I thought the following to be an interesting SI post FWIW.
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03/05/3 - TraderMike: The Three Trends That Will Change Our Lives
Long term subscribers may realize that my writing has changed a little over the past few years. I started to charge for
this website in November of 2000 and my writing was much more charged at the time. In March of 2000, I came to
believe that the great stock market bull market was over and began to short stocks. By November I became
convinced that the country was heading into a recession that would cause slow economic growth for years and
horrible stock market declines.
I saw very few other people saying this and saw it as part of my mission to warn people about what was coming.
Between commentaries on the technical action of the market and statistics and data that backed up my conclusions I
would give hyperbolic warnings about what was to come. It was much more charged than anything I write now. I did
that for a reason - I thought that would get people's attention so that they would think carefully about the hard data
articles that I was writing.
I started a thread on Siliconinvestor.com, which was once one the third most popular stock market message board site
on the Internet, called the Coming Financial Collapse of 2001 that became the top thread on that site. I posted about
one of my articles a week on it and links to news stories on the Internet. It even got mentioned in the New York
Times. People on it talked about what was coming and a few tried to disapprove my thesis.
Then came September 11th. It changed the tone of my writing. It was depressing. Two people on my email list had
family killed in the Twin Towers. I had been in the Pentagon before. My aunt lives a few miles from it and heard the
explosion and saw smoke for hours. The markets closed for over a week. I started to watch the TV and cut off it off
after four days. I didn't want to see anymore.
Although the country, had been in a recession all year, after September 11th it became official. However, the market
rebounded into January and people thought that a big recovery was beginning. People remained bullish.
In the meanwhile, I received dozens of messages from people after September 11th accusing me of being unpatriotic
for having been negative on the economy and Greenspan. One person started a spam campaign to get me to change
the title of the threat. I did that and stopped posting on there. I guess I decided to just forget about it - I had spent over
a year warning people about what was coming and if they hadn't listened by then they never would.
I toned down a lot of what I was saying. As the market boom failed to come in 2002 and the corporate scandals
broke, people started to realize that we were in a bear market. "Bear market" became common words on TV. Instead
of predicting huge recoveries, most people started to try to predict where the bottom was.
It was a change from the past. And was a sign that the bear market was entering its 2nd of third phase - which it still
is in now. In the first phase people think they are in a correction. In the second phase they realize it is a bear market,
but continue to have faith in bogus "long run" investing strategies. In the third phase - which we are far from - they
panic en masse and cause the final bottom.
The tone of my newsletter changed though last year. I stuck more and more to just writing about what the market
was doing and toned down what I was writing.
I see three trends now though that people aren't talking about - some of which I find alarming.
1)Bush's war in Iraq is not just about weapons of mass destruction or Saddam Hussein. It is a long term shift in our
foreign policy that will continue for years. Even if Bush lost the next election, whoever is the next President will have
to continue in Bush's direction after Iraq. Winning the Iraq war will place at least 100,000 troops in that country for
several years and give us a responsibility in the Middle East that we do not have now. Bush's foreign policy is
visionary and will change the way the United States deals with the world. Nothing in my lifetime is comparable. In the
20th century only FDR and Truman come as close.
Personally - I don't have my mind up on whether this is a good or bad trend. I don't know. I do know that no one is
talking about this. There is no debate at all in the Senate - not on whether we should go to war in Iraq, but what our
foreign policy should actually be like. The TV commentary is a total joke and people who are against the war just
grasp at reflexive slogans like no war for oil. All I can do is try to understand what the administration is trying to do
and learn more about the Middle East myself so that I can have a more informed opinion.
2)Our culture is changing for the worst, because of this terrorism. America is becoming a nervous nation and people
are acting strange and scared. The happy time when kid-pop music like Brittney Spears dominated the air waves is
over. She took a "vacation." She doesn't fit with the times anymore.
People are uncomfortable about the economy and the future and are projecting those fears onto terrorism - which
they are fearing more than they should. Two weeks ago when the CODE ORANGE alert began I went to a car
dealership to talk to a friend of mine. Sales were extremely slow and one of the salesmen had his head in his hands.
He was depressed about CODE ORANGE and said that he had bought duct tape the day before. When people in a
town of 60,000 are buying duct tape in fear of chemical attacks the nation is having a mass hysteria.
One wonders if these are short term behaviors and fears that will go away once the economy does recover or if these
fears are the start of a long term change in our culture - one that will result in people giving more and more power to
government police powers. Will people just learn to live with the possibility of terrorism, or will the country become
something different? People in their 70's often will tell you how they could buy things for a dime when they were
children. Will I tell my grandchildren that before 2000 you could move freely in the country without an identity card?
3)I see the country heading towards a financial crisis due to the current account deficit, which is widening. The deficit
is at an unsustainable level and will either cause the dollar to plunge quickly - and create a financial panic in the
United States - or will cause economic growth to continue to be sluggish for years on end as it is worked off slowly. I
think the odds are that it will fall sharply. As long as these records have been kept every single time a country has
built a current account deficit that is as big as our a financial panic was the result. I don't see why things will be
different here. If this happens it will probably occur in the second half of this year. This is the third trend I see
happening and will talk more about it tomorrow as it is complicated. To put things simply - even though I have been
bearish since March of 2000 the stock market has fallen further and longer than even I expected, however the
economy has held up much better than I would have thought. I think this is going to change this year.
I'm not the only one worried about these things. Warren Buffett's statement this week that the bust will be as big as
the boom is a warning that things are going to get much worse than any of us imagine.
