Is there a greater Depression on the horizon?
I know the rallies we have seen around the world would have us believe not… but what’s really changed to the underlying economic conditions that caused the whole sub-prime collapse in the first place?
While on my recent vacation in Vanuatu, I asked my good friend, and demographics guru, Endre Dobozy what he thinks. I recorded the interview and have posted it for you below. You’ll soon understand why I like Endre’s economic forecasts… Endre calls it how he sees it.
Disclaimer: The information provided in these videos shouldn’t be considered financial advice. Everyone’s situation is different and you should consult your own advisors before making any investment decision.
Please also understand Endre and I are not trying to pick the “top of the market” – we’re happy to continue to ride the trend till it reverses. The purpose of these videos is to give you a balanced forecast of the world economy for 2010. Watch the videos below (or click here to download the mp3 version) and I’d love to see your comments…
*Click here to download the complete mp3 version.
What’s your view on Endre’s economic forecast for 2010? Will we see a continued recession, or worse, a depression? What about the US, Australian, Japanese and emerging economies?
I want to hear from you… post your comments!
Your Trading Coach,
Ps. Would you like to find out a little more about Endre’s Underground Investment Secrets Newsletter? Click here to get your 1 month free subscription.
Right. Like they say… people who pick bottoms get dirty fingers.
I do agree though and I am definitely a short term bear and long term bull. I think there is still time to accumulate cheap assets. Rates wise, surprisingly the markets in my opinion have already priced in the imminent hikes of the future, and any sort of short term bearish news that rocks the boat will see some good sizes FTQ demand for bonds.
The Asian markets are pretty exciting to watch though. Things happen so much quicker over here because you’re up against millions of other speculators. There are very few value investors in town.
What good timing! … looks like Obama is watching my blog 😉 He just posted a video commenting on the state of the economy too.
Check it out here:
Thanks to you and Endre Dobozy for sharing your market opinion. I do concur with the general view of the market. However as a contrarian in my approach to the financial markets generally, I am of the honest opinion that our generation is going to be witness to the complete overhaul of the world economy, and it really has’nt began. Overhaul not by choice but by necessity where capitalism as we know it will be completely redefined.
Gold having been completely debased as a benchmark for wealth will temporarily return to some degree as the only thing of value, only temporarily though! but most of the other asset classes will no longer be so for future generations as they will become worthless and impossible to own but only available for jus-on-time use and access. I see the borrowing of certain characteristics of socialism where many asset classes will become only available for public access at no cost and entirely owned and maintained by groups of, or individual states as a neccesity again and not by choice.
Capitalism was wonderful for as long as over-leveraging remained under strict control through honest market regulation, but at some point those in charge deliberately undid the rules and looked the other way knowingly pretending markets driven primarily by human “greed and fear” would regulate themselves, which is impossible. The runaway train left the station without brakes or driver and sped out of control and is now hard or next to impossible to stop without derailing it completely and all we can do is throw “stimulus” paper money at it to prevent a disaster while we hopefully wake up from and out of denial and re-define our capitalistic system. Unfortunately most of us are still in denial and blame our leaders.
We obviously see stimulus spending as adding to an ever ballooning problem and worlwide deficit which is true but being applied only to buy time. Put simply, one cannot take a penny and leverage it to spend 10 and then 100 and continue the sequence on indefinitely without strict rules. This is to create an inverted pyramid whose structural integrity must be watched 24/7 as it becomes more unstable with each additional layer and according to the laws of physics and nature , the pyramid eventually falls, and if I might add; unlike the pyramid of Giza still standing today.
You certainly manage to find many people with interesting views to interview. Another one with plenty of food for thought. The comments on future property values would have made you sit up and take notice! The thought expressed about the retention, or increase in the value of money after the vast amounts that have been ploughed into world economies was reassuring. We may not need to invest in a barrow to carry our cash to go shopping after all.
to back up what i said before, i think anyone thinking of removing stimulus has got to be kidding. China’s +50bps increase in the reserve ratio caused a huge sell off in Asian equities. This is coming from a country that has a 25% x GDP stimulus package in place. So, what will happen if other developed countries start removing stimulus, which is more like 2%x GDP?! Yes, there certainly is some good speculation in the markets that have given off signs of a bubble, and although i think the ups and downs this year will net off eventually, this is in my opinion that last struggle before the market breaks free. The stimulus given by governments around the world needs to be more than just a hot cash injection. Despite the performance in equities, many economies are still dependent on stimulus. Anything other than a measured, well planned progressive removal will definitely be a big dampener.
Also, i think markets are still very fragile and sentiment driven. Neither earnings nor economic data is giving the market enough conviction, and players are taking info a piece at a time and mostly with mixed feelings. That’s why we’ve seen the equities markets in the last few days in Asia and the US drift between gains and losses. My personal play on equities is a range play right now. I think there should be little direction, and if any it should be up, but mostly rangebound on trend.
You’re a trusted source of information David…Great interview!
The interview is correct on a number of fronts. You can’t dig yourself out of a hole by digging yourself deeper in debt which is what the u.s has done. It’s also true anyone expecting 2010 to be like 2009 will be greatly dissapointed …and that china is most definitely not the saviour to the u.s economy when over 60% of the country is living on well below average incomes.
I’ll be watching this again.
