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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (1918)	10/28/2001 11:57:30 AM
From: SOROS	Respond to of 99280

I'm not espousing a depression, but not ruling one out either. I think you are jumping the gun in saying anything worse than the current situation is a depression. You also did not address the unknown terrorist situation and your scenario having to TOTALLY discount more attacks altogether. What I am saying is that the S & P has returned around 9 1/2% annually for its HISTORY. From the mid-1980's to 2000 it returned a rate of over 20%! I keep hearing people say, "the markets have gone no where for 1 1/2 years". So what? It could stay flat for 6 or 7 MORE years just to bring us back to the average return. The Bullish salesmen they parade on CNBC are great at using history to point out why the market should go up now -- the six month theory, the length of a bear, cycle this and that -- but they TOTALLY ignore the historical average returns. Short of a flat market for an extended period of time, the current S & P would have to fall by more than 50% to bring the average back to historical levels right now! I love the way the analysts say the market is a leading indicator, and everyone should jump back in at historical highs right now, but they pay no attention to the index for leading economic indicators which dropped 1/2 of 1% in Sept. which is the largest one month drop in six years. This means the economy is STILL getting worse. There are many more degrees of worse before a Depression. Mostly, stock could fall a long way, and we could avoid an out-and-out depression. Of course, the only thing keeping us out of a "technical" major recession is the Fed's actions. Their two components of the leading economic indicators -- money supply and interest rates -- were the only things positive. But I think you will see, as Japan did, that if the real economic indicators keep deteriorating, the Fed's two weapons will have NO effect! I also guess that Bush's praise of companies not laying off people will have NO long-term effect other than a momentary warm fuzzy. Reality and economics will always overtake pride and well-wishes. There are now something in excess of 1 and 1/4 million layoffs this year alone! Ah, but the CNBC cheerleaders would have you believe a turnaround is in the offing -- well, then why did we just set a NEW 10-year record once again for initial unemployment claims after having just set the record at the last reporting? Oh, and the CONTINUING unemployment claims is approaching a TWENTY year high now. Should we believe the CNBC PAID promotion directors (analysts and TV reporters) whose jobs depend on Americans continuing to buy stock or the actual facts coming out finally from many companies about the direction of the economy in the future? Zeev, you tell me to ask myself, "can it get worse?" If Lucent's last report is any indication, I'll say a resounding "YES"! They make about 900 million and take an 8 BILLION dollar charge! They say the 4th quarter will be WORSE, and they see a further decline in ALL of 2002 for telecommunications equipment! Yes, it can, and IMO WILL get worse. Will it turn into a depression? Who knows? The potential for terrorist activity is just a further worry which all of the idiots on CNBC and in the press who want everyone to go into more debt to be "patriotic" and shut their eyes to selective parts of history, and pretend that all terrorist will go away are basing their thoughts on one thing only -- their love of money. When advice comes at a selfish price, I'll not listen. I just hope the retirements of many are not totally lost because they believed the line about the markets always going up (selective history quoting). If April, 2000 ends up being a mirror of the peak in 1929, how many people will die broke waiting for their portfolios to break even in 2025? I remain, SOROS ps I'm sure you have seen this, but there are some (not all) valuable thoughts here: aqrcapital.com