Found these interesting and entertaining:
From Kaplan
A BEAUTIFUL BEDTIME STORY:
Once upon a time there was a fair land called Bubble.com. In this fair land the rain suddenly stopped falling, at first for a week, then for a month, then for several months in a row. The citizens of Bubble.com stopped carrying their umbrellas to work with them, since even when it became very cloudy, not a drop fell from the skies. After one year of no rain, the umbrella manufacturers mostly shut down, since people stopped buying umbrellas. After five years of no rain, architects began to design houses with no roofs. These houses became very popular, since they were so much brighter and more airy than the other kind, and they were soon built in large quantities. Meanwhile the houses built to withstand strong storms could be had for a song, since their design was considered ridiculously gloomy, and those who would live in them were considered especially foolish. A few people who continued to live in these mostly gold-colored storm houses complained of a conspiracy, as their property values fell and their neighbors fled for the roofless wonders. Far and wide, all proclaimed that we were in a new era, when rain had been abolished from on high. Special temples were constructed in devotion to the sun god, known as on-line brokerage offices. The priests of these temples were revered as all-knowing and all-wise. Soon those architects who built houses with roofs could hardly be found, since their craft had become forgotten, and their services not needed. Entire neighborhoods of roofed houses were razed to make way for the modern "internet" style. Then one fine day, the clouds rolled in, lower, thicker, and more menacing than had been seen in 25 years. A few old timers proclaimed that it might rain again, but they were dismissed as cranky fools. Then a few light drops fell, then a steady rain, then a torrent, then a flood. The panicked residents of Bubble.com fled for the storm houses, willing to pay any price for shelter. Even those roofless houses that had been built in luxurious comfort, and were barely a few months old, were quickly abandoned in a panic. Those who decided to brave the storm in their roofless abodes, figuring it to be a brief passing event, were quickly disillusioned when dozens of storms followed over the next few years, some of them absolutely devastating in their impact. As for those who remained in their storm houses during the era of no rain, they lived very happily, and wealthily, ever after. As with any children's story, we won't be so crude as to mention what happened to the others.
THE GURUS SPEAK:
John Neff, former star mutual fund manager of Vanguard Group, announced on Friday, July 30, 1999 that he was so convinced that the stock market had reached "nutty" levels of "dangerous territory" that he had personally put 25% of his money into short-selling positions on both the S&P 500 stock index and the Nasdaq 100.
Former German Chancellor Helmut Schmidt told a Sonntag newspaper on Monday, August 2, 1999 that U.S. share prices were being driven to unsustainable heights by "psychopaths" on Wall Street and that a collapse was inevitable. When asked to clarify his use of the word psychopath, Schmidt said that he was referring to "the young 30-year-old dealers and 40-year-old fund managers who with their daily and hourly fund allocations have no other aim than to get the best possible performance. These people lack an overview of the world and world economy and also of the responsibility that entails."
Sir John Templeton, who is a long-time stock market guru and respected former fund manager, said on Thursday, May 26, 1999 that the U.S. stock market reminded him of Wall Street in 1929 and the 1989 Japanese market. He expects the Dow Jones Industrial Average to drop 40% in the relatively near term, losing 4,500 points. Surprisingly (or maybe not so surprisingly), few of the media picked up these comments. Kudos to Bridge News for reporting this important story.
Former Federal Reserve Chairman Paul Volcker said on Friday, May 21, 1999: "The fate of the world economy is now totally dependent on the growth of the U.S. economy, which is dependent on the stock market, whose growth is dependent on about 50 stocks, half of which have never reported any earnings."
Henry Kaufman, president of Henry Kaufman & Co., a Manhattan consulting firm that has been notably bearish on U.S. equities in recent years, declared in the November 8, 1999 edition of Barron's, "I don't know of any period in the post-World War II years when the level of equity prices was so critical to the economic performance of the United States and that of the rest of the world. Now, there are those who believe that we are in a new world and that these values are somehow correct. I doubt that. There is no analytical, rational technique by which you can forecast the extreme of financial euphoria or the extreme of financial despair. But once despair in this market sets in, there is a real risk it could precipitate a recession--not only in the United States, but globally."
ORIGINAL QUIPS FROM YOURS TRULY:
Those who invest in the stock market based upon recent strong price performance, without regard to profit growth, are like those who drive with their eyes firmly on the rear view mirror, without regard to what's in front. Eventually both are going to violently crash.
Just because the inmates have taken over the asylum doesn't mean you should rush to get yourself committed.
No one in 1932 bragged about how much money they made in the stock market in 1928, except for the fraction of one percent who cashed out in 1929. No one in 2003 is going to brag about how much money they made in stocks in 1999, except for the fraction of one percent who cashed out in 2000.
