Robert, the chart patterns, when compared to the patterns of the two prior big stock market manias this century (U.S. in the '20's, Japan in the '90's) argue that if this indeed develops into a blow-off type rally, it should be the last. as i have said before, history argues for such a final blow-off with broad participation to happen. it is still possible that the July top already was that final blow-off. however, what i didn't like about it was that it didn't go far enough. i always thought that this particular mania should put everything that happened before to shame, even the tulipomania of 17th century Holland. nevertheless, let's be clear about one thing: as Bill Fleckenstein is fond of pointing out, what's happening here has very little to do with fundamentals or even investing. it's simply speculation running wild. when even staid stocks like AXP and JPM see their market caps race up by multi billion dollar amounts on a daily basis, not to mention the stocks with minuscule revenues, big losses and a 'story' that command multi-billion dollar market caps as a matter of routine nowadays something is not right. i've been involved for quite some time with the markets and what i have seen happening in '99 compares to nothing i've seen happening before...the Nikkei in '89 perhaps excepted. i am well aware that there's a multitude of vested interests that are doing whatever it takes to keep this bubble alive, and yet i am convinced that it will ultimately suffer a fate similar to that of the bubbles that came before it. the fact that it has kept going beyond the wildest imaginings is no reason to believe it won't, on the contrary it means that the hangover when it finally comes will be of equally gargantuan proportions.
regards,
hb |
