Harry Dent's June 2012 Update
Canary in the Coal Mine
The major problem I experienced with the crash that resulted in the last Great Recession was that everybody was afraid to come out and tell the general public just how bad they thought things could get, with one exception. I watched Mad Money with Jim Cramer on CNBC and one night he told his audience that if they had money invested in the stock market that they might need over the following five years, they should sell that portion immediately. I did just that, but it was already too late. While I did not lose as much as most people, it was still a big hit to my portfolio (i.e.: life savings).
As it turns out, there were a number of people who came forward, later, to tell us what they knew and how things looked pretty bad to them, well before it actually happened. The trouble is, what they were trying to tell people was not very popular at the time - certainly not with the broadcasting media. As for the rest, do you think they would actually say anything to you and me, even if they suspected the worst? (That is where the term "whisper number" comes from - they'll say it to close allies, but not publicly).
Cramer took a lot of heat for telling people to sell. Many in the industry called him irresponsible. I appreciated the fact he had the courage of his convictions and was one of the few people I have ever heard actually telling people to sell. The Buy and Hold types may scoff at the warnings, but as Mr. Dent says in this video, if things don't get as bad as he thinks it might, then worst case is we miss a little to the upside. If he is correct, we miss a lot to the down side. Any time I find myself in a situation with little chance of gain, and a huge chance for loss, I will gladly sit it out until the odds are more in my favour.
When do I get back in? When the technical indicators say so. I'll be one of the first to say when I see the technicals showing me a good re-entry point. I am no investment professional, and can not advise others what they should do with their money. Personally, I have been short, or out of this market, since before the year began. I see no reason to change now. For other peoples' sake I hope Mr. Dent is wrong, but right now, it just isn't a risk I am willing to take.
How do you see your chances?