03/05/3 - TraderMike: The Three Trends That Will Change Our Lives
Long term subscribers may realize that my writing has changed a little over the past few years. I started to charge for
this website in November of 2000 and my writing was much more charged at the time. In March of 2000, I came to
believe that the great stock market bull market was over and began to short stocks. By November I became
convinced that the country was heading into a recession that would cause slow economic growth for years and
horrible stock market declines.
I saw very few other people saying this and saw it as part of my mission to warn people about what was coming.
Between commentaries on the technical action of the market and statistics and data that backed up my conclusions I
would give hyperbolic warnings about what was to come. It was much more charged than anything I write now. I did
that for a reason - I thought that would get people's attention so that they would think carefully about the hard data
articles that I was writing.
I started a thread on Siliconinvestor.com, which was once one the third most popular stock market message board site
on the Internet, called the Coming Financial Collapse of 2001 that became the top thread on that site. I posted about
one of my articles a week on it and links to news stories on the Internet. It even got mentioned in the New York
Times. People on it talked about what was coming and a few tried to disapprove my thesis.
Then came September 11th. It changed the tone of my writing. It was depressing. Two people on my email list had
family killed in the Twin Towers. I had been in the Pentagon before. My aunt lives a few miles from it and heard the
explosion and saw smoke for hours. The markets closed for over a week. I started to watch the TV and cut off it off
after four days. I didn't want to see anymore.
Although the country, had been in a recession all year, after September 11th it became official. However, the market
rebounded into January and people thought that a big recovery was beginning. People remained bullish.
In the meanwhile, I received dozens of messages from people after September 11th accusing me of being unpatriotic
for having been negative on the economy and Greenspan. One person started a spam campaign to get me to change
the title of the threat. I did that and stopped posting on there. I guess I decided to just forget about it - I had spent over
a year warning people about what was coming and if they hadn't listened by then they never would.
I toned down a lot of what I was saying. As the market boom failed to come in 2002 and the corporate scandals
broke, people started to realize that we were in a bear market. "Bear market" became common words on TV. Instead
of predicting huge recoveries, most people started to try to predict where the bottom was.
It was a change from the past. And was a sign that the bear market was entering its 2nd of third phase - which it still
is in now. In the first phase people think they are in a correction. In the second phase they realize it is a bear market,
but continue to have faith in bogus "long run" investing strategies. In the third phase - which we are far from - they
panic en masse and cause the final bottom.
The tone of my newsletter changed though last year. I stuck more and more to just writing about what the market
was doing and toned down what I was writing.
I see three trends now though that people aren't talking about - some of which I find alarming.
1)Bush's war in Iraq is not just about weapons of mass destruction or Saddam Hussein. It is a long term shift in our
foreign policy that will continue for years. Even if Bush lost the next election, whoever is the next President will have
to continue in Bush's direction after Iraq. Winning the Iraq war will place at least 100,000 troops in that country for
several years and give us a responsibility in the Middle East that we do not have now. Bush's foreign policy is
visionary and will change the way the United States deals with the world. Nothing in my lifetime is comparable. In the
20th century only FDR and Truman come as close.
Personally - I don't have my mind up on whether this is a good or bad trend. I don't know. I do know that no one is
talking about this. There is no debate at all in the Senate - not on whether we should go to war in Iraq, but what our
foreign policy should actually be like. The TV commentary is a total joke and people who are against the war just
grasp at reflexive slogans like no war for oil. All I can do is try to understand what the administration is trying to do
and learn more about the Middle East myself so that I can have a more informed opinion.
2)Our culture is changing for the worst, because of this terrorism. America is becoming a nervous nation and people
are acting strange and scared. The happy time when kid-pop music like Brittney Spears dominated the air waves is
over. She took a "vacation." She doesn't fit with the times anymore.
People are uncomfortable about the economy and the future and are projecting those fears onto terrorism - which
they are fearing more than they should. Two weeks ago when the CODE ORANGE alert began I went to a car
dealership to talk to a friend of mine. Sales were extremely slow and one of the salesmen had his head in his hands.
He was depressed about CODE ORANGE and said that he had bought duct tape the day before. When people in a
town of 60,000 are buying duct tape in fear of chemical attacks the nation is having a mass hysteria.
One wonders if these are short term behaviors and fears that will go away once the economy does recover or if these
fears are the start of a long term change in our culture - one that will result in people giving more and more power to
government police powers. Will people just learn to live with the possibility of terrorism, or will the country become
something different? People in their 70's often will tell you how they could buy things for a dime when they were
children. Will I tell my grandchildren that before 2000 you could move freely in the country without an identity card?
3)I see the country heading towards a financial crisis due to the current account deficit, which is widening. The deficit
is at an unsustainable level and will either cause the dollar to plunge quickly - and create a financial panic in the
United States - or will cause economic growth to continue to be sluggish for years on end as it is worked off slowly. I
think the odds are that it will fall sharply. As long as these records have been kept every single time a country has
built a current account deficit that is as big as our a financial panic was the result. I don't see why things will be
different here. If this happens it will probably occur in the second half of this year. This is the third trend I see
happening and will talk more about it tomorrow as it is complicated. To put things simply - even though I have been
bearish since March of 2000 the stock market has fallen further and longer than even I expected, however the
economy has held up much better than I would have thought. I think this is going to change this year.
I'm not the only one worried about these things. Warren Buffett's statement this week that the bust will be as big as
the boom is a warning that things are going to get much worse than any of us imagine. |
