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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Dave Shares who wrote (45204)	4/6/2000 8:52:00 AM
From: pater tenebrarum	Respond to of 99985

David, i bookmarked your post for now...will reply in detail after trading today, as you raise quite a few interesting points, which i have by and large already given consideration to. later, hb

To: Dave Shares who wrote (45204)	4/6/2000 8:57:00 AM
From: Benkea	Read Replies (1) \| Respond to of 99985

David: "Galbraith described these as totally leveraged equity instruments whose true value was a fraction of the value of the underlying securities. Are there instruments today that mirror the investment trusts of the 1920s ?" While the leverage utilized is not on point, mutual funds replaced investment trusts as the public didn't trust the name after 1929. Hedge funds however meet your strict analogy requirements to investment trusts.

To: Dave Shares who wrote (45204)	4/6/2000 9:36:00 AM
From: RocketMan	Read Replies (2) \| Respond to of 99985

Dave, one other difference is that, when the dive started in 29, the banks decreased margin requirements from 40% to 25% in an attempt to provide additional liquidity and forestall massive margin calls. Of course, that backfired, but today we have the opposite on margin rates, they get increased. Although the end effect is the same, the magnitude is not as great, because the margin calls take place much sooner instead of massive margin presure building up.

To: Dave Shares who wrote (45204)	4/6/2000 11:50:00 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 99985

David another three major differences between now and 1929 is that then, margin requirements were 10%(check this one, since I see some people are saying margins were at 40%, the mandated margin, I believe was much lower), for the fully margined, a 10% decline was a catastrophe. A second difference, the flattening of the economy followed by the crash produced a contraction of the economy with major contraction of final demand, today we have a cushion to end demand through the "security blanket". A third difference is that money is now being "created" on a world wide basis, then the feds stood aside on the monetary front, now they have shown time and again that they will bring in the "crash brigades" to avoid major disruptions in the financial markets. Last but not least, another parallel, the government was running budget suprluses before the decline, this mean that money was being drained from the economy. Contrary to widely held opinions, surpluses are not good for the market. Balanced budgets or just marginal surpluses seems to be ideal. Zeev