Prieur’s readings (October 19, 2009)

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This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Michael Santoli (Barron’s): Five modern myths, October 19, 2009.
For some of us, it’s always a Mark Twain moment. The current juncture in the markets seems a particularly appropriate time to invoke the American Aristotle’s observation that, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” This article provides a selection of items that most investors and market observers seem to “know for sure” – and that just may not be so.

• John Hussman (Hussman Funds): The stock market has never been this (intermediate-term) overbought, October 18, 2009.
We can no longer find a single historical instance where stocks were more overbought on the combination of short- and intermediate-term measures we respond to most strongly.

• Robert Lenzner (Forbes): A bull market in a weak economy doesn’t last, October 16, 2009.
The resurgence of euphoria in the stock market makes you question, “‘Where have all of the bears gone?”‘

• Francesco Guerrera (Financial Times): Countdown to next crisis, October 16, 2009.
Tick-tock, tick-tock, tick-tock … Can you hear that? It is the countdown to the next financial crisis. I hate to say this just as green shoots are sprouting – the Dow crossed 10,000 points this week, banks are reporting bumper profits and the US recession is all but over – but there is a reason why it is called a “cycle”. The recipe than turns today’s riches into tomorrow’s disasters is a familiar one.

• Wolfgang Münchau (Financial Times): Countdown to the next crisis is already under way, October 18, 2009.
We should not see inflation and deflation as opposite scenarios, but as sequential ones. We could be in for extreme price instability, in both directions, as central banks lose control.

• Paul Craig Roberts (CounterPunch): The rich have stolen the economy, October 16-19, 2009.
The political system is unresponsive to the American people.  It is monopolized by a few powerful interest groups that control campaign contributions.  Interest groups have exercised their power to monopolize the economy for the benefit of themselves, the American people be damned.

• Mort Zuckerman (Financial Times): The free market is not up to the job of creating work, October 18, 2009.
The US may be looking at long-term, double-digit unemployment. Only massive programmes are equal to the challenge of restoring stable growth to our economy.

• John Stossel (Reason.com): What’s Michael Moore talking about? October 15, 2009.
Government power is the problem, not capitalism.

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2 comments to Prieur’s readings (October 19, 2009)

  • Lauren

    The articles you posted above and others like it have encouraged me to be bearish throughout the rally – it just doesn’t feel safe, doesn’t make sense.

    But then there’s been enough good news in the past week and I wonder if even the bears will begin to adjust their positions after JPM, GS, AAPL, IBM, etc.?

  • Frank W

    I really enjoyed the first five readings, particularly the Hussman article. When Hussman focusses on the economy and market rather than Zen Buddhism, his articles are generally very interesting. Not that I use his investment modus operandi, but rather I really like to read his commentary about valuations, earnings, the relationship between the current market and the moving averages, market breadth, etc.

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