Tommaso --
The more the bulls push the market up, the worse the effects of the correction (crash?) will be. These people live in a fantasy world that ignores the real risks. They also are ignorant of historical speculative bubbles like the Dutch Tulipmania, the British South Seas Company affair, the stock market crashs of 1929, 1987, and the Japanese market crash. Or, they seem to think it won't happen again.
Decreased earnings are going to hit the market hard, and even that most bullish of publications on tech stocks, Upside magazine is warning of a bear market in their March 1998 issue.
The real destroyer is going to be debt. Most people, companies, and even governments are over their heads in debt. It's as if America has gone on a national shopping spree with a credit card, with the feeling that either they'll never have to pay the money back, or that economic conditions in the future (for example, the stock market) will make them rich, so they don't have to worry about their debts. Most people have negative net worths -- they owe more than the value of their assets. I choose to live debt-free, but an increasing number of people are letting their debts get out of control. For instance, last year, more than 1.5 million Americans filed for bankruptcy in the midst of this so-called economic boom.
I suppose that if economic conditions get really bad, I'm going to be one of the people who gets blamed for the crash, because I won't be buying any overpriced stocks from bulls who are desperate to sell, (can you say "Stampede!" ??), but instead will be trying to make money off the market's decline.
Paul McGinnis |
