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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: calgal who wrote (21218)	7/14/2002 1:10:59 AM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Hi Westi, in the article, <<The grinding 1973-74 bear market ... From January 1973 to December of 1974, the Dow fell 45% and the Standard & Poor's 500 lost 48%. If stocks were to suffer a similar decline now, the Dow could fall to 6448, or another 27%, and the S&P to 794, or 14%>> If this is all that the equity market manage to accomplish on the downside, then Greensputin's answer, "yes", to the question whether the bubble was worth it or not would be correct. <<The Crash of 1929. While few market watchers draw comparisons ... possibilities are frightening. The Dow would have to melt down to 1,291 if it were to endure the same 89% crash suffered between September 1929 and July 1932>> I also doubt this outcome, but unlike these folks: <<But most say that there's no sign that the current bear will be nearly as bad.>> I am not waiting around to try to spot for the signs. Run away when I can, not when I have to. Chugs, Jay

To: calgal who wrote (21218)	7/14/2002 5:54:38 PM
From: Hugh A	Respond to of 74559

Hey Westi... re: "When will the slide end?" In my opinion, the authors of this article missed the boat. They have not differentiated between inflationary recession (excess demand) and deflationary recession (excess supply). In an inflationary recession, demand is choked off by increasing interest rates. In a deflationary recession, decreasing interest rates have little effect until the debt hangover from the previous overbuild phase of the economy is "cleansed". Take Japan for example. They are only now, perhaps, beginning to pull out of a 10+ year deflationary recession despite having had zero or near-zero percent interest rates for most of the last decade. Check out Marshall Auerbach's July 9 article at Prudent Bear for a more detailed analysis of deflationary and inflationary recessions. prudentbear.com Hugh A. DDGU (Dow down, gold up)