Want to help VirZOOM?

[gugion]

Re: Want to help VirZOOM?

EJ did not predict a crash.


"The stock market crash that was the market's response to the collapse of the mortgage credit bubble was difficult but also not impossible to forecast. My forecast in December 2007 was for a 40% decline in the DJIA in 2008. The decline was 38% actual. The model was a property credit crisis induced recession.

But the current circumstances are without precedent. I expect that the policy responses will be equally unprecedented. Uncharted territory.

As I said the direct purchase of equities and corporate bonds cannot be ruled out, and I don't think the short side of that trade if it happens will a good place to be."


And 1/22/16:

"My views remain unchanged since early 2013.

No reason to test your patience by repeating myself.

Why am I not concerned about the asset market correction since Yellen's predictable politically motivated .25% rate hike?

I can sum it up this way:

Fake markets. Fake crash.

I'll let you know when I think a real crash is coming as I did in 2000 and 2007."


So he said in the article this is not a good time to short and no crash yet. In an answer to a question the did say that the 10 year Treasury yield would drop from 3% to 1.6%, which happened. When I saw this I said to myself "Wow, what a great time to buy long term government bonds!" Since rates were already low one surmises it's not a long term play, but certainly better than stocks.

Long term Treasury bonds returned 27% vs 14% in the S&P 500 in 2014. Bonds beat stocks in 2015, and are matching stocks year to date. This was actionable information but you must read very carefully.

You must read and reread EJ. He packs a lot of key points in his articles.

EJ did suggest the S&P 500 could go as high as 2,600, while saying it could correct some. The problem, as EJ has repeated, is that bonds have been manipulated since 2009 and more recently stocks too. EJ has given far more clarity in understanding where we are in this fantasy than anyone else I follow.

Look, I know EJ was not nearly as certain of a market crash as he was back in 2000 and 2007 and he even said he was hesitant to short it, because things are different, but his article from early 2014 very clearly predicted, though not with the high degree of certainty he had in 2000 and 2007, that the markets were going to crash. Yes, 2 years later in early 2016, when the markets were at the final decline of its 2-year long consolidation, he predicted the market would bottom and he obviously changed his mind about his crash scenario, but back in early 2014 he most certainly did predict, though with maybe 51% odds or even 50/50 whereas 2000 and 2007 were probably more like 95%-99% certainty, he most certainly did predict a crash in early 2014. I have no problem accepting that he wasn't nearly as sure about it, but he did predict it, though again, with a ton of caveats and with the expectation that the market could rise to 2600 SPX.

[gugion]

Re: Want to help VirZOOM?

EJ did not predict a crash.

I found this from Part 1 of his early 2014 articles:

CI: In 1999 your forecast for the NASDAQ crash was 80%, with no recovery to tear 2000 peak for ten years or more. In 2007 you said the S&P500 destined to correct 40% in 2008. This time?
EJ: The difficulty in forecasting the extent is lack of precedent. The market correction in 2008 resulted from the stock market pricing in the recession that the mortgage credit bubble collapse and American Financial Crisis (AFC) was causing. The 2008 correction process was roughly analogous to the Nikkei crash in 1990 that priced in the recession caused by the collapse of Japan's 1980s property bubble. My estimate of a 40% decline in the DJIA in 2008 was guided by that, and other inputs. But this asset inflation is without precedent, and the pre-conditions, too, are unique, so I think an estimate of the extent of decline is educated guesswork. My estimate in 2011 was for the early 2014 DJIA correction on the order of 60%, and I'll stick with that.

Definitely not as sure as he was in 2000 and 2007, and that's fine, but still pretty much a prediction.

[touchring]

Re: Want to help VirZOOM?

Did EJ predict a Pokemon Go will send grown men with school going kids chasing monsters? We're on uncharted waters, too much unpredictability.

One thing for sure is ecommerce in China is rising fast and strong.

Alibaba sales soar 59pc as Chinese continue shopping online despite slowing economy

Tencent accelerates sales growth to 52% in Q2