Friday, September 28, 2012

Albert Edwards: We will see a repeat of 2007 Dejavu

It has been a while since we heard from SocGen’s uber-soothsayer Albert “Ice Age” Edwards. He is now back, and with quite a bang, reiterating a line from Marc Faber that will prove 100% accurate in a few short years. The French bank’s forecaster, who has proven accurate in his prediction of the Asian Financial Crisis and the tech bubble bust in the 1990s, has made his call again that the S&P 500 will go down to 500 points within the next 18 months. Apparently, he claimed that what the Fed did with the QE3 was somewhat a repeat of what the Fed did in 2007. He also predicted that there will be a China hard landing, seeing an underlying growth in China sliding to as low as 3 - 4%.


Deja vu? “the last time I reduced my equity weighting to 30% was 8 May 2008 when the S&P was stlll standing at 1400. Keep plenty plenty of cash over the next 18 months. There will be once in a generation opportunity to buy very cheap equities within the next 18 months - Albert Edwards.



7 comments:

  1. Hello B,

    Thank you for sharing.

    I am just wondering if anyone would still remember Edward’s prediction 18 months later if S&P stays above 1400.

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  2. Hi Anonymous

    Certainly I think you are right.

    Whenever the economy is turning bearish, global media will present analysts who are bearish in nature such that people will take caution. But if like what you said 18 months later the S&P stays above 1400, then certainly everyone will forget who he even is :)

    Having said that, he has made very valid arguments in his interview (you can read his full interviews on the Edge) and is very good for investors as a tool for consideration.

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    Replies
    1. Hello B,

      In an earlier release from The Edge, another "Guru" had an exactly opposite view than Edward.
      Isn't market swings are the work of these bunch of big Funds? Single hand can't perform a clap; more hands will create noises, by these gurus.

      It is also once in a life time one sees a Gold (a portfolio that only generates return upon capital appreciation) bubble now.
      I tend to look at it as an investment theme now just because Asian (mostly Chinese + Indians) like to buy Gold for symbolic or self-esteem; and the West are blowing the wind by printing more money.

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  3. ActuaLLY, all the contarians and real gurus, like Jim Rogers and others, are predicting the upcoming one will be even worst than the last, and to be prepared, and have lots of cash. in fact, it is better to have more than 70-90% cash to tide it over, and once in a generation opportunity to buy. Even many sound bloggers out there are also in more cash position to be prepared for the upcoming one.

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  4. Hi Swee Chye

    I agree with you. With QE3 now out of the way, the only thing that is going to push stocks further upwards is improving economic data which I don't think we will see in the next few months, hence the expert's arguments as you mentioned above that the market is going downhill pretty soon.

    Having said that, I feel like experts who are right in predicting a crash are somehow more in the limelight than those who are predicting a rally.

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  5. It is no longer once in a lifetime to have big crashes. The same article above already mentioned 2007 which many say was a "once-in-a-lifetime" opportunity. It will yo-yo like this for some time to come as long as governments don't provide any long term solutions and central bankers just keep boosting liquidity.

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    Replies
    1. Hi Anonymous

      October will be the 3rd year that we are seeing the Europe problem and still does not look close to be solved. I think you may be right, we may be looking at volatility within a certain range and it will go sideways as long as the long term solution is not solved. The problem is if the US and Europe want a long term solutions to the problem, they've got to let certain industries and countries break up which will crush the market in my opinion.

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