The 8 year bear market is coming

**sweeps** · 07-14-2008, 05:28 AM

I have turned very pessimistic in the last few months. While I'm still investing in equities because I think they are cheap over a very long time horizon, I'm seeing some serious issues at many different fronts. (I don't think investing in commodities is going to help much either as they are already quite expensive.)

Ultimately I think we're due for a noticable decline in our standard of living.

Contrast that with a segment I just saw on the Today show on Abu Dhabi. They are rolling in the wealth -- can't spend their riches fast enough.

Even good ol' American Budweiser is going foreign-owned.

**jc3900** · 07-14-2008, 05:31 AM

I am worried too about the future of the united states economy. I think that we might see a prolonged 1970's bear market where any gains are just wiped out from inflation. The bad thing, though, is that this time around global competition is much more fierce. It will be much harder to come out of any bear market with the emerging bull that has happened in previous times. The other thing ominous thing that has just recently happened is our national debt just toppled 9.5 trillion!

**Scanner** · 07-14-2008, 06:29 AM

Well, to me, the wildcard is if we are able to solve the energy crisis. . .OMG. . .we would see a bull market re-rally like never before. So. . .as usual, you can't entirely divest yourself of a sector. I personally think the American co.'s are able to get out of where they at. . .if only, and if it's a big if, if only there were cheap energy.

Hey, you guys! I wrote about 6 months back that the "calling" of my generation (Generation X) was to only keep what the Baby Boomers had accomplished in terms of building the lifestyle we enjoy and you all rolled your eyes at my "politician-like" lecture!

Now you are agreeing with me?

What gives?

Am I that good of a budding politician that I can sway viewpoints on a 6 month dime?

**Scanner** · 07-14-2008, 06:32 AM

JC,

Look at it this way too - yes, we have competition but they suffer from high energy costs too, especially Europe. I think petrol is $12/gallon in England. . .that can't be helping there too much.

The ebbing tide of oil lowers all boats.

As far as Saudi Arabia, the day will come where the world is not dependent on oil. However, it is always going to need some oil (if not to move SUV's around. . .to make pharmaceuticals and fertilizer and plastics). Saudi Arabia is the "breadbasket" of oil in the world and the US is the breadbasket of "grain" in the world.

Saudi Arabia will probably always have some amount of great power and world influence.

**noppenbd** · 07-14-2008, 08:03 AM

A view from the other side:

Market Musings That May Sound Heretical (Petroleum and Resources, BlackRock Global Energy and Resources) at SmartMoney.com

**sweeps** · 07-14-2008, 09:54 AM

One bright spot I'm seeing is Apple. They sold 1 million iPhone 3G's and 10 million app store downloads in 3 days.

It was very un-SavingAdvice-like of me, but I got an iPhone 3G myself. It is the coolest thing I have seen in a long time, and worth the money for me. If I were an individual investor I probably would be buying into Apple, and perhaps AT&T and any other company that is riding Apple's coattails.

ETA: Speaking of which... Jeffrey and Nate, how about a mobile version of SavingAdvice?

**gamecock43** · 07-14-2008, 10:18 AM

Scanner~ I am thinking of freezing my assets in our Blue Chips for a few years while America tries to work this energy crisis out. I am wondering if a lot of businesses that are energy intensive couldn't just go under in the next 8 years.
For those of us who are learning about the market, can you explain this "freezing your assets in blue chips?"

**jIM_Ohio** · 07-14-2008, 12:56 PM

first- the average bear market lasts 18-24 months. That does not mean all bear markets last that "short".

There are 2-3 views on this:

1) we have been in a bear since 2000 tech crash... we had a minor cyclical bull, but the reality is we have not hit the highs of the tech bubble yet.

2) the bear now is similar to the energy and inflationary market of the 1970's. That bear market was much longer than 24 months (from what I understand- I was but a toddler then).

3) Part performance does not predict the future, so this is Bush economics and we haven't seen an economy like this since Bush Sr.

**Scanner** · 07-14-2008, 02:41 PM

Scanner~ I am thinking of freezing my assets in our Blue Chips for a few years while America tries to work this energy crisis out. I am wondering if a lot of businesses that are energy intensive couldn't just go under in the next 8 years.
For those of us who are learning about the market, can you explain this "freezing your assets in blue chips?"

I'm sorry. . .that was not an entirely grammatically correct way of putting it.

I was just saying, "I'm not buying or not selling any more Blue Chips." I wasn't put a "freeze" on it.

That was a poor way of expressing myself.

**gamecock43** · 07-14-2008, 03:05 PM

ok, thanks. LOL. I am learning slowly.

**flatrock** · 07-14-2008, 05:44 PM

I have 13 years till the pension kicks in and have become completely disillusioned with mutual funds & wall street hype. I've changed part of my investment approach and have re-directed some of my funds to purchasing beaten down individual blue chip stocks with a good dividend history (paying & raising) & plan on reinvesting all the dividends in shares. I recently bought 3000 shares of GE and am looking at Clorox. This is something Im quite sure a financial planner would disagree with but who cares what the share price is so long as they raise & pay the dividend. In 13 years with dividends reinvested I should have 4000 to 5000 shares of GE paying 8K to 12K a year in dividends. Last time I checked a $700 a month immediate annuity cost $100,000. If I gamble & buy some solid payers now I get an annuity equivalent cash flow in the future for alot less than $100,000. And if the share price recovers and appreciates so much the better. Of course if one of these picks goes belly-up I will be working till im 85.

**maat55** · 07-14-2008, 06:29 PM

Originally posted by flatrock View Post

I have 13 years till the pension kicks in and have become completely disillusioned with mutual funds & wall street hype. I've changed part of my investment approach and have re-directed some of my funds to purchasing beaten down individual blue chip stocks with a good dividend history (paying & raising) & plan on reinvesting all the dividends in shares. I recently bought 3000 shares of GE and am looking at Clorox. This is something Im quite sure a financial planner would disagree with but who cares what the share price is so long as they raise & pay the dividend. In 13 years with dividends reinvested I should have 4000 to 5000 shares of GE paying 8K to 12K a year in dividends. Last time I checked a $700 a month immediate annuity cost $100,000. If I gamble & buy some solid payers now I get an annuity equivalent cash flow in the future for alot less than $100,000. And if the share price recovers and appreciates so much the better. Of course if one of these picks goes belly-up I will be working till im 85.

I've heard this stated before: 100% of 10 year periods in the stock market have had a gain and 97% of 5 year periods have had a gain. I'm going to stay the course.

**cashing_in** · 07-15-2008, 03:11 AM

I lost quite a few dollars but since I have a SIP (systematic Investment Plan) into bonds and stocks, bonds I don't have to worry but still I made a fair amount of loss on stocks.
I will keep on buying on stocks and hopefully we will see the horizon brightening up maybe near mid 2009.
I expect this bear phase to continue for another 8-10 months.
Lot wrests on the price of oils.
Lets see what Obama does.

**WineAndCheese** · 07-22-2008, 01:05 AM

Originally posted by cashing_in View Post

Lets see what Obama does.

Let's not.

The 8 year bear market is coming