Posted: January 10, 2008, 10:27 AM by Jonathan Ratner

Market Call

Peter Grandich believes a “vicious, long-lasting bear market” has begun and early millennium post Internet bubble burst

lows are reasonable targets for both the Dow and NASDAQ.

“It won’t be overnight and there will be rallies, but if you haven’t positioned yourself to be a live chicken versus a dead

duck already, time appears not on your side,” he said in The Grandich Letter.

However, he has a special fondness for Canada. And while it is considered to be in much better shape that the U.S., he

doesn’t think it is immune from the U.S. contagion.

“Yes, it may no longer be true when America sneezes Canada catches cold, but it appears prudent for Canadians to at

least put on a sweater and gloves,” he said.

Among the many items in Mr. Grandich’s review of 2007 was mention of how gold’s 37% gain and the “spectacular” rise

for platinum prices vindicated his preference for precious metals over both U.S. stocks and base metals. He also noted that

while gold may no longer be cheap, it is not yet fairly priced, let alone expensive. He remains bearish on base metals,

particularly given the weaker prospects for global growth, and favours precious metals.

warned investors to “Man your battle stations” and be prepared for an “unprecedented economic tsunami” that will hit

America beginning in 2008.

So much has been written about the “sub-crime fiasco” he said in Wednesday’s edition of the popular newsletter, but

“we’re not even past the early innings of this disaster.”

“At the very least, this fiasco should make one think long and hard on how the financial sector goes about its business and

whether regulators are truly able to protect us,” he said, adding that offering mortgages to those who would have trouble

paying them back is just one of the dubious practices witnessed recently. “NINJA” no-income, no-job, no-asset loans

surged in popularity. Given the fact that Fed chairman Alan Greenspan was likely aware of these and other practices, Mr.

Grandich is all the more concerned.

Thursday, January 10, 2008

Peter Grandich - 732-642-3992 • www.Grandich.com

http://network.nationalpost.com/np/blogs/tradingdesk/archive/2008/01/10/grandich-predicts-long-bear-market-and-says-canada-should-dress-warmly.aspx

So expect headlines like “Troubles in the Corporate Debt Market” in the near future, he warned.

“Up until this fall, defaults on corporate bonds were at their lowest levels in more than 25 years. But, with an absolute

binge of borrowing in this millennium and an economy heading for the dumps, I anticipate heightened concerns going

forward in the so-called “high yield” market,” Mr. Grandich wrote.

He also said most of the public has no idea how huge the crisis is given that the debt markets are ten times larger than the

stock market.

“Economic life begins and ends with the debt market as financings for governments, companies and pension funds with

credit instruments are done there on the belief loans will be repaid on a contracted schedule with interest,” Mr. Grandich

said. “Now the time has come to pay the piper in the debt market, and for America to pay for years of living way beyond

their means.”

As for the market, he said there was no shortage of reasons why he turned bearish and shorted it when the Dow Jones

Industrial Average hit a high in October. And the situation may be worse now, while the turmoil in the credit markets is

expected to remain, he added.