Albert Edwards: This Man Thinks the Market Could Fall 70%

This article is from June 8th, 2011, but Edwards seems to be spot on in his first “deflation then inflation” hypothesis.

JT

Meet Albert Edwards, an investment strategist for Societe Generale (or “SocGen” for short).

Though SocGen is a French bank, Mr. Edwards is based in Britain. It is there he has developed a reputation as “the City of London’s best-known permabear” (via The New York Times).

Also via the NYT, Mr. Edwards has called for “a stock market collapse of at least 60%, followed by years of inflation of 20% to 30% as the persistent printing of money by central banks desperate to improve the situation sends prices soaring.”

Lately, though, the 60% target has been modified. Now Mr. Edwards, a friendly fellow known for his “sandals and chuckling demeanor,” is calling for an even larger drop.

The new downside target? A toe-curling 400 on the S&P, or roughly a 70% fall from recent levels.

Wild predictions aren’t meaningful in themselves, of course. With all the analysts out there hunting for press recognition, it isn’t hard to cherry-pick the extremes. Sometimes a big target is thrown out, bullish or bearish, simply for the sake of headlines. (Perhaps the most infamous call in history was “Dow 36,000,” in a book of the same name.)

The Albert Edwards case is intriguing, though, because of the logic behind his argument. The price target is not so important as getting the drivers right. If, for example, the S&P fell a mere 40% for the same reasons it was expected to fall 70%, would anyone quibble?

Continue reading:

via Albert Edwards: This Man Thinks the Market Could Fall 70% – Seeking Alpha.

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