August 9, 2002 (12:00 PM)
As I scour my mid morning research I came across an interesting quote from Baron Rothschild. He was asked when it would be time to buy stocks. He replied, " When blood is running in the streets of Paris. " I have been reading an article in A. Gary Shilling's August Insight. ( www.agaryshilling.com ) on this subject. Gary mentions, " That is, when investors have given up, admitted to themselves that they'll never, never by another. That's when the last bull has been carried out, when the pool of potnential sellers is exhausted, leaving nothing but potential buyers...." Like we mentioned in previous discussions, like Fred Hickey mentioned in the preceding post, Gary does not feel that capitulation has fully arrived. We still need to hear those refreshing words in mass.... " get me out at any price ".
Some other notes on Gary's August report.
a. a bursting of the housing bubble during the second leg of the recession. This could be caused by increased unemployment, increased selling velocity of senior citizens who were counting on stock appreciation for their nest egg, now selling their homes, which in turn would put increased pressure on housing prices due to the added supply.
b. second leg of recession looks probable, this time led by consumer retrenchment.
c. interesting discussion on the future of interest rates due to continued deflation.
d. interestingly enough, he still finds the dollar to continue to be the worlds strongest for at least the next decade or two.
e. mentions that Japanese revival is on a watch list.