Vol - Isn't it the case that many of us have watching our screens adncnbc for the last eight months hoping beyond hope that we will see portfolio values return to what they were a short time ago.
Hasn't even that hope been curtailed to say what the portfolio was only a few short weeks ago rather than what it was in March which many I reckon now believe to be a forlorn dream. Aren't we lowering our hope sights as we go along into this wet worth reduction excercise?
And what benefit have all these months of worrying and trying to discern the least inkling of a bottom or an end to this awful suffering been?
Personally I now think more about this by the day. Yes regrets, about what I should have done. But all those months in the bull market of buying the dips finally gets you and you go into the black hole with everyone else and the black hole market takes all the gains and more.
Oh yes there may be a rally after the announcement of the final result but Vol, I tell you now it will last 24 hours and will be accompanied by massive selling into it, the most massive we've yeet seen as one lot of people reckon this is the last chance to get out and another lot reckon they will short anything that goes up by a few dollars because they get the extra impetus of those few dollars before a massive collapse the next day.
As we've watched daily, hourly during this eight months of misery we've now become accustomed to one day up during the week usually Tuesday for some reason and then the rest of the week down including one massive drop. And the NAZ continues its inexorable decline.
I was looking at short postions today and many are at all time highs. There is no discernable interest from institutions or funds in buying stock, the November to March period must own period is turning out this year to be no different than the rest of the disastrous period since the end of March.
The NAZ grew to climax with its massive blow off in March during a Goldilocks period in the economy when for eight years or so the economy grew as never before fueled by fantastic technological changes which super charged the growth as never before and helped it do all this without inflation.
It ended as all bubbles do with a massive blow off this one last March. It is over and we have been acting with all the decisiveness of an elderly and infirm rabbit caught in the headlights of a massive truck.
The most incredible aspect of this is the paralysing power of hope that has cost so many of us so much.
There is not the faintest hope of a bottom here. The NAZ got stocks to the levels that it did when the US economy was growing at its historically highest ever levels ( or near them). Mr Greenspan has put the brakes on hard,, very hard and the economy next year may not grow at all. Under those circumstances the NAZ is simply unsustainable at this level or indeed at the levels of December 1998 (about 1,900).
I'd love someone to prove me wrong but for the avoidance of doubt I will ask the question again. If the US economy is now ex-growth or even 1% or 1.5% how is the NAZ going to support a level that was current during 1998 when the economy was booming?
We are simply deceiving ourselves to imagine that it can any more than water flows uphill.
Stock prices are no longer responding to great earnings or prospects. They wait now to hear what the prospects are for next year. Time after time we are now hearing about "concerns" about accounts receivable increasing or inventories increasing or the like. Analysts pouring over the minutia of the financial statements looking ot find anything they can refer to as a concern and then whack, down oges the stock.
And now the new game of downgrades. I hate to think what this means if what you described to me ealier today is true. We all have now to worry that you wake up to find one of your stocks is downgraded. Forget about whether the management say things are great even looking forward, forget about what management says the stock still gets whacked. Stock prices now move totally independently of the fundamentals or company performance.
How on earth I ask you so you invest in a climate like that.
Friday night 4.00pm comes like a blessed relief. And it is now Sunday night blues, NAZ stomach starts at around 8.00pm Sunday nights as one wonders how badly we're going to be worked over on Monday. Vol I admit to having had one of the most unpleasant years of my life.
In recognition of this I guess, we are now seeing comments about things getting better after Q2 next year. Q2 next year...yeh right.
I have said many times now that Mr Greenspan intends to break the back of the US economy. He won't even think about reducing interest rates until he sees the white of the eyes of a few millions of Americans on the unemployment lines. In fact my guess is that he won't even change the "bias" till then, whatever good changing it might be anyway. Who cares a jot about his 'bias'. For any improvement in the economy and thereby the market to take place we have got to have a reduction in these sky high interest rates that are sucking the life out of the economy.
And wait as the US economy slows down just you watch what happens overseas. Think Korea is going to get out of its massive credit problems if the US economy tanks as it is. Or Japan? Will Japan do better or Europe. Of course they won't and they aren't. Its already started and will feed back into the Q4 00 and Q1 01 earnings and it will feed upon itself.
Vol if this is anywhere near true and I'd love someone to show me that it isn't happening in front of our eyes, then we are only just at the beginning of the crash.
When Abby said a few months ago that she was advising to reduce equities by 5% or 15% or whatever she said what we should have done is to reduce equities TO 5% or 15% not BY.
Sorry to moan like this but I think after eight months of the greatest excercise in futility that I have particpated in I think its a reasonable contribution.
Best regards,
L |
