Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: smolejv@gmx.net who wrote (25956)	12/9/2002 5:08:44 PM
From: carranza2	Read Replies (1) of 74559

Hi, DJ. Recently read Tice's (Prudent Bear) pronouncements. It's clear that if the past is prologue, we're in for a Dow at 5,000 before the market does better in any sustained manner. The question, then, is this: Is it wise to always believe that the past is prologue? I would not mechanistically go back 50 years to find patterns and shoe-horn them into future prospects. Instead, I'd dig deeper and see what are the real conditions. They are IMO the following: 1.- The almost absolute certainty that the dollar is going to fall more in value relative to other currencies. The implications for foreign investment in the US markets are obvious. 2.- The almost absolute certainty that the fall of the Dow will cause (or be caused by) a double dip recession which will be much nastier than its first dip as we are clearly less equipped to weather it. 3.- The almost absolute certainty that Uncle Al was mistaken when he took it for granted that we are becoming more productive as a result of computers and other technologies. As Tice puts it, we are getting smarter at making computer and other technological equipment, but we are not necessarily working any smarter (getting more productive) as a result. 4.- The almost absolute certainty that budget surpluses are a thing of the past for the foreseeable future. Depending on the expense of a war, the deficits will be significant. And Bush wants to cut taxes!!! In combination, all these factors make me think that a Dow of 5,000 is not only possible but likely. Add Tice's structural and historical data showing that bubble-bursting requires severe cuts in market valuations before the bull returns, and I think it is almost a foregone conclusion that we are in for more pain. If the Pimco economist is correct, the sole bright spot is that the Fed. is now thinking in terms of the things that need to be done to prevent deflation.

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