts when I gave him a nice watch at Christmas. My explanation that it would be nice to wear at job interviews made some sense to him since he is sick of his current job.
     
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