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The Recession Ahead: Economist Blames Investors, Unrealistic Expectations

Traders Magazine, November 2000

Kathryn M. Welling

Not Makin' Bubbles? In fact, they've burst, says John Makin, who - let's disclose the awful truth upfront - is both an economist and a (resident) scholar at the American Enterprise Institute in Washington. But don't get the wrong idea. Makin is not merely some Ivory-Tower

type. He's also a Street-savvy principal in a big bucks hedge fund, whose economic insights are invariably grounded in investment reality, not to mention practicality.

Case in point: Makin's no-nonsense definition of a stock market bubble. "A stock market bubble exists when the value of stocks has more impact on the economy than the economy has on the value of stocks." Even more remarkable, despite his close communion with both politicos and portfolio managers, he's a market economist who hasn't lost his ability to utter the "R" word.

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