Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Kid Rock who wrote (3381)	5/2/2001 8:22:56 PM
From: FrozenZ	Read Replies (2) of 74559

Great post Kid, it really hits the nail on the head. Everyone knows the valuations are wrong but they have been wrong for years, why is now different? I'm not a stock market wizard but I will guess. Once the bubble breaks it becomes harder and harder to re-inflate it. The fed is doing everything it can right now... cranking up the money supply in a way that's never before been done. American consumers have a savings rate of something like -$40,000 per family (that's minus) so it's getting harder and harder for them to spend their way out of a downturn. Gas and electric prices are going through the roof so that doesn't help them either.There is a certain casino like behavior that markets display as they lose touch with reality, and many people have noticed those behaviors showing. In the end both perma-bears and perma-bulls will be wrong because extreme moves are characteristic of times like these.

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