jimmygu3
12-13-07, 03:09 PM
I have been bearish on equities since 2000, with a few targeted exceptions. My current reasoning for being down on stocks is that I expect the unwinding credit bubble to pull money out of the market. Strapped homeowners will raid every last penny of their brokerage and retirement accounts if it means avoiding foreclosure. The MBS, CDO, LMNOP shakeout will have a negative effect on liquidity and stock prices.
But then there's the question of where dollar repatriation is likely to occur. If foreigners increasingly realize that they are getting a negative real return on Treasuries, where will they put their dollars? Some may buy discounted housing in big cities. Commercial RE is another likely candidate. But it's hard to imagine stocks not being bid up as dollars are dumped into the market.
Anybody have an opinion on which way this will go?
But then there's the question of where dollar repatriation is likely to occur. If foreigners increasingly realize that they are getting a negative real return on Treasuries, where will they put their dollars? Some may buy discounted housing in big cities. Commercial RE is another likely candidate. But it's hard to imagine stocks not being bid up as dollars are dumped into the market.
Anybody have an opinion on which way this will go?