As you know the Captain holds classes regularly on stock valuation and a basic introductory course on investing. And every once in a while, through the online discussion boards, a student or the Captain himself will write something that is Cappy Cap worthy. Ergo I present to you a quick prediction of what I believe will happen in the future;
Well, it is my humble opinion (and nobody can predict the markets) that inevitably the stock market will crash as Americans fail to generate the economic production that is necessary to provide the profits necessary to drive up stock prices.
I also believe, slowly, but surely, Americans and institutional investors will start to realize the huge bubble retirement programs have formed and when the baby boomers start drawing their money out of the market, this will cause a general downward pressure on prices.
I doubt the federal, let alone state and local governments, will ever balance their budgets and it will lead to an inevitable collapse of the dollar (which has more or less happened anyway) further crashing the stock market.
Gas will shoot up to $5 easy, and will cripple discretionary spending, but only for those who are lucky enough to be employed, the remaining 10% "officially" unemployed and the other 40% "underemployed" will just suffer in limbo in "working poor" status or "lower middle income" status.
China will get REALLY mad at US and will stop buying US treasuries, and not until we all have a "Come to Jesus Meeting" and we realize we can't just prop up stock prices let alone the economy with puppies and unicorn talk, will any of this get fixed.
Of course to convince 300 million Ameircans about the severity of our economic problems is laughably impossible, but I think when bread lines start to become longer than they were in Soviet Russia, people might have the time to ponder what economic events led us to this.
You and I will probbaly be very old, if not passed away by the time this economic epiphany hits the general population, but thankfully, in the end, I believe people will be watching less "Jersey Shore" and more "Fox Business" by this time. In the meantime, based on my numbers, the Dow Jones should really be trading at around 8,000.
But again, that's just my short 1-2 take on it.
Well, it is my humble opinion (and nobody can predict the markets) that inevitably the stock market will crash as Americans fail to generate the economic production that is necessary to provide the profits necessary to drive up stock prices.
I also believe, slowly, but surely, Americans and institutional investors will start to realize the huge bubble retirement programs have formed and when the baby boomers start drawing their money out of the market, this will cause a general downward pressure on prices.
I doubt the federal, let alone state and local governments, will ever balance their budgets and it will lead to an inevitable collapse of the dollar (which has more or less happened anyway) further crashing the stock market.
Gas will shoot up to $5 easy, and will cripple discretionary spending, but only for those who are lucky enough to be employed, the remaining 10% "officially" unemployed and the other 40% "underemployed" will just suffer in limbo in "working poor" status or "lower middle income" status.
China will get REALLY mad at US and will stop buying US treasuries, and not until we all have a "Come to Jesus Meeting" and we realize we can't just prop up stock prices let alone the economy with puppies and unicorn talk, will any of this get fixed.
Of course to convince 300 million Ameircans about the severity of our economic problems is laughably impossible, but I think when bread lines start to become longer than they were in Soviet Russia, people might have the time to ponder what economic events led us to this.
You and I will probbaly be very old, if not passed away by the time this economic epiphany hits the general population, but thankfully, in the end, I believe people will be watching less "Jersey Shore" and more "Fox Business" by this time. In the meantime, based on my numbers, the Dow Jones should really be trading at around 8,000.
But again, that's just my short 1-2 take on it.
4 comments:
I don't know, I still expect the "Student Loan" bubble to pop first.
I see economic Armageddon happening this decade. On the flip side it won't last forever and the world will recover but be forever altered. I am far less confident in people being able to learn the right lessons. After all, the great depression taught people how well Keynesian policy works, oh wait, never mind. The economy can burn and be reborn like a phoenix but sadly you can't fix stupid.
They'll either be watching Fox... or Pravda.
Indeed it will burn, and stupidity is amazingly fireproof. 'Capitalism' and 'The Free Market' will take the blame, as will 'not enough socialism'.
If we're lucky, those heretics will be marginalized and relegated back to their academic ivory towers for a long-term timeout while the rest of us knuckle down and and rebuild a sound financial economy. That way, their intellectual grandkids will have something to destroy.
Because if it was investment, I'd be long 'hubris', even more than gold. All the brilliant financial wizards scoffed at the dangers of easy credit, tore up safeguards like Glass Steagall, and dismissed concepts like real collateral and proper accounting as primitive superstitions.
Several decades from now, people will look back at us and sneer, and declare that we were fiscally unimaginative bumpkins, incapable of understanding the sublime complexities of innovative financial instruments. Just like we said of those dinosaurs that experienced the 1930s, what the fuck did they know?
Because this time will be different. This time there will be rainbows and unicorns. Because we're the smartest people in history.
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