Stanford PhD Predicts 66% Drop in Stocks...

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From the desk of Ian Wyatt Editor, Daily Profit Friday September 16, 2011 To unsubscribe - click here

	Stanford PhD Predicts 66% Drop in Stocks...

	How low can stocks go? That's the question that John Hussman, Stanford PhD in economics and mutual fund manager, sought to answer recently.   We broke this news last week and a lot of readers asked for more...   His conclusion?   If we hit normal historical lows, he believes the S&P 500 index will go as low as 400 - which would be a 66% drop from today's levels.   He says, "When you think of 'once in a generation' valuations and 'secular bear market lows' - that number [400], not anything near present levels, should be what crosses your mind."   The point is that if your portfolio is not prepared for the worst case scenario, then you're simply not prepared.   Hussman advanced his point further this week by bringing to the fore a market situation that Wall Street has become so numb to it hasn't even priced it in: Greek debt.   Greek debt issues have been in the news for over a year now-and still mostly unresolved-but according to Hussman Wall Street hasn't really priced in the magnitude of the situation because it still clings to the "bail-out" mentality that governments will just make debt problems go away with public funds.   Greece debt is tracking to surpass 180% of GDP by the end of this year, up from an already crushing 144%. Greece is already scrambling to secure new loans to pay off its old loans. It's becoming clear that it's no longer a question of if Greece will default on its debt, but when.   The result will be catastrophic not only for the Greeks, but the primarily French and German banks left holding the bag on Greek debt, and by extension American retirement savers whose pension plans and 401(k) plans have invested heavily in those banks.   Hussman recommends paying attention to these types of risks - and being ready for the worst. His advice is eerily similar to that of Ivy League endowments of Yale, Princeton, Harvard and the rest.   And while Stanford isn't in the Ivy League, it's sometimes considered the Ivy of the West. That's why we recommend paying attention to these investment giants.   Right now for instance, we know that these endowments are using a unique investment vehicle to keep their portfolios prepared for even the worst case scenarios.   You can read all about this investment by clicking here now.
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