Pragmatic Capitalism

Capital for Living a More Practical Life

Author Archive

It’s 2000 & 2007 All Over Again

“I have to get into this market; otherwise it’s just dragging on me” (A portfolio manager quoted in the Wall Street Journal just prior to the March 2000 peak in the S&P 500.)

The 4 Dubious Assumptions Driving the Market Higher

By Comstock Partners Despite the problems facing the U.S. economy, the dysfunction in Washington and slowing global growth, stocks continue to rise on the basis of what we view as false assumptions.  These assumptions are as follows: 1)     Since almost every central bank in the world is aggressively easing, the market cannot go down. 2)    Although the U.S.… Read More

The Disastrous Consequences of not Raising the Debt Ceiling

As we face another brutal fight over the federal debt ceiling at a time when the economy still remains fragile, the stock market is oddly complacent. Even if the debt ceiling crisis is resolved, the result would be some combination of spending cuts and tax increases that would weaken the economy in 2013.

It’s Not All About the Fiscal Cliff….

While the fiscal cliff problem has absorbed almost all of the financial media comment since the election, there’s a lot more to the stock market decline that has virtually gotten lost in the discussion. The market actually topped on September 14th and has trended down ever since.

Why the Market Looks Toppy

The market is giving signs that it has discounted any possible good news and that the rally is over. Europe has been in one of its periodic, but temporary, quiet periods that has encouraged the market while slipping further into recession.

The Market is in Denial Over Bad News

In our view the same sort of denial is going on now. Investors are overly reliant on central bank action that has a good chance of being ineffective or worse. The bad news, despite being well-known, is essentially being ignored.

Evidence of Coming Recession is Overwhelming

We first noticed the first signs that the economy was beginning to soften about three months ago. Now the evidence of a slowdown has become so overwhelming that it is difficult to avoid the conclusion that we are headed for a recession. We cite the following as evidence.