by ilene - September 3rd, 2010 4:30 pm
Courtesy of Charles Hugh Smith, Of Two Minds
Nobody knows the future, so the best we can do is strive for an open mind and flexibility in our thinking and responses.
In 1904, the "fact-based" consensus was that rising prosperity would stretch into the future as far as imagination allowed. The prosperity was so widespread that war, it seemed, had been abolished as bad for business.
In 1904, Imperial Tsarist Russia, though suffering from the usual spot of bother now and again, was stable and enduring. In 1904, Great Britain viewed France as its continental rival.
Ten years later, advanced, peaceful, hopeful Europe stumbled into the Great War, and three years into that war Tsarist Russia fell to revolution.
In 1928, permanent prosperity was again the consensus. Two years later, that hope was reduced to ashes.
In 1930, Germany and Japan were economically troubled, as were the other great nations of the world, but neither were seen as threatening. Less than ten years later, the two nations had declared war on the world.
In 1980, fear of a sudden massive Soviet tank attack on West Germany sparked a series of "what if" books and a push for short-range nuclear-armed missiles in Germany--a U.S. plan which galvanized the Western European peace movement.
Ten years later, the Soviet Empire had crumbled into dust and abandoned gulags.
In 1975, scholars and pundits confidently declared that the "cult of Mao" which fueled China’s Culutral Revolution was so entrenched, so pervasive and so central to China’s Communist regime that would outlast Mao the mortal and thus into the next century.
Three years later, Mao was dead and the Gang of Four lost power. Ten years after 1975, when the Cult of Mao was universally viewed as a permanent feature of China, that nation was four years into the state-controlled, limited-capitalist model of engaging the world that created its present-day pre-eminence.
I think you see my point: consensus predictions of what the future holds are generally wrong. The consensus in the U.S. about the world of 2020 is that it won’t be much different from the world of 2010. All the actuarial tables of Social Security run to 2040 and beyond, as if the road ahead will be an extension of the past sixty years of American global dominance and credit-based prosperity.
by ilene - April 2nd, 2010 12:01 pm
Déjà vu, all over again.
by ilene - January 2nd, 2010 2:29 pm
H/t to Pragcap.
By AP / TIM PARADIS, courtesy of TIME
(NEW YORK) — Few analysts forecast this year’s remarkable stock market rebound as major indexes were plunging to 12-year lows last March. Now, with most experts predicting the pace of stocks’ gains will slow in 2010, there’s reason to believe they will be proven correct.
Stocks began the dramatic turnaround in March after Citigroup Inc. and other big banks said they were making money again, and then climbed at a fairly steady pace as signs of an economic recovery from the Great Recession became more pronounced.
Investor fears about a potential financial system collapse played a big role in the early year slump in stocks. Once it was clear that wasn’t going to happen, the Standard & Poor’s 500 index roared back 64.8 percent from its early March low, the biggest move since the Depression. For the full year, the index rose 23.5 percent, its best showing since 2003.
But sustaining that momentum in the new year likely would require a big drop in the unemployment rate and strong corporate profit gains, along with stable borrowing costs--a combination few analysts are forecasting.
"The easy money has been made already," said Bill Stone, chief investment strategist for PNC Wealth Management. "You’re not going to see another 65 percent move in the next nine months."
In the last day of the year, more signs of healing first pleased investors, then had them concerned about the economy’s ability to thrive without government help. Light trading volume exaggerated the market’s moves, sending the Dow Jones industrial average down 120.46, or 1.1 percent, to 10,428.05.
The year’s stats tell an incredible story across the financial markets:…
Stock market gains often come months before economic recoveries are confirmed. That’s because investors tend to bet on how they think business conditions will be six to nine months in the future. In downturns during the past 60 years, the S&P 500 index hit its bottom an average of four months before a recession ended and about nine months before unemployment reached its peak…
Ron Kiddoo, chief investment officer at Cozad Asset Management in Champaign, Ill., said the market can continue its rally through 2010 only if investors see that companies are again hiring, bringing the unemployment rate down for its present 10…
by ilene - December 23rd, 2009 5:53 pm
Courtesy of The Pragmatic Capitalist
The rally is going to continue into 2010 according to Wall Street’s most influential bank (Please see here for Goldman’s top 10 trades of 2010). Analysts at Goldman
Goldman sees very low rates, stronger than expected earnings, strong commodity demand and investor reallocation driving prices higher. Goldman sees no rate changes through 2011 – one of the most accommodative outlooks of any bank we have covered. Stronger than expected revenue growth and continued margin expansion will result in 15%+ equity returns in the upcoming year. Although they see a continuation in the rally some moderation is expected. As we previously mentioned, their analysts expect many similarities to 2004. David Kostin wrote:
“Continued profit margin resiliency from prior aggressive cost reductions should drive strong returns in early 2010 and push the S&P
Their analysts in Europe are even more bullish. They see the DJ STOXX 600 rising 20% to 300 by the end of 2010.
Goldman argues that we are transitioning into the growth phase of the recovery from the hope phase. This period is generally characterized by stabilization in economic growth and lower equity returns than the hope phase. Nonetheless, doubt remains and catalysts for higher stock prices remain.
Perhaps most important, Goldman sees a continued influx of cash to the equity markets. Thus far, investors have been risk averse and either remain in cash or have moved into bonds. Goldman sees a substantial move into equities as investors become less risk averse.
How to play it? Thematically they focus on three key themes:
- Dispersion – higher growth and higher sustainable returns companies.
- BRICs exposure.
- High and growing dividend growth companies.
by ilene - July 3rd, 2009 7:23 pm
Here’s Karl Denninger’s mid-year review of his new year predictions, and thoughts on 2009 part 2.
Mid-Year 2009 Checkup
Courtesy of Karl at The Market Ticker