I’ve been on your site for a few months now and I see a lot of substance and also see that you genuinely care about helping traders / investers and mankind! I have found this interveiw with Endre Dobozy to be 100 percent accurate to what I think about the markets. There is absolutely not one thing that I disagree with. I am a subscriber of Bob Prechters Elliot Wave International with the Global Version which covers every major world market, also with short Term perspective on the Asian Markets, which I think (Asia and particularily India) is where money will be made over the next several years. I am long China now but preparing to scale out very soon as I also beleive it will have a massive move to the downside. All the world markets will correct very soon and I have my eye set for the India Market as well, for long term. I agree this is a deflationary enviroment, for now, not inflationary for a few years. I also see the USD rallying for the reasons Endry states so very well. I am riding upwards Canadian small caps for now. Canada is full of minerals and commodities very similar to Australia in that aspect, so I often compare the two. I see Gold dropping to the $680.00 level at least. $1226 might very well be the top but it could go a little more above that level, but it may not also. I definetely do not see gold rising even close to $3000 for years. It will get hammered like other commodities to the suprise of most people. Oil will correct also soon enough and harder then most think, then it will have its day in the sun again, much higher then the old $147 level, but the corrections will be severe and over the next few years the trend is definetely down. Really down! I know some of the price projections now but will not steal the thunder from other reliable sources, like EWI (Bob Prechters site) Of course David Jenyns site I find reliable also and just seeing the videos with David and Endre, I have absoloutely No doubt in my mind that that Endre’s site would be extremely good and accurate and the cost is also very reasonable.
I believe people on his site will save enormous wealth listening to his advice and have the opportunity to create wealth also. I beleive very strongly that the USA is in a depression and that will flow into the most of the rest of the world also. The vast majority of the the people in the world do not realize it yet, but they will very quickly. I too like ETF’s and have looked at the many bear ETF funds but will wait for the definete turn especially with ultra (tripple or double leverage) which can eat away your money in sideways markets as reliable sources have mentioned.
Doug Fabian has good videos on his site and shares the veiw of caution in the markets at this time. I recently ordered a whole whack of videos from traders library. Jesse livermores reminescence of a stock broker is always highly recommended and on my list. The New Market Wizards book or cds are inspirational. Elliot wave and Gann ect good to have. I know what Endre means when he says that if you tell other people about even the possibility of a depressionary enviroment, they don’t beleive you. Many people believe we are on the road to recovery but I think they are in for a very rude awakening which will be very soon now and extremely fast, hard and deep. I am looking to going to cash and into short term lower risk bonds, waiting till all the markets correct then Definetely getting into India and some emerging markets, leaving China out untill it gets slaughtered, then I will get back into the best performing funds, the ones that have performed the best now and insure that they are the best coming out. I am sure the volatility will be high.
Endre Debozy, I think you have nailed it perfectly with the markets and the markets move as a herd with sentiment. Very few people can give proper fundamental anayisis and you have covered the various trends and cycles breifly, but from every angle. Extremely well done. To me, those will be remembered as the videos of the year!!! With all the other verbal garbage out there, your talk was absolutely refreshing and I believe years from now people will review it and see the extreme accuracy of your well researched foresight.
You can refer to my views at . This is basically a short term view. I would be very bearish on the US once interest rates increase. Till that does not happen and the $ is available cheap there is a potential for asset prices to go up especially in emerging markets like India.
Also with a 13 trillion $ deficit it would be surprising if the $ continues to strengthen though the European zone also remains weak. The real decoupling between emerging markets especially India and the US would begin in a year once monetary policies stabilise inflation in India going forward.
Gold going back to $650 in the immediate near term also seems a bit far fetched. I expect gold at the end of 2010 to be higher than 2009. I do expect gold to be lower 5 years down the line though.
As far as markets are concerned it is better to stay with the trend even though it may be irrational.
A correction on a book I mentioed. It is “Reminescence of a Stock Operator” by “Edwine Lefebre”. Jesse Livermore has other books. I have not purchased these yet. but will add them to my personal library soon enough. Several good traders have highly recomended these.
David i agree on many fronts with Endre.Australia is too connected to China.The problem is since World War 2 the US have been the driver of capitalist markets worldwide.China is in the midst of a speculative bubble in stocks and real estate.Yes, China is on the rise, so too is India. But China is a communist regime, it doesn’t follow the capitalist model of western companies, it’s closed and much of the accounting is really just ‘cooking the books’ it’s not real, it just has seen an opportunity, that is all.When you have Chinese companies borrowing to speculate on Chinese stocks, that’s a bubble.When you have average Chinese citizens borrowing up to 15 times their income, that’s a bubble.
Australia should not be so complacent because if China’s property bubble bursts our property market will implode.
Chester: Thanks for the insights… I agree, and as we’ve seen, the Asian markets move very quickly. Over the past couple of years, the increase in market volatility has been unprecedented.
John Anderson: Great comments!
Malcolm: Glad you’re enjoying the interviews 🙂
John: Endre and I actually chatted about Bob Prechters… I’ve never been a huge fan of Elliot Wave stuff but I do take note when multiple strategies start to say the same thing. Quite a few of the “big boys” are starting to get a little bearish.
You mentioned some great people to keep an eye on and I’ll be sure to check them out.
Savio: Agreed… trading with the trend is always the only way to go.
Derek: No one can predict what’ll happen, so we’ll all just wait and see… I will be paying particular attention to the Australia property market though – very very interesting.
Pierre: I tend to agree, life always goes on. I don’t think the world will turn every turn into a “Mad Max” apocalyptic future scenario… but that’s not to say the possibility of a crash isn’t very very real.
Your Trading Coach,
Ps. If you like a good conspiracy theory, check out:
I love all the insights. The World Economy will only see real growth, if debts levels are moving south. However, I don’t see it happen, because everybody is living with debts so far, why change. Get a billion here, and a billion there, and just carry on as usual, and hoping shares will grow rapidly. Always hope, but not connected with real Cash flow strategies.
Your readers may be interested in the following comments I have made regarding the Australian Property Bubble: