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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: Justa Werkenstiff who wrote (10958)12/5/2001 9:25:13 PM
From: Mark Johnson  Read Replies (2) of 99280
 
The rest of the story:

That chart of the DOW vs the Nasdaq sure looks similar but history never repeats itself exactly. I would point out at least one fatal flaw in the policies during the DOW's 1930's slide. It looks like they cut the discount rate 1.5% in 1 year and then held that rate for 3+ more years - really bad policy. This time, the Fed has cut the rates 4.5% (soon to be 4.75-5% in 11 months) in 10 months. But we are not counting on interest rates alone - I don't know if tax cuts were put in place in the 30's but our recent and pending cuts will be very helpful as shown by the Reagan cuts in the early 80's. Furthermore, money supply is accomodative, government spending is on the rise (something I'm not particularily crazy about but as long as they are not long-term programs, they shouldn't hurt us down the road), mortgage refinancings at a record, oil prices are significantly lower - all of which provide additional support for the recovery.
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