Extremeties are indications of market trend change. The NAS is down something like 20-25% past 7 days. This is on top (or bottom) of major downturn. nas at 2300 is -2800 from its march high or over 55% retracement. A correction is 10% and a bear market is 30%. we are already well beyond a bear. The economy is not ending. or dying. there are other factors at work. the unwinding of the speculative ipo/internet/tech bubble of the past 3 years, totally unrealistic expectations and margin trading by novice investors, and other forces that we don't know about yet.
The US economy is strong. we remain the technological leader. the internet, and broadband and switches and routers and data centers and crm are transforming US industry to a higher productivity than we have ever known.
The rate of growth is slowing. Most companies are reporting a slowing of the rate of growth, not an end togrowth.
The total devastation that we have seen the past 9 days or 9 weeks or 9 months is transforming the very fiber of many lives. money that was intended for retirement, or college, or new car has vaporized to money heaven. this come at a time when many northerners are receiving sharply higher gas bills and we hear about layoffs.
We are very close to a major bottom. not that things will just turn up, but this pummelling is actually worse than the 1987 crash, just has taken longer. and that was a major turning point for renewed growth.
there are many problems. there are many opportunities. an all tech portfolio was an invitation to disaster in 2000 just as it was a recipe for total euphoria in 1999. we have a new president coming in. i'll assume that he will not be tainted by the election turmoil. he is not an einstein. but he is smart enuf to surround himself with top people. and he will listen to them.
i fear bush's tax cut proposal because of its size. people talk about reagonomics and what a boost it did for the economy. it did that, but at the price of saddling us with trillions of debt.
we have been finally paying down this debt, but with slowing earnings, lower tax revenue, the paying down of the US debt will slow, if not reverse. tax cuts will only make that worse. some cuts are good and needed, too much will be deadly. i am rambling. i am upset. i have lost a lot of money this year. a lot of good friends have lost a lot of money this year. but i don't despair. a sensible approach going forward will bear fruit. night all. larry |
