We economists knew since beginning of the year or at the end of 2008 that the 2nd wave of foreclosures and economic shocks will be on or around July/August... no later than 2009 3Q.
Even we junior economists with only Master's degree were talking about it over our beer in next door pub that the US economy will experience shocks from:
1) Lagged influence of layoffs on consumption and mortgage payments
2) Credit card debts (mixed with consumption habits of an average Americans)
3) Speculations on commodities
and of course, the multiplied effects of all.
Last month, the chairman of Wells Fargo also admitted that he expects the US economy to hit the rock bottom in 2009 4Q in an informal private meeting (never appeared in public).
The more important thing is all the economists like us already knew this months and months ago,
so I have already minimized my losses in my 401K and actually have gained on my fund allocations.
But if I read news these days, I am surprised by innocence and how dumb a number of investors are to speculate on oil prices and go crazy on small day to day changes in economic indicators.
I didn't know anything about supply and demand until 4 years ago for god's sake, and these investors should have much more experience than I do and much more knowledge. But apparently their panic is not hard to notice on NYTimes and WSJ on my iPhone.
Even on the oil prices, it's a text book material to invest in commodities when the economy is in trough,
but the thing is we are clearly still going down until now as recent unemployment figures have shown.
Also, those 3 factors mentioned are somewhat textbook material already.
A common knowledge that even an infant investor knows despite lack of any technical knowledge is that markets always go through two peaks or equivalently two troughs. As the US economy is still in recession, and there has been only one trough, another trough is expected and even we junior economists already knew that the shock should hit the US economy on 2009 3Q, given how the credit card cycles, recent consumption, and labor statistics behave. It should be almost a common knowledge who has taken more than 3 economics courses in college, yet those investors are making just grave mistakes over and over again.
Recently, Goldman Sachs and Merrill Lynch (now Bank of America) received accolades because their performances were improved because they focused on the basics of investment banking - as an underwriter and broker instead of all the crazy things they did in recent years. Accolades for going back to basics!!! Applauded!!!
But apparently there are still so many dumb crazy investors who do not know any basics (or clearly have forgotten) and keep on speculating and thus hurt the market in general, which could exacerbate the current economy.
Again, those dumb people are so useless and even harmful for good and/or smarter people.
Even we junior economists with only Master's degree were talking about it over our beer in next door pub that the US economy will experience shocks from:
1) Lagged influence of layoffs on consumption and mortgage payments
2) Credit card debts (mixed with consumption habits of an average Americans)
3) Speculations on commodities
and of course, the multiplied effects of all.
Last month, the chairman of Wells Fargo also admitted that he expects the US economy to hit the rock bottom in 2009 4Q in an informal private meeting (never appeared in public).
The more important thing is all the economists like us already knew this months and months ago,
so I have already minimized my losses in my 401K and actually have gained on my fund allocations.
But if I read news these days, I am surprised by innocence and how dumb a number of investors are to speculate on oil prices and go crazy on small day to day changes in economic indicators.
I didn't know anything about supply and demand until 4 years ago for god's sake, and these investors should have much more experience than I do and much more knowledge. But apparently their panic is not hard to notice on NYTimes and WSJ on my iPhone.
Even on the oil prices, it's a text book material to invest in commodities when the economy is in trough,
but the thing is we are clearly still going down until now as recent unemployment figures have shown.
Also, those 3 factors mentioned are somewhat textbook material already.
A common knowledge that even an infant investor knows despite lack of any technical knowledge is that markets always go through two peaks or equivalently two troughs. As the US economy is still in recession, and there has been only one trough, another trough is expected and even we junior economists already knew that the shock should hit the US economy on 2009 3Q, given how the credit card cycles, recent consumption, and labor statistics behave. It should be almost a common knowledge who has taken more than 3 economics courses in college, yet those investors are making just grave mistakes over and over again.
Recently, Goldman Sachs and Merrill Lynch (now Bank of America) received accolades because their performances were improved because they focused on the basics of investment banking - as an underwriter and broker instead of all the crazy things they did in recent years. Accolades for going back to basics!!! Applauded!!!
But apparently there are still so many dumb crazy investors who do not know any basics (or clearly have forgotten) and keep on speculating and thus hurt the market in general, which could exacerbate the current economy.
Again, those dumb people are so useless and even harmful for good and/or smarter people.
