Mike, first of all, I wish to say the following: unlike in some venues both here at SI and elsewhere, we have managed to engage in a lively discussion agreeing on some issues, having vast gulfs between us on others, without any question of personal attack coming into play. This is the kind of discussion I always favored. If your thread leads to this, SI members marshalling their facts as well as they can to make some arguments one way or the other, then you have a thread to be proud of.
Now, to the issues, point by point:
I told people last December in my newsletter that the stock market probably crash in 2000 because Greenspan pumped extra Y2K liquidity in the markets and would take it out in the first quarter. I sold my long term holdings in February and had people told me as I a nut. Went short first week in November and within a fee days called the crash. Once market broke 3,500 I warned them we would go to 3k and the market was completely broke down. So what though - what is important is the future. And the accuracy of any of our past statements means nothing about that.
First of all, I am a devoted admirer of those in our field who post facts to support their claims. Please post a verifiable copy of that newsletter here on SI for the membership. If and when you do, I will be the first to congratulate you for that excellently timed warning.
I am interested however, about why you would warn of a stock market implosion February 2000 and only go short a week ago. Surely these dramatic crashes were worthy of a short sale or put option or two.
I disagree about the past - those who have proven records in the past have some standing predicting the future, I believe.
...we have economic imbalances that could create such a crisis in the future. In short Greenspan created a credit and stock market bubble to patch over the LTCM, Russian loans, Asian loans, Latin America loan crisis in Oct 1998. He artificially created demand in our economy so that these foreign countries could create a trade deficit with our country and hopefully pay off some of those loans they had from the international bankers which they weren't able to after enacting IMF "reforms". We may be paying the price for this madness in the future.
Here you accuse Alan Greenspan, the Chairman of the Federal Reserve, who has presided over the greatest peacetime economic expansion in this nation's history, with manipulating our economy and the trade balance so that the United States could collect debts from other nations. This is completely preposterous. As for the IMF, and their advised reforms, the professor of whom I spoke, Dr. T.M.C. Asser, who will be teaching courses at my site in futures and options, is my father, and, in his position as Assistant General Counsel of the International Monetary Fund (IMF) spent the better part of the 90's repeatedly traveling to countries such as Hungary, Poland, the Czech Republic, Slovakia, Albania, Latvia, Lithuania, Estonia, Kazakhstan, Ukraine, Belarus, Armenia and Russia to assist in creating a legal and financial framework for the proper foundation of emerging market economies. These reforms were necessary, and positive. The successes of many of these countries in the wake of this labor is proof. These reforms were agreed to by visionary politicians on both sides, including the Presidents, foreign ministers and central bank heads of all of these nations. Especially Poland, Hungary and the Czech Republic have made amazing strides in joining the market economies of the West and East in economic growth. The IMF and World Bank play critical roles in the development of blossoming economies. If not for them, many of these nations would languish in an economic morasse for decades. I would hardly call this courageous risk-taking and dedication to giving many countries a platform to financial success a "madness."
You don't seem to be saying this is a near bottom - you claimed that Nas is going to at least 2,500. Now you say it is a near bottom because this thread exists. Which is it?
I stated we are at a near-bottom in temporal terms - we have yet quite a steep decline in store - but I believe the ensuing 500-800 point slide will be a swift and dramatic capitulation. Those who have played the markets on hope alone will now be flushed out. It is a healthy retracement.
I don't think these are strong stock. Many of them such as ORCL and JDSU have completely broken down. You couldn't point a gun to my head and get me to buy them as investments. You might be able to buy them on a gap down bottom and sell them the next day for a good 10-20% gain, if that happens - but I wouldn't hold these bubbles as investments.
CSCO, ORCL, JNPR, JDSU, SDLI, SUNW, BRCM, HGSI, VRSN, BRCD - these are not strong stocks? Oh la la la la la la. Now you make me wonder if you are employed at an investment bank. These are great leaders in the explosive growth of our economy due to immense and rapid technological advancements. Avoiding technology stocks is not a wise choice. They are now the leaders, and will continue to be the leaders of our stock markets far into the future. When you call these solid companies "bubbles" I have grave reservation about your motives. To name simply one stark example: anyone who pays for a DSL line knows how massively oversubscribed they are, and of the rocketing demand for high-speed Internet connectivity. This is merely a beginning in the Internet revolution. Of course there have been excesses, as in any other period of massive and revolutionary growth. When the dust settles, companies such as these will lead us into the future.
Sincerely,
Olivier L. F. Asser |
