Thread: Financial News
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Old December 23, 2018, 02:24 PM
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zman zman is offline
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I don't see this recession being anything close to 2008-2009 levels. Prior to the last recession big banks and corporations were leveraged to stratospheric heights. 70X is the number that is thrown around, which means for each dollar collateral they owned they lent $70. Also mainstreet folks were buying homes as if they were candy with stated income, an euphemism for no income. The financial world was out of control and it was a matter of time before the bubble burst into flames. Markets can't keep going up forever. We need healthy pullbacks and recessions every now and then in order to avoid great depressions. This time we're better prepared. The fundamentals are sound enough to sustain headwinds for some time.

I also agree there will be great opportunities to invest in this market. Without getting into the weeds, here's a very high level analysis-- historically DOW/S&P trade at 12-15X P/E. At 27k, Dow was trading at 18X. Now that the correction has started, there's a chance it will over shoot on the down side and go all the way down to 12X P/E or 18k before the recovery truly begins. I doubt it'll go that far though. I expect a short rally in early January followed by a year long recession. So yes this could easily turn out to be the investment opportunity of a decade.
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