Comments on: Billionaire Eli Broad Downbeat, Says Slump Worst Since World War II (And A Dissenting View)

By: LJR

LJR — Tue, 01 Jul 2008 13:45:00 +0000

Mark Hulbert is hypocrite and scoundrel who wakes up in the morning, consults his cheerleading eight ball and then makes up some bloviated prattle about why it’s right. He’s committed himself to the idea that this is still a bull market so every so often he crawls out from under his ideological rock and rallies the few idiots left who believe him.

He is more than just deluded, IMO. He’s a crook and he well knows it. His product is that malformed lump of misinformation, The Hulbert Newsletter, that was inspired by the book, How to Lie with Statistics.

By: DownSouth

DownSouth — Tue, 01 Jul 2008 12:39:00 +0000

What I take away from this discussion is the inordinate role psychology can play in the markets.

In some markets psychology triumphs. In others it is reality that prevails.

I am of the school, however, that believes that, in the long haul, it is always reality that dominates.

By: eh

eh — Tue, 01 Jul 2008 08:40:00 +0000

I hope we're all wrong and this credit crisis is not the worst financial threat in a couple generations.

Actually, I hope it is, or becomes that. Because IMO it is the only way there is a chance that Americans will be made to see the folly of a FIRE-based economy, with its illusion of prosperity.

By: Jonathan Bernstein

Jonathan Bernstein — Tue, 01 Jul 2008 07:51:00 +0000

Broad has special credibility as a self-made tycoon who made his money building houses (mostly) in California, ground zero for the housing bubble. He knows the difference between a well founded move in realty prices, and a realty bubble. While he was retired from active management during the bubble years one would assume that he had as much information as anyone about what was happening and was better able than most to understand its significance.

I seem to remember that during the ’70s bear market JP Morgan’s trust department came out with statements that said stocks were not sound interest for fiduciary accounts. BusinessWeek even proclaimed the “death of equities.” That’s the kind of discouragement that marks a washed-out bear market. Doesn’t seem like we are close to that– or that those who talk about capitulation, are ready yet to look true capitulation in the face.

By: a

Tue, 01 Jul 2008 07:40:00 +0000

"historically bear markets show an average fall in the S&P 500 of over 30% and last more than a year"

Yeah, but I presume you're taking as a definition of "bear market" as a fall in the S&P of over 20%. There's only 10% to go to reach 30%. So the statistic is not really revealing; it comes from an arbitrary benchmark.

Mind you, I'd agree that *this* bear market will happen to be worse than the average.

By the way, I don't agree that investors have thrown in the towel. They're throwing in the towel when the market moves by more than -10%.

By: Melancholy Korean

Melancholy Korean — Tue, 01 Jul 2008 07:01:00 +0000

Look, I know it’s easy to say, well, Broad is a billionaire, and the other guy is some market newsletter writer, and I know it’s easy to fall into the trap of giving authority to someone because of his financial success, but the difference in the two excerpts is striking.

I can’t put my finger on why Broad comes across as a very sharp guy, realistic and rational, while Mr. Hulbert sounds like a deluded cheerleader, but wow. Maybe because I don’t have faith in indicators like the “HSNSI” index, or whatever.

I hope we’re all wrong and this credit crisis is not the worst financial threat in a couple generations. If spreads tighten, inflation comes in, the dollar strengthens, consumer confidence comes back, the equity markets bottom–well, awesome. As long as one has cash, one can always get back in the game. Seems like preserving capital has less downside risk (understatement of the century) than getting long right here.