Hi Joel, On our PM concerning the infuriatingly slow process of cleansing, we must remember that investors, young and old, have been acclimatized to LTBH, and for many, specifically technology and Buffet shares (KO, G, etc).
A good percentage, if not the majority, of the bears do not have the experience of a bear market (depth, width and foggy treacherous booby-trapped nature of the valley), and so we will have waves and waves of down, down, up, down, down, down some more, up, up, d ... as each echelon of bears gets infected by the ‘smartie’ virus and jump the gun on the race to the upside, only to stumble as did the previous echelon, step on a trap, get amputated to varying degrees, and some perish in their anxiety to be not left behind.
I do not need to remind you of the Tokyo market, but it may interest you to know that the Taipei market was at one time (1990) even more heated than the Tokyo market, requiring employers to hunt up their employees in the stock trading dens during work day. At that time, the turnover $ volume on the Taiwan exchange was higher than NYSE (yeah, imagine, little old Taiwan). Folks were making a whole year's salary in a few hours. At the absolute peak, there were weekly tours of Taiwan speculators to the smaller SE Asian markets where they were entertained by young ‘naughties’, wine and dined, and they collectively selected a few shares to ramp up in concert with the local Chinese speculators, and dumped before returning to Taiwan for the weekend, only to return in the following week. No one ever said the Chinese race do not know how to party. Ah, where did all the money loaned to Thailand really go? Soros’ pocket? Not likely.
I have a buddy whose brother-in-law in Taiwan was responsible for bouncing a few billion $ (yes, that was a b, and in real fiat money) in checks for stock purchases, causing in one instance the market to tank by 7% in one trading session. The man escaped jail by getting himself elected into parliament. Democracy is great, for the wealth and the guilty, in Taiwan, at least.
I must note that the Taiwan market is still only at 50% of its all time high, going no where fast, until the island is fully drained of its liquidity, and then, finally, capitulation, followed by reunification with the great motherland.
So, I believe the Big Kahuna is coming, and the water may not subside for some time, meaning a gurgle-ly and wet grave for those without enough high density air in a few thoughtfully located spare scuba tanks.
One lesson I take away from the Taiwan story is “counter party risk”, as applied to those in the derivatives market believing that they are “hedged” – read, all the credit derivatives and gold derivatives, stress tested for psychological peace, but not for genuine utility – when a check is bounced, a counter party vaporizes, leaving a messy trail of other parties, each holding on to own pants, in a crowded prison compound, with no music to mask over the panic rumbles.
I should be in the movie business:0)
Chugs, Jay |
