George Soros, the billionaire money manager, claims to be old and wise, and able to guess the market's turns better than most. Given the compensation he has collected on Wall Street over his lifetime, it is hard to quarrel with that.
Soros, who still manages several hedge funds, says that the U.S. is in a "bear market rally," according to The Wall Street Journal. Like many pundits, he stakes his claim primarily on the American housing market. If home prices keep up their sharp decline, how, he reasons, can the rest of the economy do well?
He may have a point. Much of what economists have said recently is based on a recession being avoided because consumer spending has slowed but not halted. People are still going to Wal-Mart (NYSE: WMT). Thank goodness for that.
But Soros and his intellectual allies look at a housing market that will continue to decline into 2009 and say that this must force a deeper and deeper downturn.
No one wants to believe Soros. The thought is too grim. But the logic is hard to dispute.
Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Under $10 letter.
Comfort Zone Investing: One thriving area of real estate: Apartments
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
Reader Comments (Page 1 of 1)
5-08-2008 @ 11:11AM
Mike said...
Difficult to believe that the market will do well as housing prices continue to fall...
5-08-2008 @ 11:47AM
gumbo koontz said...
Mayor Bloomberg of NY asked me to stop talking yesterday. I wonder what he mean? Is he just tired of my ramblings or is he threatening me ? He owes me an explanation.
5-08-2008 @ 12:31PM
David Huston said...
Mr. Soros is undoubtedly correct. Meanwhile, Mr. Paulson claims that the end to our financial dislocations is in sight. We're adults, so I for one would expect for him to lay out the case for his optimism. What resolutions are taking place regarding mortgage insurance companies, foreclosures, falling Fannie and Freddie, repayment of the "short-term" loans being advanced by the FED (on the taxpayers' ticket) to banks investment banks, credit default swaps, here and abroad, SIV's, CDO's, MBO's, the falling dollar and the burgeoning trade deficit, skyrocketing oil, gas and food prices, etc?
5-08-2008 @ 1:27PM
zach said...
This economy is very versatile no one can tell whats going to happen, even with the housing crisis
5-08-2008 @ 11:03PM
Joe Cowan said...
If anyone believes what Secretary Paulson says, I would like to show him/her my beach front propertry in Nebraska
5-13-2008 @ 6:55PM
Mike Sanders said...
At the risk of being tried for heresy, by my own party (R), I believe that it's time for an American Renaissance. By that, I mean that it is high time for us to begin the job of improving America's infrastructure. Roads, bridges, sewers, the grid, everything. Defense spending is eating us alive. If we do not begin to train workers, encourage projects and get over our fears of Mexican invasion, Al Quida, asteroids, steroids and other divisive distractions, we are going to rot from within. Workers make America work and if we aren't willing to do the work, then we'd better start offering incentives to those who are able and willing to do so. Twenty years ago, when I first visited Detroit, it looked like a mess. Productive work is what inspires minds, builds bodies, feeds families and generates real wealth. Unless you plan to move abroad, then you have a vested interest in improving our country. The only other solution is to expand the military and start conquering other lands. Admittedly, I may be exaggerating, but twenty years have passed and I've heard that Detroit is still like a third-world country. We can save the world, after we save ourselves. It will still be there and who knows, maybe it will do better without all of our assistance.