"Stocks are screaming cheap" We have been hearing this mantra ever since the ink on Warren Buffett's contract with Goldman Sachs dried. Wake up people - Buffett bought call options on Goldman but he also gets paid 10% per year. Granted the notes are most certainly well offside but given the poor outcome of letting Lehman fail, I say it is unlikely that Goldman is put down to rest. The point being, given the timing Buffett got a sweet deal.
As for the rest of us, we need to recognize that every cycle resembles a pendulum. The further it gets stretched in one direction, the greater the swing to the other side when the music stops. So too in this monetary cycle. The pendulum swung much too far toward easy money and it is already pretty ugly as we are in the overcompensatory phase of that excess. How far does the pendulum swing in the other direction? We won't know for another year or two. But as a mentor of mine used to say: "those with a penchant for picking bottoms end up with smelly fingers".
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