Downside risk is another 20% to 30% to major indices, per Roubini. (Another 15% plus decline to house values).
That puts a likely floor on the Dow between upper-5000's to lower-6000's
GS: expect it to fall to $30s or low $40s
The average fall in a recession is 40-50%, which is why some investors rushed in when the Dow hit 7700. But average means just that. There are falls below the average, and by all consensus, this is not an average recession.
if you look at all previous recessions, none have had a dramatic drop in housing prices as we are experiencing now. this is no average recession and daily I am seeing evidence that supports Roudini's view. and frankly, it's getting spooky.
He answered that question. He's not an active trader and simply puts money in the best asset class based on a 25 year horizon (it's just a statistical calculation for him - no emotion or fear-based reactions to short term movements).
He specifically stated that if he were an active trader (meaning horizon less than 1-2 business cycles), he'd put zero dollars in equity.
He said he expects his personal 401ks to drop as well - but again, he doesn't trade them.
That's wise advice.
Either be a good trader (which most are the opposite), or simply leave your money in equities.
Here's the link from tech ticker.
surprisingly, they say roubini is now an opptimist compared to many?!
He will change his mind when rates go to .25% and ECB cuts again thereby flooding the world with $$$$$$. The giant stimulus packages are passed and Roubini will finally change his tune going into 2009. If he does not he'll get a call from Obama