Ellicott City money manager John Hussman sees a new recession:

We are headed toward a new recession because our policy makers never addressed the underlying problem in the first place, which was, and remains, the need for debt restructuring. This is an issue that I suspect will re-emerge to the forefront of public debate in the next year. Hopefully, the response of our policymakers will be at different.

And he is not optimistic about stocks:

For investors, if you believe that current analyst estimates of forward operating earnings are correct, and you believe that the inappropriate bubble-era benchmarks for price-to-forward operating earnings are actually valid, and you've ignored all evidence that the Fed Model is spectacularly devoid of validity, and you believe that the only course for valuations is to move toward those misguided benchmarks regardless of what happens to Europe or the U.S. economy, then it's easy to believe that stocks will head higher. For our part, we believe none of those things. At present, we estimate that the S&P 500 is likely to average nominal 10-year total returns of just 5.7%, with the bulk of those returns most probably emerging in the back years, and significant risk of substantial losses in the earlier ones. Moreover, investors face not only an oncoming recession, but probable sovereign default out of Europe, and more likely than not, a compounding of both factors into heightened credit risk here in the U.S. (note that credit spreads are beginning to scream higher, particularly among banks and high-yield debt).

Posted by Jay Hancock at 6:14 PM | Permalink | Comments (0)
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Some are worried that baby boomers will start dumping stocks to finance their retirement, keeping prices low for a long time. That's not Barry Ritholtz's biggest worry. He's concerned that nobody will be waiting there to buy them:

My single biggest concern regarding equity markets is not a bear or a bull phase — its the wholesale abandonment of investing by the broader public. That is the reason it took 25 years to regain the 1929 peak — til 1954. It required an entire new generation to be born, grow up and start again. I figure we are about 40% of the way there now.

Posted by Jay Hancock at 9:03 AM | Permalink | Comments (4)
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Holy Toledo, smallcap stocks were up 6.1 percent on Thursday. That's equal to a nearly 500-point increase in the Dow. In Barron's recently, Pinnacle Value Fund's John E. Deysher explains what might be going on.

Going into recession, small-caps lag because customers and vendors concentrate their business on larger firms that are more likely to survive. Going into recovery, however, small-caps generally do better than big-caps because customers and vendors feel they might get a better deal with more companies in the mix. Depending on the strength of their conviction that the recovery is real, stock prices can pop almost immediately. Any whiff of good news could trigger a rally.

Posted by Jay Hancock at 8:00 AM | Permalink | Comments (0)
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very nicely. The change by the Financial Accounting Standards Board in how banks can value illiquid securities is basically a back-door way of relaxing capital requirements. Sez Megan:

A perfect regulator in an ideal market would relax capital requirements in bad times, and raise them in good times. The actual regulators we have, however, are terrified of spooking the markets if they do so--and more importantly, terrified of the all-out political war that would follow. So we lower capital requirements in good times, when all that capital seems like an untouched gold mine, and leave them stat, or raise them, when everything's going to hell. FASB, which is pretty insulated from political pressure, is doing what it can to correct that problem.

Posted by Jay Hancock at 5:26 PM | Permalink | Comments (2)
Categories: Stock Market
        

Barry Ritholtz says: "There's a big bear market rally coming" and "It's too late to sell."

Marc Faber says that: “Equities could rally between here and the end of April" and that investing in stocks now will be profitable over the next decade.

Doug Kass is "espousing a more bullish opinion on the U.S. stock market" and suggesting stocks hit a bottom last week.

Steve Leuthold, who runs the bearish Grizzly fund, says: “I personally would not have an investment in the Grizzly fund because I think we’re so close to a major market bottom. “Every investor ought to be considering putting money into equities.”

Bill Fleckenstein is "starting to build a shopping list" of stocks like Microsoft, Pepsi, Cisco and Johnson & Johnson that he might buy.

All these guys have been very, very bearish. But they also know stocks can't go to zero.

Posted by Jay Hancock at 10:37 AM | Permalink | Comments (0)
Categories: Stock Market