Nassim Taleb forecasts future US treasury bond crisis

Posted on 18 May 2010 with 2 comments from readers

Author of ‘The Black Swan’, New York University professor Nassim Taleb thinks one day a treasury auction will fail and produce a crisis in the US bond market.

Bernanke is the man who crashed the train. New UK Prime Minister David Cameron understands the problem and knows what to do.

Taleb’s advice for what investors should not do: avoid long-term treasury bonds, avoid the dollar and euro; buy metals, agriculture and avoid the stock market.

A prediction could be a good reminder what is in store for an economy, leaving aside all the jargons, focus should be on how valid the predictor was only when the market crashes and the advice was not followed to stay off the long term treasury bonds. Almost at the end of 2008 when the markets were crashing like there is no tomorrow, you can find out more on how volatile and sensitive the markets as they repeatedly crashed, recovered, bounced back and again the chain of crashes.

Every time the markets crashes the sentiments, the financial backing of people go through a lot of upheaval, however when analogy of the black swan was used to see how things had gone bad to worse, financial experts, market advisors all gathered to discuss on how the markets were behaving so erratically and when they will normalize making policy holders think whether the Fed has lost it out, however they are all said to be calculative moves as only when a crash happens there is a possibility of expanding the globalism and a word of caution to be prepared for tomorrows catastrophe.

Investors’ belief in getting back the normalcy is inevitable as they will recover once the down trend is over and how well the corrective measures meted out for the market to survive past the deep crash. Investing in metals, agriculture should be the focus of the investors who are looking for a long term saving and return perspective as it is seen that those areas get least effected when such a storm arrives. Completely avoiding the stock markets in times of falling prices is again a move which could further detach and make the price zoom down a lot, it is however the investors capacity to take the risk and cautiously trade in equities as buying in a falling market and then selling in rising markets will only help the economy to bounce back.