Market Sages: The Worst Is Yet to Come

Positive sentiment is on the rise on Wall Street as the market moves further away from the March lows and the S&P 500 hits the top end of its 1,270-1,400 trading range. This weekend brought bullish results from the "big money poll" in Barron's, but also some more sobering commentary from two Wall Street legends: Jeremy Grantham and Peter Bernstein.

In his latest quarterly letter, GMO founder Grantham predicts the U.S. market won't hit bottom until sometime in 2010, citing the painful experience of past post-bubble economies. "The unraveling of the 2000 bubble is a tale still being told," he writes.

Author, financial analyst, and market historian Bernstein, meanwhile, poured cold water over hopes for a V-shaped recovery in an interview with The Wall Street Journal. "You don't have a high-growth exit from this, as you've had from other kinds of crises," he says. "Here, the shape of the business cycle is like an L, where it goes down and doesn't turn up. Or like a U, a flat U."

finance.yahoo.com...

Scary stuff. The truth is, we really never know what the will future holds for us ,but what we DO know is that right now, we are currently in an unprecedented time. The big picture is a deflating housing bubble (which usually take years to deflate), super high energy prices, and a very high debt to income ratio for most americans. We have spent ourselves into a black hole. I agree with Warren Buffet...there is going to be an extraordinarily long recession and you might as well get out of the market right now and wait it out for a couple years.

[edit on 29-4-2008 by Master_Wii]

[edit on 29-4-2008 by Master_Wii]