Hi cabinboy, you wrote “(many mutual funds performed very well in 92-96, despite RE’s troubles).” Your years are troubling me somewhat. How did the mutal funds do heading into the housing downturn? Examples, please.
The correlation with NAHB was plotted only to 1996, but it is very well known about the correlation between the housing market and the economy. Edward Leamer has a report which shows that housing leads the economy. Every time housing has turned, a recession followed.
Cabinboy, how can the stock market go up when corporate profits are falling? Leamer’s report negates your story. Sorry…
Sometimes, economic cycles are such, that the best thing we can do is preserve our assets. This is such a time. This is the time to take your winnings off the table, hold in cash until we are in the middle of the recession next year, and then buy back at the bottom. When s&p is at 600, then get back in.
Do you want me to find you Leamer’s report, or could you just google it? It’s not his opinion, but a report showing how housing led the economy into every recession since WWII, with the exception of the years we propped up the economy with war spending (Korea and Vietnam). But this time, Leamer says, we don’t have the financial strength as a country, to fund a big war.