My simple question to anyone who is invested in the stock market: Why? The only reason in 1995-1999 was "because it's going up". Now even that statement is no longer true.
The primary difference between a gambler in a casino and an investor in mutual funds is that the gambler knows there is a possibility of losing money. It should also be mentioned that the average casino is much more organized than the average trading floor.
If a Martian or other alien were to obtain a copy of the financial section of today's newspaper, he/she/it would conclude that there is no intelligent life on Earth. And he/she/it would be absolutely correct!
In 1636 and 1637, they tore up potato fields in Holland to plant tulip bulbs. In 1998 and 1999, they tore up potato fields in eastern Long Island to plant mansions for wealthy stock market traders. One might wonder which is more worthless, a bunch of tulips or a bunch of recently broke stock market traders.
We have seen the Goldilocks economy, but the full title of the story is "Goldilocks and the Three Bears." Just as in the children's tale, with the departure of dear Goldilocks as the worldwide economic recovery quashes the dreams of eternal deflation, the next character currently making his lovable appearance is cute little Baby Bear. Waiting in the wings: Mama Bear; i.e., a sharp Dow correction to around 7000.
"Those who cannot remember the past are condemned to repeat it." --George Santayana. "Those who can remember the past, but figure 'it's different this time', DESERVE to repeat it!" --Steven Jon Kaplan.
Friends don't let friends own high-tech stocks.
Participation in the equities market has increased the most in percentage terms from women, minorities, and those of diverse ethnic backgrounds. Welcome to the great equal opportunity bear market in U.S. equities!
HEADLINES FROM THE YEAR 2011:
The stock market attempted to rally this morning, encouraged by PPI data indicating that wholesale inflation is creeping back down to an annual level of just above five percent after having been as high as seven percent one year ago, but a late wave of mutual fund redemptions once again caused the market to end the day with a net loss, with the Dow ending down 14.23 at 1734.89. The broader market showed a brighter picture as advancers edged out decliners on the NYSE by a ratio of 9 to 8. "It's hopeless," said one observer, who wished to remain unnamed, "no matter how bullish the economic fundamentals, we still have so much money in mutual funds that we could have net outflows of ten billion dollars a month for the next 15 years and still not completely eliminate the overhang." The dividend yield on the S&P 500 is now 9.63%, the highest level since the Great Depression. In an attempt to stimulate investment in U.S. equities, the President as expected signed new tax legislation reducing the top capital gains rate to 18% regardless of the holding period, though few expected the action to have much effect. "Just another instance of too little, too late--I wouldn't even try to call a bottom here," said another respected analyst. "In spite of the fact that we have the strongest post-recession recovery in U.S. history, I can think of no reason to be invested in U.S. stocks." Bob Gabele of Insider Chronicle noted that although individual investors are bailing out of mutual funds at a record rate, the managers of mutual fund holding companies and top executives at nearly all major brokerages have been recording the greatest concentration of insider buying since the early 1950s. The possibility that this heavy insider buying, which extends across virtually all stock market sectors, could signify an approaching stock market bottom was scoffed at by one veteran NYSE observer. "They just feel they have to make a public display of confidence-nothing more or less. Only an idiot could expect the market to stabilize, much less rally, with the shape it's in." To no one's surprise, this week has seen another 27 U.S. mutual funds announcing their merger or liquidation, bringing the total number of mutual funds to about one quarter of their peak a decade ago.
Precious metals gained once again today, with gold adding $14.10 to $1744.80, silver climbing 38.5 cents to $41.744, platinum soaring $22.60 to $1830.30, and palladium rising $10.10 to $1182.90. Analysts attribute the white metals' recent strong rally to surging industrial demand, while the fundamentals for gold remain clearly bullish, say most traders. A report from the World Gold Council indicating that the total world's mined supply is now more than twice the total fabrication demand was generally ignored, as the actual supply-demand figures are no longer considered to be relevant to the market behavior. COMEX gold traders' commitments show commercials net short more than 150,000 contracts for the first time ever. According to Lipper Analytical Services, the average gold mutual fund has returned 38.3% per year for the past ten years, even with the 2004 crash that saw most gold mining shares drop by 40%-50% in five months. "Clearly, one doesn't have to be a rocket scientist to make money in gold mining--just buy on dips and hold on forever," said the chief analyst at Merrill Lynch Goldman. When asked if it was significant that the price of an ounce of gold exceeded the level of the Dow Jones Industrial Average for the first time since 1980, she said: "It was obvious a long time ago that this would probably happen sooner or later."
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