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April 10, 2008

Comments

Charles

Yes, ladies and gentlemen, put your hard-earned retirement savings to work in a market in which corporations and the Federal Reserve are not telling their shareholders/stakeholders the basic truth about their financial situation, in which the US government is all-but-leaderless, in which even the best financial analysts refuse to comment on the consequences of a war with Iran (catastrophic) on the market.

But not before reading and reflecting on Nouriel Roubini's picture of the economy (www.rgemonitor.com/blog/roubini/252471/).

Now, economies are not markets. The market often does go up precisely when the economy is sucking the worst. But it doesn't go up entirely independent of the market. Financials, consumer stocks, home builders... these could all be down for a very long time.

Chris, I am a pretty optimistic guy. I managed to get through 4Q 2007 and 1Q 2008 losing only 0.15% while the S&P was taking a bruising. I think there's money to be made. But people should be very careful with the American market, with commodities, with all the "sure bets" out there. There is nothing to keep the American market from going sideways for 10 years, the way it did last time we had serious stagflation (see www.ermanometry.com/concepts/nominal_and_constant_dollar_data.php).

This is a great time to be reading up on investing, learning about stocks, and maybe even putting in some mad money-- money that one can genuinely afford to lose. At some point the world market, perhaps including the US, will turn around. At that point, one wants to be ready to go. But the bottom may well not come for six months more... or even longer. Investing is dangerous in The Year of the Rat (www.phoenixwoman.wordpress.com/2008/01/02/financial-analysis-year-of-the-rat/).

Gary

The long view is important, but you need to get there with an eye on the short veiw as well.

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