perceptions_now wrote on Nov 25^th, 2011 at 2:05pm:



http://www.google.com/finance?q=INDEXASX:XAO

1) If you look back on the above interactive All Ords chart, you will find todays finish on the All Ords, is much the same finish, as May 2005.
We have basically flatlined, for over 6 years!

2) Similarly, we Peaked at 6760 in October 2007, then plumetted to a low of 3111, in March 2009.
We lost over 50% of the share price.

3) And, I'm going on record now, for a future prediction, that we are again headed for similar events, over the next 5-10 years, because the Politicians (on both sides), here & abroad, have NO IDEA WHAT IS HAPPENING OR WHY, NOR DO THEY HAVE ANY IDEA ABOUT THE CORRECT ACTIONS TO TAKE & perhaps more to the point, they have no interest in looking beyond the ends of their noses, because they do not have OUR LONG TERM INTERESTS AT HEART!

qikvtec wrote on Nov 25^th, 2011 at 6:36pm:


You are correct, in the respect that change is constant!

However, the fact is that in modern Economics, it had become an accepted norm that, whilst share prices would rise & fall, the basic trend would inevitably be upward over time, just like the money supply & Debt levels and for that reason, investors should "stay invested in the market".

That has now changed, as most the Macro factors that influence share prices are heading south and that trend line is likely to remain in place, for a very long time!  

Btw, I don't think that simply saying, "only if you sold them", would carry that much weight. Certainly those millions in OZ & Billions around the world, relying on their share prices going up, to fund their retirement, should not rely on that!

And, if I were them and I am, I would also not rely on escalating real estate prices, either!

Off topic, sort of? Who would make the correct guess here?
Let's assume that we have 2 pension age retirees in Western Australia, one doesn't have assets that generate much income & is entitled to an Aged Pension, the other has too much assets, which generate too much income and is therefore, not entitled to an Aged Pension.

Both are entitled to a WA Seniors Card and with that gets a 50% discount off their Drivers License renewal.

Only one is entitled to a Commonwealth Seniors Health Care Card and therefore a further 50% discount discount off thier drivers License renewal, thus getting it free.

Which one do you think gets the Commonwealth Seniors Health Care Card and extra discount -
1) The person who gets the Aged Pension, because their income is low?
2) The person who doesn't get the Aged Pension, because their income is too high?      

The following article is quite long, so I have just taken some appropriate excerpts.
================================

Harry Dent's Formula For Surviving The Great Bust Ahead

The Gold Report: Your considerable research over many years indicates that the size and age of its citizens drive a country's economic growth or decline.

Harry Dent: We've identified a peak spending wave indicator that correlates strongly with the stock market and the economy.

In developed countries, though-countries with higher-tech infrastructures and a solid middle class-this spending wave indicator peaks at around age 46. People slow in spending way ahead of retirement, from 46 on. That is basically when the average person's kids are leaving the nest. In fact, the greatest slowing comes from age 50 on.

TGR: Is the pattern the same across the globe, or do slowdown years differ from country to country?

HD: There's some degree of variation, but the post-World War II baby boom pretty much happened around the world. Birth rates in most developed countries peaked in the late 1950s to early 1960s, so the whole developed world is pretty much synched on this baby boom, all peaking together. Japan is the one exception, where births peaked twice, once in 1942 and again in 1949.

TGR: Let's talk a bit about the debt issue.

HD: In the U.S., most people focus on government debt. Under George Bush, the national debt grew from $5 trillion to $10T in 2000-2008. At the same time, the banking system, financial systems and shadow banking-in the private sector-created $22T in debt. That was the greatest debt bubble in history, and it occurred in developed countries all around the world. So we have this global debt crisis and this debt has to deleverage. Everybody is in too much debt-financial institutions, consumers, businesses and governments, with central banks propping them up and bailing them out.

Obviously, this can't go on forever.

If the demographics weren't working against the Fed and the other central banks, it might be different. But they're fighting a battle they can't win because the baby boomers are working against them.

That's the problem. The money the Fed creates gooses up the markets, but doesn't do much for the economy, and banks aren't lending. It's crystal clear in history. Every time you see a big debt bubble in a fall boom-as in the 1860s and 1870s-a depression follows.

