We won’t bother you by bashing out the sell argument further, as the market is reaching some short term support levels a little lower. The long term picture sure does not look too rosy. One of the people having been spot on is Napier. Although somewhat “extremely” bearish (SPX to reach 400) , Napier’s arguments are still valid. From his book, “Anatomy of the Bear, lessons from Wall Street’s Four Great Bottoms;”
The debt cycle will end when the world realizes that the US government is a terrible credit risk. This is the most likely catalyst to reduce equities to a 70% discount to the replacement value of their assets (the valuation that marked the bottom in the previous bottoms of US equities through history). It will be then that you should re-read this book, as great fortunes will be made by investing in very cheap US assets. Until then you should be wary of equities, unless you feel comfortable investing in bear market rallies, and you should be terrified of Treasuries.
Classic video below.
If you wonder why we got into this mess, here is a great summary by Forbes.
In order to get some perspective on the Economy and Markets, while the News feed strikes us with all the risk on/risk off news, below two videos by great minds. Remember, Napier’s long term SPX price target is around 400, give or take a couple of handles.