Friday, January 2, 2009

Predictions for 2009

It will be just like 2008.

Only this time it will be commercial real estate that collapses, which no one sees coming. We will have panic, scared people and institutions, more de-leveraging, major declines in stocks and in house prices. We will have frequent and large bankruptcies (starting with the retail sector). We will have deflation. We will have more bailouts to the same banks we bailed out in 2008 because they refuse to change their business models.

That's my favorite part of this whole mess...no one is learning any lessons. The banks all claim that they don't need to change. This is just a cyclical problem, not a structural one. The CEO of Goldman actually came right out and said that. "We don't need to change."

Stocks will fall. I can't emphasis this enough. People keep throwing money at stocks because perma-bull CNBC tells them to and because people are operating on the investment thesis that Obama = Jesus. Obama isn't going to save you from recession. It can't be done. He will save you from Great Depression 2. People will find this out soon enough, but not before we endure this sucker's rally. The Obama election sent stocks up 20% in December, which gives us a great opportunity to make lots of money by shorting at these highs.

Again; too many people are saying "maybe stocks are cheap." When people are saying "I will never invest in the stock market again" is when we buy. I'm thinking about six months.

It is going to be really ugly in 2009 and the recession will not end this year. But at least we can have faith that things will be getting better in the future rather than worse, which is more than we can say about the past eight years.

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