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

To: Alex MG who wrote (13413)	12/14/2001 3:05:26 AM
From: macavity	Read Replies (2) \| Respond to of 99280

Good point. It would appear that all stops are being pulled to get the economy back on its feet. What if all these tricks do not stop the fall. All this extra (unanticipated) money has flowed to the consumer. Tax Rebates / Cheap mortgages / 0% finance ( this is the equivalent of Japan with Auto manufacturers replacing the job of the MOF). It is all irrelevant - we are in for a 70s type sideways/bear market. You cannot stop the effects of the burst bubble. We can take the pain quickly or slow it down with monetary/fiscal mumbo-jumbo. We have had a bubble and they take time for valuations to meet prices. I am Japan based, and melons still cost 40USD, even at USD=125JPY. This is due to the high distribution costs (labour) that has never been allowed to be corrected. Trust me the longer you fight the cleansing of market forces - the longer it takes. (Take your choice!). This is not a simple recession - the business sector blew up from overleveraging itself (c.f. Japan) on easy credit. Normally the consumer goes down first and takes down the business sector later. For this reason if, or when, the consumer does fall (and these layoffs and increasing mortgage rates are not helping) then the last and final leg propping the economy will be gone - for a while. I fear that there is worse to come (c.f. next couple of years) as things are contracting world-wide, and things always take longer than you expect. The virtuous circle of 95-2000 has gone/is going: Rising dollar / falling commodities (CRB) / falling yields /dodgy company accounting / stock-options in lieu of cash. I urge people to look at a long-dated index (SPX) monthly chart. 1982-2000 is clearly over (we bounced of the 82 trendline @ SPX=940 in Sep2001). We are in a secular bear market now. It is a market for traders and those with flexible allegiances. Trade (do not 'invest'), be prepared to be wrong, and change your mind accordingly. -macavity