NEW YORK–(BUSINESS WIRE)–Lerach Coughlin Stoia Geller Rudman & Robbins LLP (“Lerach Coughlin”) (http://www.lerachlaw.com/cases/americanhome/) today announced that a class action lawsuit has been commenced in the United States District Court for the Eastern District of New York on behalf of purchasers of the securities of American Home Mortgage Investment Corp. (“American Home Mortgage” or the “Company”) (NYSE:AHM) between July 26, 2006 and July 27, 2007, inclusive (the “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”).

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It is always risky to call an equity market peak and the beginning of a bear market in equities; so I will not try to do that. But leaving aside equity valuations, it increasingly looks like we are at the peak of a credit/debt cycle, in the US and globally.

Specifically, the crucial macro question that we should ask ourselves today is whether we are at the peak of a Minsky Credit Cycle. Or as the UBS economist George Magnus – an expert of financial instability - put it: “Have we reached a Minsky moment?”

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Many writers of investment books approach the topic of saving and investing without any clear economic theory. Value investors often share the sentiments of fund manager Peter Lynch, who said, "If you spend 13 minutes a year on economics, you have wasted 10 minutes."

At the other end of the methodological spectrum, MBAs trained in efficient portfolio theory disdainfully characterize the suggestion that investors should at times not hold any stocks in their portfolios as "market timing" — the investment world’s equivalent of casino gambling.

It is not possible to approach macroeconomic questions without an economic theory. A sound economic theory may or may not yield any useful insights for investors, but a false one is almost certain to mislead.

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"Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years." ~ Warren Buffett

As we all know (or at least should know), the United States economy became imbalanced in the late-1990s as too much speculative capital surged into the Internet and Telecom sectors of the economy. As this speculative boom expanded, rising asset prices allowed the boom to move into the broader economy. Throughout the late-’90s, speculative funds and increased leverage played a primary role in the expansion of credit throughout the economy. If someone wanted cash and had a semi-viable story as to how he would pay it back, he could procure a loan or venture funds quite easily. This process played out throughout the economy, as consumers, businesses and every level of government piled into debt in order to finance projects for current consumption, with little or no concern given to having to pay it off. Our fiat monetary system, with limitless fractional reserve banking made possible by low reserve requirements and a general lack of prudence by our questionable Federal Reserve establishment, played a significant role in creating the initial imbalance.

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