Peter,
Thanks for re-posting that. To me, one of the qualities of
good analysis is the obvious passing of the test of time.
I see that that interview was posted over a year ago. In retrospect, I would say it seems as relevant now as a year ago. Nor do I see any flaws in the ideas put forth. I'd say
the thoughts expressed in the interview were and are right on the mark.
A couple of quotes which I feel are quite to the point a year later:
"But perhaps most important, this first phase is occurring at a time of the first generation of investors in U.S. stock market history to never have gone through hard times. This big difference allows them to disregard risk."
"In the second stage, business conditions really start to deteriorate. Stocks go down further as they discount this climate. Corporate profits decline, and the effects of the battering stocks have taken so far is reflected in corporate earnings. For this reason, the public relates much more to what's happening in the second phase, and optimism begins to turn to questioning and even gloom. THIS USUALLY IS THE LONGEST PHASE."
"Either way, it's been the longest bull market in history. To me this suggests that it probably will be followed by one of the worst-ever bear markets."
"And the incredible part of great primary swings from extreme optimism at the top of a bull market to black pessimism at the bottom of a bear market is the public's and the investment community's inability to recognize and accept change."
"It's simply the way bear markets work. The sad part of it is that bear markets work just the opposite of bull markets. Just as bull markets climb a wall of worry, bear markets descend on a ladder of misplaced optimism."
"They don't believe big blue chips also can collapse. Second, these are the most liquid stocks. At the bottom of a bear market, when you really can't get a decent price quote on anything else, these are the stocks that still can be sold."
Very clearly, I can see after reading this article/interview that the current bear market as long as it has lasted so far does not qualify as the worst bear market in history after the greatest bull market in history. The dow is still near all-time highs! So we are still in the midst of Phase 2, "the longest phase".
Also, I see that optimism has not really given way to pessimism as of yet. Read on any thread how many players still think and argue for bullish continuations even now and continue to bring up the wall of worry as opposed to the ladder of misplaced optimism! This tells me Phase 3 has not even begun.
"5,000 years of human nature indicate this market will end in the cellar." WE ARE NOT THERE YET!!!!!!!!
Thanks very much for re-posting. Very good and very relevant.
Regards,
Eichler |
