Sunday, January 15, 2006

It is not different this time

Back in August I wrote that it was time to reduce exposure to equities. A few events in the past two weeks has made me even more cautious and I have shifted more of my managed/retirement accounts' allocation to bonds. My takeover focused investing will continue.

While the markets have reached new highs, most sentiment readings are reaching euphoria levels. So much so that, an extremely high percentage of experts have called the recent yield curve inversion as not relevant and that this time it does not predict a recession! That is scary.

My own observation of holiday shopping and retail discounts tell me that the consumer is slowing down. Atleast no one is now questioning the rapid cooling down of housing taking place. I was hoping for just a mild, one-quarter recession, but I now expect it to be a deeper, longer recession. Some experts are predicting that any consumer slowdown will be offset by capital expenditure from industry. I hope so, since otherwise the outlook is pretty dark.


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