Schopenhauer, let me be more specific:
The value of any stock is based on the general rule of thumb:
70% of its value is derived from the overall market mass mania,
20% from the sector mania,
10% from that particular stock mania.
In other words a rising tide lifts all boats.
If the markets tank, which I believe is a high probability, the small caps will be severely affected (regardless of their future promise). Because most sane people have a desire to preserve their capital, there will be a flight to safety and speculation in the small caps will diminish, hence a reverse in capital flow, hence a crash of the small caps.
The reason I believe the markets will tank is because as the cheap Asian goods reach the U.S. shores employers will forced to cut expenses in order to compete (hence layoffs). The layoffs in turn will reduce consumer spending. This scenario will be repeated in other
non-Asian economies and in turn reduce the trade amongst these countries due to lower consumer spending (not to mention new protectionist policies pushed by the politician of the day).
Yes, the economists are saying that the U.S. has a very limited Asian exposure. What about Europe, Mexico, Canada, South America? Each of these trading partners will have their little bit of Asian exposure which will in turn ratchet down their economies and in turn ratchet down their trade with us.
I realize this is not a very optimistic scenario, I'm neither an optimist nor pessimist, I'm a realist. What is happening before our very eyes is the worst financial debacle of our lifetimes.
Tragedy could possibly be averted by pumping in the liquidity (or some other solution) but will that not cause another problem?
I realize that RNTK is not the most appropriate thread to discuss this. I have been in RNTK for a while and have made some money on my speculations. Because I have gained from others help on this and other threads I feel it would be a disservice to at least not offer my vision as to what may well lie ahead. What is going on in the world is much bigger than RNTK.
I will say that if RNTK dipped to around $.20 I would buy again because the risk/reward would be much more tolerable and I believe RNTK does has some future potential.
Not a scare tactic just something I see. I got out of the 1987 market 2 months before it crashed, what I see now is even more troubling.
All world stocks during the '29 crash were affected and to no small degree the highly speculative. |
