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Gold is certainly in a bubble here and one sign is the ommipresent advertising. But gold is a risky market to play in because it’s relatively small and gold could still have a major spike up from here. The adage that a market can stay irrational longer than you can stay solvent is something shorts have to consider.

With near zero interest rates there’s no opportunity cost in holding gold. A strengthening dollar and a rise in interest rates would change that and maybe pop the gold bubble, but until there is some sign of that happening I’d leave gold alone.

Yeah, the gold thing has me chuckling. I’m not a precious metals expert, but when every third commercial on TV and radio is yelling “buy buy buy!” it’s time to take a step back. And weren’t we just talking about unscrupulous mortgage brokers?

Precisely! I don't wish to needle Pelham any more, but plenty of folks come online today and describe in painstaking detail how the mess unfolded a year or more after the fact and hold themselves out as a junior Nostradamus or something.

If he had intel on the ground a few years ago and thought to himself, "Wow, this is unsustainable. I wonder how much higher it can go, and when it will fall," then kudos to him. He saw something many of us didn't.

But that doesn't mean it's prudent to follow the perpetual economic sourpusses whose opinion never changes moving forward. I personally would guess about a 10-15% return in the S&P 500 next year and GDP growth in the 4% range. (No thanks to you, Mr. President, it's simply U.S. resiliency.) Dollar likely continues a slow long term decline, but I don't think people who buy gold today when every other commercial on FNC is by a gold broker is going to be happy this time next year.

I predicted Chicago's condominium price crash in the late 1990's. I was proven correct nearly a decade later. In other words, I was wrong.

Always admire a man willing to put his money where his mouth is. We shall see.

” And actually I’m a prodigious consumer of the “business press” as a financial advisor.”

And you’ve already told us your excuse for not seeing the bubble.

“Wow that’s astounding hindsight you have there. For purposes of discussion, I’ll assume you were one such insightful person pre-crash and would have singlehandedly saved people trillions if only they’d followed your wisdom”

It’s hardly hindsight. I just paid attention to what was going on around me. I had customers who were mortgage brokers, I had a neighbor who was a mortgage broker, I had friends who were real estate agents. But most of what learned from them was also being reported in the press. I suspected we were in a bubble as early as 2003 when the affordability index for southern California fell below 18%, and of course prices escalated wildly from there. A bit of investigating led to how all of this was being funded. It doesn’t take rocket science to figure out that bad loans aren’t going to get better simply because they are bundled and tranched. When I heard one reporter say that the CDO market was in the trillions of dollars I knew we had a recipe for major trouble. There were analysts detailing what was going on, all you had to do was look for them.

“If you’re so certain, why don’t you buy a bear market fund right now, then let’s consult again in a year and see who’s the happiest?”

I may. I think the coming surprise will be the dollar strengthening.

Wow that’s astounding hindsight you have there. For purposes of discussion, I’ll assume you were one such insightful person pre-crash and would have singlehandedly saved people trillions if only they’d followed your wisdom. And actually I’m a prodigious consumer of the “business press” as a financial advisor.

There was, and is, always a handful of people who sieze on a negative trend or economic indicator and proceed to tell us of the tsunami to come. They were a minority voice in the “business press” at the time.

My point to you is that their correct call this once doesn’t make them infallible oracles going forward. If they were bears 3 years ago, bears 10 years ago, bears 20 years ago, and are still bears after a selloff of that magnitude, it ought to raise some questions about their thought process.

If you’re so certain, why don’t you buy a bear market fund right now, then let’s consult again in a year and see who’s the happiest?