That is the point. I don’t want to be in dollar denominated assets right now. I think we will have a short term bounce in the dollar but my long term outlook is negative. We have lost over 40% of the value of the dollar over the last 6 years and that was when our economy was going strong and the Fed didn’t have its finger on the button ready to flood the market with credit and money at a moments notice.
I encourage you to do some reading on Helo Ben and see what you think his philosophy is. He was a student of the Great Depression and his conclusion was the Fed at the time didn’t cut rates fast enough and therefore caused it to last much longer then it should have. If our country is heading toward a large asset deflation and recession, what do you think he will do? I believe he will very aggressively cut interest rates and flood the market with cash and credit. What effect do you think this will have on the dollar and your wealth held in dollars?
If you believe the housing market is tanking and going down, you need to keep looking down that road and see what the greater consequences are for this economy. If you think that housing is going to drop by a large amount just so we can buy some good deals, you aren’t looking at the broader economy.
The last point is if you believe this country is the only place where there is a housing bubble and credit bubble you need to start reading some articles in England, Spain, Ireland, etc. There is a global asset bubble/credit bubble and I am prepared for the worse case scenario but hoping for the best. We will know much more in the next 18 months how a lot of this stuff will fall out and I will move out of my ultra conservative stance when I have a better read.
I see a large downside risk here in stocks without a huge upside benefit.
