RE: Some Common Market Misunderstandings...Where do I start? 1) PE. irrelevant, really? lol. how would you know a stock is undervalued? how would you know a market is pricey? when oil hit $40/barrel in 2008, that was emotional, those are the blips and that is when you buy! If you are trying to convince people oil is going lower and staying lower for a decade, good luck. ON fundamentals, we saw what the market has done on fair value/valuation 2 years later after 2008! Your cycle theory, however that is determined, is based on something. Chart patterns, cycle patterns on anything whether daily, yearly, over decades are based on VALUATION, excessive credit charts on 2008, lack of E on the tech bubble of 2000, Japans housing bubble in the 1980s, PE of the US markets in 1987, US housing charts since the 1980s, etc....
On gold, it is historically the inflation hedger commodity. No question. Yes, it is also the currency alternative as well... why, because as currencies are worth less, they no longer offset the effects of inflation -- real value return on assets Its a fear commodity too! As for deflation, that is depression thinking. As was fear mongered in 2008, it is just that. If the world grows and consumes commodities, eats food and moves forward, that possibility subsides. Do you think the world will go into prolonged depression, not recession? Has your food prices gone down this year? gas? utilities? property taxes? yip, deflation!!! You are wrong, this is not a deflationary environment -- anywhere on the globe!!! Hyperinflation is what is feared most and that blows away your short oil argument, because low oil correlates with lack of growth, stagnation. High oil correlates with possible inflation!
The main reason the markets and global economy have paused is because of Greeces' recent situation and the impact on Europe and fear of default contagion across to other countries. And the Chinese market always pauses a bit every year, but as for the economy, GDP continues to rage on at 8-10% a year. Are you saying that economy is on hold and in fear of deflation? Are u kidding? Its been keeping the entire world afloat for 2 years! 67-70 housing markets in China grew just last month. Their biggest fear is overheating and calming down hyperinflation, lol....
As for political risk in next years. Yes, maybe Syria or Saudi, the next Libya, the next Egypt, the next terrorist event destabilizing a country, will happen and spike oil once again well over 100. The US has a debt situation which for 2012 election will be addressed at least in the media - getting worst. No surprise. If the economy continues to grow and they outline a plan, status quo. You see if the increase the debt ceiling to 15 trillion and the GDP is 15 trillion ... and next year they increase it to 15.4 trillion, yet 2.5% growth, the GDP is 15.4 trillion, they really aren't losing ground... the fear has been they lose ground which they did for the last 8 years and Moodys lowers their credit rating forcing austerity....doubt that will happen in next few years... charts say it has to happen eventually but thats irrelevant to you!
Lastly as for cycles... we learn from the past. we learned the mistakes of the 1930s and all was done to avoid it in 2008. It just won't happen but for a blip. Look at the price of oil for the last century... eventually it goes higher... look at the price of real estate... eventually it goes higher... look at the price of food, it goes higher....yip, oil cycle, food cycle, housing cycle, suggest you look at economic cycles over 300 years... deflation doesn't last long... if you really believe all of them are going to sewer and stay there for a long long time, year after year to come... good luck to you. You will be proven wrong.... the global economy will be much bigger in 3 years time, not deflation/depression doom and gloom...