Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: MythMan who wrote (10774)	12/10/1997 7:11:00 PM
From: Defrocked	Respond to of 18056

Pete, you raise some good counter arguments for Mike to consider. However, the issue he raised about a 50% decline should not be dismissed out-of-hand IMHO. Just for the heck-of-it, I computed the percentage drop from the high-to-low on the SP500 Index for 1973/1974 and 1981/1982. They are, respectively, -48.0% and -24.1% using (high,low)'s of (119.87,62.34) for 73/74 and (136.64,103.71) for 81/82. Given we hit the SPX high of 986.25 last week, the prior recessions noted above suggest that declines to 512.85 or 748.56 are not out of the realm of possiblity. These numbers would correspond ,using a DJIA of 8000, to DJIA levels of 4160 or 6,072. Now I realize that picking tops or bottoms can be very difficult.<g> But after computing these numbers I have come to the conclusion that one should not completely dismiss these possibilities. Why??? Well, because I am beginning to think that the Far East situation could be as severe, and as unexpected, a shock as of the oil embargo was that lead to the 73/74 recession. (I'm sure it is in the Far East. The verdict is still out here in the US.) Or that the ravaging of Far East wealth that has occurred could end up creating an effect similar to the money supply constriction that lead to the 81/82 recession.FWIW. After rereading the foregoing I naturally question my logic and the extent of my bearishness. I am not so bearish as a 50% decline but 20% down could easily occur. Weigh that against the upside potential from here in this climate and Intermediate Treasuries feel warm and cozy. I am not a "super bear", just very conservative right now. BWDIK.

To: MythMan who wrote (10774)	12/10/1997 7:17:00 PM
From: Mike M2	Read Replies (2) \| Respond to of 18056

Pete, credit card deliquencies are at a 15 year high so someone isn't paying off their balances each month. Bankruptcy filings were 1.4 million this year(Ithink-g-) up from 300000 or so in the early 80's. Cash balances as a percentage of their consumer debt are at about 65% down from 115% in 1985. Yes the recession may have been mild but my point about the weak recovery is why price stks at record levels when the economy is not booming. More later. Mike