The Fed raised to get some room before the downturn which is already apparent in commodities and disposable goods hit the rest of the economy. Fortunately the beginning of the downturn was mostly in China because we exported all that part of our economy. But still, the Fed at near zirp with a downturn coming on is horrible policy making by the Federal Reserve. The fact they lied about the economy being strong when it wasn't is even worse.

The market may be at an inflection, but the economy is clearly already tipping and has been. The issue is the front part of the recession is offshore because so much of our commodities and production is offshore which gets hit first in an economic downturn.

LOL finally the numbers come out about the economic slowdown me and others have been pointing to. It is sad at the same time, the Federal Reserve and bankers had been lying to the public saying the economy was accelerating. When all is said and done Q1 numbers will show an economic downturn whether or not they admit it in Q1.

I agree that the global market is in a clear downturn, however, out recent downturn is caused by domestic weakness and is fully justified. In reality, China's slowdown is in part caused by the US which I have argued has been slowly dropping towards a cyclical downturn. The issue is that unlike before, with so much raw material and low end production moved out of the US we don't really see it. Rather China gets hit first. Don't expect this year to be roses. We are already seeing the beginning of the bad news coming to rest at home as the downturn spreads beyond commodities.

Although I agree that a cyclical downturn is accelerating globally, this advice is a bit overly ambitious. Hold your long term value stocks and be very cautious. The third wave of a downturn will come which follows commodities and the transportation downturn. The US has been insulated from the beginning of the downturn since it has exported so much commodity and basic low margin production to China. It will not, be insulated from a downturn in services and higher up the food chain production and branded goods.

Gold is doing better than most commodities, however holding its ground seems to be the best one can expect in the face of a strong dollar and weakening economy with Fed tightening as well.

"Extraordinary Popular Delusions and the Madness of Crowds. Mackay’s book, classic reading for Value Investors, is best known for his description of the March 1637 “Tulip Mania Bubble”, It is interesting how the author points to a book pointing out the madness or excessive run-ups to argue that you shouldn't follow the madness of a downturn. The real issue is how valuations got so high from the historic norm given the weak economy.

Indeed the main source for this was zirp rates and increasingly accommodative Fed policies which have now made it all but impossible to use the regular tools to save the economy in the next downturn. One can read the books to follow the right path and wonder, why have so many chased the market up and who's gonna be left holding the bag now?

As for crowds massing to sell right now, that is 100% the wrong thinking. The selloff, or rather the reversion to prior lows is being done by institutions not individuals. If you want to see panic like the author is alluding to on the way down wait for the market to drop 20% more.

By the time the small investor gets around to selling they will already be sporting huge losses and missed the downside boat.

Sadly stupid is doing the same thing and expecting a different result. In order to deal with the market decline due to excessive easy money policies from the Fed for extended periods of time which spawned loads of junk bonds and arguably riskier derivatives markets and products, the Fed has tried to solve this by creating even more accommodative policies which banks have now also joined in marketing junk to the masses as the best way to make income on your capital.

The issue is junk is junk and many holding it can't afford to lose some if not all their investment and are getting increasingly worried because the liquidity is drying up faster than anyone can dispose of the junk. Although this is indeed bad for the short term economy, it is also good for the long term because we must sooner or later cleanse the economy of so much bad debt writing. Unfortunately, we will see who it has been sold to this time, and likely it will be the most desperate and those unable to pay for it. Thus the word "junk".

They have a credible argument and it is not the first time investment banks have screwed people over an IPO. The issue over the fact the stock price has risen is not the point. The point is the misinformation and/or rigging in the IPO. Sadly, most IPOs aren't friendly or tailored to small investors but to big investors who get the upper hand. It's a dirty business and I'm glad people are exposing it and hopefully reforming it with lawsuits.

A major issue is the risk you take in China's currency depreciation and the rising strength of the dollar. For this reason alone I think many people are looking to even exit Baidu's stock even though the author is right. It's a sound business that probably will only get stronger.