Who the hell are you? Is rather remarkable that a humble blog like this can actually go against those regarded as the best minds in economics and market forecasting and be proven right. You have Buffett's quote at the top, yet just weeks ago you took a stance against Buffett's buy at Dow 9000 call. You agreed with Soros and Rogers on US bonds to decline in the long run, yet you never shorted any. You are an opponent of wall street bailouts and as bullish as Faber on gold, yet you ruled out hyperinflation. This blog is truly as independent and unique as it can be in the investment world. With so much on your plate, it's exciting for me to watch you proving yourself right. Boon / bhc, your blog is now on my must-read list. Keep up the good work!
John, Exeter, UK
- I put the quote by Buffett there to remind our readers of what Buffett said in 2003. If the valuations reached during the so-called Great Bubble [in 2002] were insane, what does that mean for the current valuations where stocks are still kept above the 2003 low with US employment being a lot worse than in 2003, with a lot higher national debt, a lot higher federal deficit, much higher energy and food prices? As a self-proclaimed student of Buffett, I am sensing a great deal of inconsistency in Buffett's thinking here. In my view, stocks are in the process of a dead-cat bounce -- not the beginning of the next bull market as claimed by the mainstream "experts". We are still within a bear market but Buffett simply doesn't want to believe this is the case.
- US bonds are destined to decline in the long run, there's no question about that. However, the Fed has been buying them up all the way from the short to the long ends -- the Fed is manipulating. We are monitoring it closely and will not hesitate to take a short position if we are smart enough to identify the where and when.
- Hyperinflation is not possible in my view, because there is still a great deal of Dollars held by foreign central banks. Fundamentally, we believe the Dollar is no longer the world's reserve currency following the global financial crisis. However, foreign central banks will have a hard time diversifying away from it in the short-term. Therefore, a sudden, dramatic crash is unlikely -- they will prefer to manage the decline in an orderly way, with co-operation with foreign central banks. Should there be a crash in the Dollar due to an event outside of their control, Ben Bernanke will have no choice but to use the very last bullet he has to stem the tide -- raising interest rates. This is probably the only situation where Bernanke will be forced to hike, without consideration of whether or not the jobs market can already stand on its own feet.
- Many thanks for your participation in the readership. Best wishes.