Juggling Dynamite

Addiction to Central Bank interventions, have left market participants complacent, unrealistic and weak-minded. Stocks have rallied 20% since October lows, based on intraday levels. But investor sentiment also has gained, and that’s a bad sign for contrarian investors. No one learns lasting lessons or better behaviours from the expectation of repeated bail outs. Without critical thinking and concern for the downside, market participants are left exposed and vulnerable to the inevitable disappointments and losses that follow high hopes. Watch this clip.

The World Bank warned developing countries today to prepare for the “real” risk that an escalation in the euro area debt crisis could tip the world into a slump on a par with the global downturn in 2008/09.  Moving its 2012 estimate down to 2.5% would see global growth slow to a similar pace the world experienced during the Great Recession of 2008.    See:  World Bank slashes global GDP forecasts; outlook grim

Global growth peaked above 5% in the froth of the consumer credit bubble in 2006. This is no small downgrade from that plateau, or from the other still optimistic targets of the IMF and the OECD for global growth between 3.4 and 4% this year.  We expect further downward revisions to follow suit soon. 

And so belief begins.  Hope for the best, but protect your capital for the worst.

Danielle did an interview with Kerry Lutz on the Financial Survival Network out of Greenwich, Connecticut this weekend.  You can listen to the clip here see:  Investing ahead of the pack.