>This column by Paul Farrell warmed my heart, though not for what was in the column. It was the classic doom and gloom scenario. Paul asked a question of his readers – what 20 possible triggers could cause a meltdown in 06? He got many responses and was surprised that only 2% of the responses were “optimistic”. My question is this: Why would expect an optimistic response when you ask a negative (pessimistic question)? Regardless, I think it is interesting to contrast the pessimistic nature of the respondents to Paul’s column with the consumer confidence numbers released this morning that show a three year high. Why are his readers so pessimistic and the rest of the U.S. apparently is not?
I don’t know the answer and don’t really care to find out. The point of this blog is to communicate to you, my readers, and so far this year most economists have quite upbeat about the economy and the market and its prospects, so upbeat (and in stark contrast to the previous five years) that has scared me. These people are usually wrong and they are upbeat….does that mean things are about to go bad? Then came Paul Farrell’s column and his prediction that their is an 86% chance the American Economy will collapse and thus my heart began to warm and my outlook began to change – perhaps, just perhaps this will be a good year for the markets after all!
Ironically, Paul and I have the same advice even though we have different viewpoints, I’ll defer to Paul’s quote “In my opinion, your best bet in a major collapse is to stick with a solid old-fashioned well-diversified no-load index portfolio. It worked during the 2000-2002 recession and bear.”
Of course, now I’m rethinking my advice in light of Pauls!