We saw this from 1873-1877 and into the early 1880s. We saw the next big bubble into the roaring 1920s, followed by the Great Depression and debt deleveraging after that. In short, debt bubbles ultimately burst and then deleverage. Deleveraging debt destroys money, so there's less money in the system and it means deflation in prices.

Cash is king-cash and cash flow.

So people just have to get out of the way. Even with all the stimulus, the Fed has no way to restore normalcy with this debt level and this demographic downturn. We think stocks are next, so we expect another stock crash within the next few years. And the next crash will be worse than in 2008-2009 because the Fed has pumped everything up and stretched the system to the max.

The government is trying to skip winter. It keeps heating things up, pouring the money into the economy so the banks don't deleverage debt and the banking system doesn't collapse as it did in the 1930s. The truth is, it's only keeping us in high debt and maintaining a bubble that's not sustainable. Sooner or later, this stimulus will result in a crash that takes down the economy.

TGR: So we're basically just getting into this 2008-2023 winter depression. How deep will the trough go?

HD: A winter season lasts from 13 to 15 years or so. The worst collapses in stock prices and real estate hit when the banking system deleverages. In the 1930s, that happened early on. In this case, the government took a lesson from the 1930s and decided to keep pouring money into the banking system to prevent its meltdown. But it can't be done. There's a limit to how much you can stimulate. It's like a drug. It takes more and more of the drug and it has less and less effect until it has almost no effect, and then the drug itself kills you.

We're seeing that in Europe already. There's no bailing out Spain. It has one of the biggest real estate bubbles in the world and a rapidly aging population.

TGR: What do you see in terms of stocks?

HD: The worst is likely to hit in the next two years. It's a matter of when the stimulus stops working or when governments throw in the towel.

Japan has been through all of this before, but when it came into its crisis in the 1990s, it had budget and trade surpluses. The rest of the world was experiencing the greatest boom in history, which we'd predicted.

Japan is still carrying very high private debt, and its government debt has risen from 60% of gross domestic product (GDP) to 230% and still climbing.
But now Japan's debt is much larger than before the crisis and deleveraging still looms ahead. Japan has been a lost economy for 22 years now. Real estate is down 60% and stocks are still down nearly 80%, 22 years later.

TGR: So Japan's QE has raised government debt to more than 200% of GDP but only managed to postpone a depression?

HD: Yes, it kicked the can a couple of decades down the road.

TGR: Your earlier mention of losing control brings to mind the people of Greece out in the streets rioting because demands for further sacrifices and more fiscal austerity have become unbearable.

HD: It is true. One of our financial advisers who was there recently reported every third store is closed or boarded up. Greece is in a depression and Spain's headed there.

China also is vulnerable. Exports, which drive most of its economy, are declining rapidly while government spending on vacant buildings and empty cities has created a real estate bubble. If that bubble begins to seriously break down, Chinese consumers with disposable income, the top 10% of the population, own the real estate that will lose its value.

TGR: What's the best investing advice you ever received, Harry?

HD: I learned early on to think contrary to the crowd, something like Joseph Kennedy. Right now, most investors think these markets can't go down because the Fed won't allow them to. They call it "the Bernanke Put." Well, if everybody's thinking that, I don't think that.

TGR: Other than going to cash, what else should people be doing to prepare for the depression/deflationary period ahead?

HD: Cut expenses and high-interest debt.

Link -
http://seekingalpha.com/article/780031-harry-dent-s-formula-for-surviving-the-gr...
================================

Harry Dent does have a reasonable handle on many of the issues that are affecting the Global Economy, particularly in respect to the Demographic & Debt issues and he did predict the Baby Boomer BOOM, prior to predicting the Baby Boomer Bust and his thoughts are well worth a read.
http://en.wikipedia.org/wiki/Harry_Dent

That said, he is not infallible and some of his predictions have been inaccurate, such as suggesting DOW 40,000.

In addition,  Dent does not appear to take Peak Energy into his calculations.

In my opinion, the fall out from the issues related to Peak Energy & Climate change, will also have some profound influences on the Global Economy.

I therefore recommend that all of the following be factored in to everyone's thoughts, as we take on the next few decades -
1) Demographics
2) Debt
3) Peak Energy
4) Climate Change

Good luck & watch the Debt!