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Pastimes : Ask Mohan about the Market
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To: sea_biscuit who wrote (14992)3/19/1998 11:04:00 PM
From: tekgk  Read Replies (4) of 18056
 
I agree, most of it will simply vanish. The stock market is not like a bank account where money in and money out balance, especially when the price drops quickly (the reverse is also true). A fortunate few will be short or in cash when the next bear begins. I believe that many of them will pick up the bargains. One of my relatives bought real estate and bargain stocks in the thirties - he told me that his friends said he was nuts when he got out before the peak and nuts when he got back in. He never had to work his entire life - his friends did. The herd will simply have to wait for 26 years to get back to where they were at the top, like they did after 29 and after 66. In both cases the herd lost a least 75% of their money over the first 12 years of both bear markets. The herd has always been wrong historically. How else do you explain why 2% of the people own 95% of the wealth?

A more recent example is Japan. Where did the trillions in 80's real estate go? Where did the stock market trillions go? The answer is easy to see from the outside - it's gone and it won't be back to the old highs in constant currency units for at least a quarter of a century.

I have noticed that the same talking heads that predicted that Japan could never crash because they were so productive and had so much money are now saying the same thing about us and our markets - a sure sign of trouble ahead.
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