Bill Bonner raises a red flag on stocks
Posted on 14 October 2009 with no comments from readers
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The Daily Reckoning is the largest circulation financial newsletter by a wide margin and people do pay attention when the oracle speaks. He is too much the consummate professional to call a spade a spade, and hesitates to whisper the word ‘crash’.
The market can stay liquid for longer than you can stay solvent, or so the old adage suggests. The astrologers who called August 14th for a crash are still eating their hats, although in Shanghai their timing was spot on.
However, the big boys are probably putting on their shorts. There are always a few annoying bright sparks who make millions while others are losing their shirts. It is of course never quite that simple. But listening to an incredibly wealthy and successful investor like Bill Bonner does makes sense.
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This is too funny these days lol.. Party on one side while the neighbors are complaining. With oil shooting up the local markets in Dubai have decided to join the fun in these world rallies. How can they just sit there with oil climbing towards $80. I bet we will see $80 soon and with oil headed towards $80 this local market in Dubai will rally big time.
If that 10,000 barrier is passed in the US the DOW will head towards 12,000 as there is not much resistance after 10,000. All these rallies on bad news of USD dropping,shipping down,unemployment numbers climbing,bank failures climbing,etc.. Go figure..
David Rosenberg:
“By some measures, the S&P 500 is already trading at valuation levels that would ordinarily be consistent with an economic expansion that is five-years old as opposed to a recovery that, at best, is in its infancy stages.
“On an operating (‘scrubbed’) basis, the trailing P/E multiple on the S&P 500 has expanded a massive 10 points from the March lows, to stand at 27.6x. Historically, when the economy is taking the turn away from contraction towards expansion, which indeed was the case in Q3, the trailing P/E multiple is 15x or half what it is… While we will not belabor the point, when all the write-downs are included, the trailing P/E on ‘reported’ earnings just widened to its highest levels in recorded history of nearly 140x, which is three times the levels prevailing during the height of the tech bubble.”
There are only a few financial commentators who, in my opinion, are “5 Star” rated. Bill Bonner is one of them; he presents only “the facts”, and his analysis/ assessment of those facts and statistics are always on target.
His Prescient Book:
Six or seven years ago, Bonner wrote a book entitled Financial Reckoning Day … a book that is now becoming hallowed with time. The “subtitle” of that book is:
“How to Survive the Soft Depression in the early 21st century.”
If you have savings, or a 401K, or an IRA, you’d be a fool if you didn’t read his book. In it, he reviews the history of governments and their “fiat” paper money; his conclusions act like powerful messages that race through the corners of our mind, and his advice is impeccable.
Another financial analyst who ranks up there is David Rosenberg, whom Peter quoted above. These are guys who don’t talk smack; unlike most economists, who simply regurgitate whatever the Wall St. analysts have to say about the economy, but in reality, know nothing about what is truly going on in the global economy.
Yes, the markets are currently “caught up” in the euphoria of massive fiat money, desperately being printed by governments to: a) prop up the markets, and b) to create the illusion of a strong recovery; but perhaps by early next year, the markets will fall hard, and governments (especially the US FED) will be powerless to prevent it.
Bottom Line: Listen to what Bonner and Rosenberg have to say; study what they say VERY carefully, then draw your own conclusions.