Bottom, Part II

Anybody interested in going out on a limb?

-HW "Skip" Weldon Columbia, SC

Reply to
HW "Skip" Weldon
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Well, when I asked this on my blog, Augustine kindly sent me this link

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shows some surprisingly high bear market rallies. I still remain guardedly optimistic, but I'm also wondering if any shoes remain to drop.

Reply to
JoeTaxpayer

I missed the call on this bottom by a day (in a conversation with an MBS-trader friend of mine). I hope this call has more legs than my last one...

-Will

william dot trice at ngc dot com

Reply to
Will Trice

I'll go w-a-y out on a limb. When we set things right according to rule of law (or simply beheadings), we will have established a bottom. It will mark a low point in management ethics and behavior, and in regulatory and Congressional oversight, that hopefully we will never have to smell again. IMO we have a crisis in ethics (or integrity), and if we don't find and punish those responsible for trillions of dollars of losses, and track down the fallacies and end them, confidence will never be restored. This is what the markets will anticipate.

I welcome any opposing views.

Reply to
dapperdobbs

I'll go out on a limb and say that no one can predict the short term movement of the market with any consistency.

Reply to
PeterL

Yes, but you didn't even bother climbing up the tree (let alone go out on a limb) to say that. You're just standing below watching someone else tumble from the branches screaming :-)

Reply to
Tortoise
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Reply to
Tortoise

Many moons ago I was a gardener, the most satisfying endeavor I've known (back-breaking though it was): every garden has both plants and weeds. In order for the garden to flourish, the gardener promotes the growth of plants and inhibits the growth of weeds, but if you think you can eradicate weeds forever (in this world), you're a social activist dreamer. (I grew up in a utopian society; do-gooder's who are oblivious to the consequences of their silly desires are as tyrannical as they are insane.) Rampant zeal not only kills weeds, but also the plants which are the declared beneficiaries of that zeal. In the end, blind zeal leaves behind only a barren landscape -- be careful what you wish for.

Less poetically, America has lived through the age of railroad tycoons and robber barons, in addition to going through a civil war, two world wars, the Great Depression, and other trials. None of those epic tribulations destroyed the country's fiber or impaired its economy so as to jolt US stock performance out of the steady orbit of a more than 200-year-long trend.

God /has/ indeed blessed America. This is not a right but a privilege, and no one knows how long this will continue. In the end, one cannot legislate ethical and moral behavior, but individuals must choose their own courses of action ... and reap their own harvest. Law enforcement is most effective if it serves to set an example; if you wish to punish everyone, who will be left?

Reply to
Tortoise

It's fun, that's why all the cars slow down on the freeway whenever there's an accident. Maybe I prevented someone from climbing that tree in the first place. If anyone's investment success depends on his/her ability to predict short term price movements, that person is doomed to failure.

Reply to
PeterL

I just replied to an old thread w/something I'd typed up a the time but hadn't posted - see other. I thought there were some good themes brought up in that thread.

-Tad

Reply to
Tad Borek

What I get from the current trend, is that the market is reacting to positive news (or less negative than expected) more strongly than it is reacting to bad news (or more negative than expected). Is this a sign of a bottom or are traders learning how to play this new distressed and oversold market? Predictability should not be mistaken for stability! I think the economy must show signs of stability on main street before we see a bull market, exactly where a bottom will occur before that is a call I won't dare to make, I'll just play whatever cards the market deals :)

Reply to
Edify

The 5-year interval from 1932-37 saw a rise in share prices at an even STEEPER rate than what investors saw in the roaring 20's! The surprising aspect in all of this is that those five years were planted smack-dab in the middle of the Great Depression. How then did a severely depressed economy manage to generate

5-year stock returns which were superior to anything generated during the record boom which preceded that era?

It may seem a sensible assumption that economic conditions drive stock market performance, but the historical record includes examples that invalidate such a simplistic view. At best, one might say that economic conditions normally drive stock performance, but not necessarily. The extreme emotions of a manic-depressive collective state of mind can cause the market to whipsaw unpredictably, for years on-end. It's instructive that excessive whipsawing occurred in an era that was marked by excessive, inept government intervention in economic affairs. The ultimate risk trumping every other risk at the moment is the question mark over whether or not free market mechanisms will be allowed to function. The silver-lining in the cloud is that intent and ability to implement aren't necessarily one and the same.

Reply to
Tortoise

Banks got into big trouble when most people thought they were solid and safe. I am wondering if some of the big mutual funds are next.

Reply to
Don

??How then did a severely depressed economy manage to generate

5-year stock returns which were superior to anything generated during the record boom which preceded that era??

Great history lesson!

I don't believe main street is damaged anywhere near as bad in the present as it was during the 1930s. I believe the road to recovery on main street is relatively short. Unlike the 1930s, the government has manipulated the market (right or wrong) this factors in...additionally, today?s investors through 401 (k)s and day trading (both nonexistent in the 1930s) as well as hedge funds favor trading over investing long term, today?s markets (even before the downturn) are more volatile than the 1930s. The lust for playing the volatility of the downturn won?t end until a return to fundamentals is supported by main streets stabilization. We will also need to see job markets returning from corporate belt tightening and credit markets moving making M&As more frequent and daily business operations more fluid. So far, nothing about this downturn has behaved like the 1930s therefore I don't expect the recovery to either.

Reply to
Edify

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