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John Messner of Messner and Smith suspects we’re in a secular bear market. “Hedge funds and mutual funds are liquidating stocks” as their investors pull their money out, and the process may last a long time as the world deleverages, or sheds excessive debt. “I pity the new president,” he says; there is so much that has to be done to pump the economy up and then to try to stave off inflation after the job is done. “We definitely have toasted the consumer,” says Messner. That’s one reason he likes stocks like Jacobs Engineering, which has been cut in half. Among many things, it does scientific and environmental engineering and consulting for governments all over the world.

Mike Stolper of Stolper and Company, which advises wealthy families and foundations, says this is no secular bear. “It fits the contours of a cyclical bear market,” says Stolper. “In terms of intensity, we saw a full-blown financial panic.”

The bad news has been compressed into a short time period. “This is a head fake,” says Stolper. “We will have a short, sharp recession,” says Stolper. There will be a V-shaped recovery in both the economy and stocks. “A year from now, we will have difficulty remembering whether the swoon took place before or after the election.” In particular, he notes that stocks were reasonably valued in relation to their earnings and book value before the sell-off commenced. At the market’s bottom, those valuations will be extremely compelling. But people hold off buying: “They look to the [stock] market as a gauge of prosperity, and they have this vague feeling they are being bankrupted.” But the fear will evaporate quickly, Stolper predicts.

“I don’t know that it is a secular bear,” says hedge fund pro Todd Buchholz, Solana Beach author/economist with degrees from Cambridge and Harvard Law. “The economic problems are more than can be patched over. So much restructuring is needed.” For now, hedge funds and mutual funds will be selling heavily because of redemptions, and there won’t be enough buying power on the sidelines. “If the credit markets unlock, we will be out of this in the spring. The consensus is that we will stay down a long time. I don’t agree.” He thinks the stock market will be higher a year from now.

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JohnnyVegas Nov. 5, 2008 @ 12:11 p.m.

The bad news has been compressed into a short time period. “This is a head fake,” says Stolper. “We will have a short, sharp recession,” says Stolper. There will be a V-shaped recovery in both the economy and stocks. “A year from now, we will have difficulty remembering whether the swoon took place before or after the election.”

This guy sounds like one of thoe pump and dump real estate agents, where the market only goes up and NOW is always the time to buy.

I have a C-note that this guy Stopler is wrong by a country mile.

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a2zresource Nov. 5, 2008 @ 6:59 p.m.

In my mind (meaning this likely has noooo relationship to "reality") the problems with the economy go to the foundations of globalization as a market paradigm. My ideas on fixing things and making them go are probably too radical even for the Reader.

Still, it should be obvious that as long as America needs globalization to make things go, there will always be a need for large defense outlays, large international bank loan guarantees secured with American debt against tax revenues, and unavoidable overseas political triggers to commiting American armed forces to the rescue... all of which tax the economy and prevent the use of otherwise-dedicated resources for expansion and growth.

America could dump globalization if we had a commercially-successful program of space exploration and colonization where our technological advantages froze out foreign competitors and restricted terrestrial anti-American terrorism to a relative rarity, but again... such a thing is too radical to consider even here.

The only reason for bringing this up is that severe market contraction is probably the best time to make plans for a different future.

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gbear92038 Nov. 6, 2008 @ 8:56 a.m.

Heard of the Amero "dollar"...yet? The theory is that the US dollar will eventually devalue to 0 (due to forien debt/China)?Everyone worldwide will lose trillions in dollar denominated assets? The Tresury has already produced Amero dollars that combine the currencies of the USA, Canada and Mexico? Is this true/possible and what short/long term effects could we face?

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a2zresource Nov. 6, 2008 @ 9:39 a.m.

For general information: The Security and Prosperity Partnership of North America (SPP) and the Amero were things I've never heard of before, but there is information about the partnership at http://www.spp.gov/ which does not indicate that it rises to the level of a Senate-approved treaty.

Could it be that rumors of the Amero are being floated to improve sales of gold-related mining stocks?

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valueinvestingisdead Nov. 10, 2008 @ 8:49 a.m.

The bad news has been compressed into a short time period. “This is a head fake,” says Stolper. “We will have a short, sharp recession,” says Stolper. There will be a V-shaped recovery in both the economy and stocks. “A year from now, we will have difficulty remembering whether the swoon took place before or after the election.”


This guy is probably one of the remaining Bush supporters who think everything is great with the economy. We have lost major financial institutions, people have lost their house or house value, their retirement accounts are shattered, jobs are plunging with no hope for re-hire, bankruptcies are flying but this guy says we are in a head fake....talk about being out of touch?

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Don Bauder Dec. 1, 2008 @ 9 p.m.

Response to post #1: Stolper is a pro; he would be first to admit he could be wrong. Best, Don Bauder

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Don Bauder Dec. 1, 2008 @ 9:02 p.m.

Response to post #2: A severe economic and market retraction is definitely the environment to make some tough decisions and do some creative thinking. Best,, Don Bauder

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Fred Williams Dec. 2, 2008 @ 7:15 p.m.

Don, are things bad enough in San Diego that we'll finally get the council to stop paying tens of millions annually to Spanos and Moores?

Will we convince the city that CCDC, SEDC, and the Housing Commission are albatrosses?

Can the egregious Grantville eminent domain abuse be stopped?

See this new video:

Grantville is Not "Blight" --http://www.youtube.com/watch?v=k9Tcze...

There are so many opportunities to cut waste right now.

Then there's the public employee pensions...which voters seem unwilling to touch going by the results of the election.

Don, what do you propose for getting the city out of its hole?

Best,

Fred

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