Shilling Sees Paradigm Shift From Spending

If you’re anything like me, you’re thinking this market has gone too high too fast to last. It has to fall. But what if I’m wrong? Will I totally miss out on the biggest recovery since WWII?

The Tech Ticker at Yahoo! Finance has had a very bearish bent for at least two months, maybe more. Almost all the experts they have on say we in for a serious correction. Well, all the experts I listen to. But I think the boys at Tech Ticker feel they don’t want to be cheerleaders in this rally and are trying to do their best as journalists to warn people about the dangers ahead.

Today they interview a guy named Gary Shilling who appears to own his own firm. They don’t say who he is or what he does and Aaron Task should be punished for not properly identifying this guy or why he’s a credible analyst. That said, he sounds smart.

And he is smart. He’s an economics consultant with a doctorate from Stanford University. According to his Web site he “set up” the economics department at Merrill Lynch at age 29 and served as the firm’s first economist. He’s also worked at the Federal Reserve Bank in San Francisco. And Schilling has a pretty impressive resume of making correct forecasts before major market turns.

Shilling says after “a 25-year borrowing and spending binge the ability of the U.S. consumer to borrow, especially against their house, is severely constrained.”

He adds with baby boomers needing to feather their nest eggs, savings not spending will be the order of the day for the next few years. On top of that, when people are unemployed they don’t spend a lot of money.

Check out the clip.

How does this tie into ETFs? I think for anyone worried about the state of the market but wants to be invested the smart thing to do is do what professionals do when they don’t know what to do. Buy the SPDR (SPY)

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