Legendary Julian Robertson Says U.S. To Suffer Poor Economy for 10 to 15 Years

Quote from Fractals 'R Us:

A few decades back computers were going to put people out of work but the upside was that we would have lots of spare time. There was a college major in Leisure Time Activities, not kidding here, I knew a guy that had that major. What happened with the computers is not that they reduced work much, they improved the quality and they opened up new areas of work and research and improved productivity. Probably it will be similar with the robots.
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That's a good point; these robots will not be born all of a sudden writing shakespeare or thinking deeply abstract thoughts - not at first, at least. That will probably take a while longer to perfect. And <i>someone</i> will be needed to program and perfect the designs of these robots (until they start doing that job themselves too, but again, probably later)

And, they'll probably be expensive at first; a roomful of mexicans might be more cost-effective for some jobs. So they won't replace all workers all at once. First will be selected manual laborers, but even that might be a slow process.

<b>But there are scarier prospects to AI, aside from loss of jobs</b>. An AI can eventually be smarter (in some ways at least) than any human. Imagine, for example, a time when even the BEST human trader would get shredded in the markets, and all trading is done by intelligent programs. The money goes not to the best trader, but to the trader with the most advanced AI. <i>That</i>, I think is scary; but I'm sure there are even scarier ramifications that you can think of in 5 minutes.
 
Quote from Landis82:


I think that what he is eluding to is the FACT that we have never seen a CONSUMER lead recession in our lifetimes, and perhaps our parents lifetimes, for that matter. Just think, 73/74 (oil), 80/81 (Volker), 90/91 (S&L crisis), 1998 (Asian currency crisis), (2001 Dot-Com collapse and 9/11), were all exogenous shocks to the economy that resulted in a contraction in business, but were not CONSUMER lead.

This time, Robertson feels that the economic contraction will be CONSUMER lead and this will result in a Japan style deflation, or disinflation that lasts for years - - - this is even more daunting when one considers the fact that the Japanese had a much higher savings rate than us during their economic contraction and malaise.

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Well said.

I think you encapsulated it pretty well.
 
Quote from achilles28:




Which means the entire economy was saddled with years and years of Bubble debt that had to get paid off with pre-bubble wages!
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Yup, pretty much the bullseye of the problem right there. We ain't going anywhere till a good chunk of debt gets repaid. Need to suck up a lot of excess housing inventory as well. Builders produced for a market that included speculators buying a half dozen homes at a clip. Price is not the only problem. Too damn many houses out there. Maybe we should just torch the excess?

Constructive destruction!
 
Quote from Landis82:

Robertson has some great macro views at times . . . no doubt about it.
And I genuinely don't believe that he is merely trying to "talk his position".

I think that what he is eluding to is the FACT that we have never seen a CONSUMER lead recession in our lifetimes, and perhaps our parents lifetimes, for that matter. Just think, 73/74 (oil), 80/81 (Volker), 90/91 (S&L crisis), 1998 (Asian currency crisis), (2001 Dot-Com collapse and 9/11), were all exogenous shocks to the economy that resulted in a contraction in business, but were not CONSUMER lead.

This time, Robertson feels that the economic contraction will be CONSUMER lead and this will result in a Japan style deflation, or disinflation that lasts for years - - - this is even more daunting when one considers the fact that the Japanese had a much higher savings rate than us during their economic contraction and malaise.

Now, one must be careful to make an important DISTINCTION between the economy and the stock market. It is very possible that the stock market is WAY AHEAD of the Economy . . . and is about "halfway" through "winter" whereas the consumer is just starting "winter".
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Yes. I used the analogy of a rubber band while explaining my views to my wife. For decades, consumer spending has expanded as we've gone through a years of economic expansion in this country.

The past several years, the rubber band kept expanding due to credit cards and borrowing on home values.

That credit is now much tighter and the rubber band is stretched as far as it can. Now the only thing left is for a snapback (reduced consumer spending).

This will put a drag on our economy which 70% consumer spending.

I totally agree. We aren't even close to the end of this. We're probably facing 2+ years of recession, IMO.
 
Quote from cgtrader:

80-85% of Americans are broke?
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That is a fact. 80% of Americans are broke. Negative equity. That's what happens when you put nothing down and ride a house into lower values, it eats up the value of anything else you own outright.
 
Quote from Jayford:

Too damn many houses out there. Maybe we should just torch the excess? Constructive destruction!
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An Indian reservation in my area decided to stop renewing leases for land where thousands of non-Indian people had new homes built. The value of those homes took a 50% hit overnight. Some owners were so pissed that they torched their own homes when their lease ran out. Other owners physically moved their houses onto non-Indian land.
 
Quote from stock_trad3r:

The only part of the the article I agree with are the stock picks.
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You've obviously never been through a consumer lead recession.
My parents haven't either because they were only toddlers at the time.

My grandparents went through one, though.

:(
 
Quote from GermanTrader:

An Indian reservation in my area decided to stop renewing leases for land where thousands of non-Indian people had new homes built. The value of those homes took a 50% hit overnight. Some owners were so pissed that they torched their own homes when their lease ran out. Other owners physically moved their houses onto non-Indian land.
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I guess those people hadn't heard the term "indian giver" :p
 
Betting against 30-year bonds was the best trade I could come up with, too, to hedge against the inflation I think is coming.

Exactly how do you place the trade like he's talking about?
 
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