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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: LLCF who wrote (53165)	1/3/2001 10:09:52 AM
From: Perspective	Read Replies (5) \| Respond to of 436258

<It's only unhealthy if it bothers you... ie. you're long way too much stock> This IS unhealthy. Greenspan is hovering over his economic models, thinking the control surfaces are functioning like they have over the past fifty years. A couple yanks on the stick, and we'll miss that mountain, right? The problem is that his models are attempting to account for mass psychology, and I don't believe they adequately account for the fact that it is human nature to go from extreme highs of emotion straight to extreme lows. The depth of emotion is proportional to the extreme of bliss that preceded it. I've witnessed this over and over again, in my personal life and in historic market data. This is why it is so important to avoid bubbles. The economic system suffers dramatically decreased control surface gain. And once the negative psychology asserts itself, it is latches up there. Trying to ease it down is virtually impossible, like balancing a pin on its head. The pin tipped over to the recession side just over a month ago, and Greenspan doesn't realize it. Don't worry - even with substantial rate decreases, the economy will go into recession, and you'll see the market work its way from the present overvaluation back to historical undervaluation again. However, the window to avoid a decade+ depression is extremely narrow, and Greenspan just missed it. Sorry, better luck next bubble. BC