Andy Xie: Double Dipping in 2010

Here's Andy Xie's latest in Caijing. Chinese version may follow.
Great throughout, with two great closing paragraphs:

I have argued above for a second dip in 2010 and stagflation beyond. I want to add some comments on the nature of bear market rallies. In a structural bear market that lasts for years, stock markets can have big bounces from time to time. These bounces can be as big as 40 percent from bottom to top. Obviously, rallies of such size are mouthwatering. It is difficult for investors to stay on the sideline. I am not against playing such bear rallies, but one must remember that bear rallies are at best zero-sum games and often negative-sum games. One’s profit is someone else’s loss. Timing is everything in playing bear bounces. Getting in and out early are the basic principles. The most harmful behavior is chasing.

The last structural bear market happened in the 1970s and lasted for ten years. It is obviously difficult for investors to stay on the sideline for a decade. After all, how long does one live? This is why a structural bear market swallows more and more people through such rallies. The ones that jump in later tend to be more patient and probably smarter. I am afraid that the current bear market won’t end until it brings down Warren Buffett.

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