Wednesday, December 23, 2009, 12:18AM ET - U.S. Markets open in 9 hours and 12 minutes.
The S&P 500 could fall to as low as 600 in 2009 and "alternative assets" like commodities and currencies will provide no shelter for investors, says Gary Shilling, president of A. Gary Shilling & Co.
Having been appropriately bearish heading into this year, Shilling sees "few good places to hide" in 2009. Currently, Shilling is long Treasuries and the dollar, but notes the bond market's rally is getting long in the tooth.
Other than defensive plays like utilities and consumer staples, Shilling is short stocks. His "S&P 600" prediction, a 33% drop from current levels, is based on a view that S&P earnings will be $40 per share next year (vs. the consensus of $83) and the index will trade with a P/E multiple of 15. (Here's the math: $40 EPS x 15 P/E = 600.)
Shilling is also short commodities and remains bearish on emerging markets, most notably China. The theory China, most notably, could "decouple" from the U.S. doesn't hold up to scrutiny, Shilling says, as evinced by the slowdown of China's economy and the fact their middle class isn't large enough to sustain growth internally.
Against that backdrop, Shilling isn't only bearish on China as an investment, he sees the potential for major social upheaval in the world's most populous nation.
That's the trouble with these doom guys, they're always bearish and sometimes the world comes around and stumbles over them.
Why are predicting the bad news why not tell the effect of all stimulus I think you are dicounting that area and effect....
i love gary. he is loudest at the bottoms. always. liz
This shows that even a blind squirrel can find a nut once in a while
This shows that even a blind squirrel can find a nut once in a while
The US govt is just holding the markets up long enough to let the hedge funds sell high to meet large redemptions and also to let their insider buddies get out, at the price of the little guys.
Chubby is right. The blood is in the streets - looks like a good time to buy to me.
Sell everything and sneak across the border to Mexico
Nothing is going to get BETTER until things STABILIZE for MONTHS
yes--why not s&p 400????---dow3500????--nasdaq--600??? come on let's all get real depressed and be pesomistic maybe some suicides to go along with it--bottom line-- the majority of the americans have been living far beyond what they can afford because of the large corporate greed and scams too lend money on the risky--guess what?? the gun is shooting both ways now!!!!!
the hangover will be proportional to the binge ... some ppl, particularly in US, binged too much during last decades ... it's called "redde rationem" ...
This time he will be wrong. He was lucky last time!!
Yes sir, that why folks are buying T-bills with zero return for now?
not necessarily doomsday, but i believe the market will be "stagnant" mostly in 2009. events that led to the downturn of the economy did not happen in 6 months - the whole mortgage industry and household debt has been an issue for several, if not many, years - therefore, it will take "some considerable time" before there is meaningful economic growth. also, no nation, including china, is immune to what is a world-connected economy to a great degree. much love and hugz to everyone.
I think Mr. Shilling is on the wrong side of the trade for 2009. Here's why: We have a lot of stimulus coming; significantly lower gas prices/energy costs; significantly lower mortgage rates causing many homeowners to refinance and free up extra money and many potential homebuyers now better able to afford a home.
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Herbert - Friday December 19, 2008 12:42PM EST
Armageddon, eh?