Thursday, November 20, 2008

Minus 52%

S&P down 52%. I believe this now outdoes all the bear markets since WWII, and it just over 13 months (from the October peak) or 16 months (if you measure from July 2007).

Unbelievable! As bearish as I was, and I was looking for about 50%, I did not think that it would happen this fast. The speed of this makes me think that we are ultimately going to go to ridiculously low levels. For the time being, 738 is the next target. I did not think that the way we magically bounced off 777 in the morning would hold as it seemed too easy.

What did I do today? I sold some more Canadian dollars (too late possibly) as I can see a scenario where the loonie goes lower. And if it goes higher, I may just buy it back.

The silver lining is that we are probably more than half way through time-wise the longer term bear market (2000-present) and definitely more than half way in price (over 50% from 2000 highs). We are setting up for another 15-18 year super bull market with all this market carnage. I don't think it starts for another 5 years+ (2013-2016?), but when it starts, you may be able to make 15%-20% or so for years and years by basically phoning it in from the beach! When this thing is finally over, no one will want to invest in stocks (as was the case in 1982) and in the first few years, people will basically ignore the huge returns in stocks.

5 comments:

rick said...

"What did I do today? I sold some more Canadian dollars (too late possibly) as I can see a scenario where the loonie goes lower."

Seems to me that when stocks go down, the US dollar goes up and vice-versa. I suppose you're probably safe for a while. Eventually though, everyone will be done cashing out - maybe even before a stock market recovery, and the US dollar will begin its slide into oblivion. Maybe.

Saba said...

Adil,

Not short this afternoon, I hope?

The announcement of the appointment of the new US Treasury Secretary was interestingly timed.

Adil Burney said...

Rick: maybe. The short on the Canadian dollar has an exit strategy and is not long term.

Saba: Nope, not short. in cash.

Jen said...

You may have seen this graph. With US resale drops shifted two years froward, it looks as if Canada's decline are slightly more precipitous. Any predictions for how this may play out for us? Sharper fall percentage-wise, but shorter in duration, I'm thinking.

http://tinyurl.com/6n2msa

Adil Burney said...

Jen

I think that chart will be a question of Canada lagging but catching up quickly

see this post:
http://canadahousingcrash.blogspot.com/2008/11/forget-decoupling-or-recoupling-how.html

Plus the US numbers are too low in that chart. I agree with your conclusion (sharper, and maybe shorter as we catch up). Net result will be comparable in that I think Canadian homes are going to fall a heck of a lot.

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