Behind the Numbers, with Gary Shilling

"We're in a situation where people realize that there is a lot more risk taken in lower-grade investments like junk bonds and leveraged loans–they not only contain low quality backing, but they're also extremely hard to price," says Gary Shilling, portfolio strategist for A. Gary Shilling & Co. "That's one of the things that came out of the 'Bear Stearns bust'–the realization that these things were marked to model, not marked to market, since they don't trade frequently, and the models were very unreliable." As for economic concerns, Shilling points to cautious consumers. "Retail sales and consumer spending growth have slipped considerably, since consumers have been relying on house appreciation in lieu of increases and incomes to support their spending growth," he says.