" I know it is all about hunch and gut feeling. What would not surprise you? "
1. The bear market lasting a very longer time than 5-7 years. The actions of the Fed will have to be unwound now, along with the over-leveraging that occurred before 2008, which must unwind and was not allowed to dramatically correct.
2. Worldwide financial crisis that erupts overseas and spreads systematically across the earth over a period of 1-4 years. This would include the "Cyprusization" of banking systems abroad and here.
3. Another -50% decline in the markets - would be our third in this bear market - and why we have a defensive strategy.
4. Severe deflation as a result of credit contraction. While the blogosphere is focused on hyperinflation, I am telling you that I believe there will not be hyperinflation anytime soon. The threat of deflation is a greater threat in my assessment and if or when it happens, you will wish for inflation.
... is that enough? 🙂
I've continued to right that the worldwide economic system has more systemic risk than at any time in our lives. These are possibilities, not guarantees. They are the largest potential dangers that we must be aware of and help guard against. There are of course, others.
At this point in our history, recency bias in the minds of the average guy on the street prohibits him from objectively assessing these risks as potential risks. They are outside his frame of reference. He will be hardest hit.
There will be opportunities that each danger will create, if or when they unfold.
Keep your powder dry,
Dave
