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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (14539)	3/2/1998 7:38:00 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 94695

Tommaso I was more thinking in the concepts of the mid 60. Any relevance there?? It is my understanding that then also were more mutual funds than stocks and the US enjoyed similar global success after the Cuban crisis. Any takers?? Haim

To: Tommaso who wrote (14539)	3/3/1998 12:23:00 PM
From: Lazarus_Long	Read Replies (2) \| Respond to of 94695

<< I keep trying to engage someone in a serious comparison of what we are now seeing with the last few months of the 1929 market. >> A plot of the indexes looks distressingly similar. OTOH: What I have read is that the economy had actually been heading down for about two years prior to the crash- -and the market, being in a euphoric, speculative , "New Age" bubble, ignored it. That's not the case now - -or at least as yet. While their are some small air bubbles in the economy due to SEA, it still appears pretty strong--so far. In '29, as I remember (I'm at work and don't have references handy), the Fed screwed up and tightened the screws on an already collapsing economy. The Fed has been very careful this time- -maybe TOO careful. They have shown a severe reluctance to do anything that might prick the bubble. (I'm discounting AGs "irrational exuberance" remarks. They were just words and had only a short term effect. If AG wants to do something, he's going to have to pull the trigger - raise rates - to have any credibility.) Once the worldwide depression got under way (and it started overseas before the US was hit), a trade war developed as nations effectively revived mercantilism and all of them tried to export more than they imported- -an impossible goal. These attempts led to deflation. While the price of products dropped, other things didn't. Particularly, payments of the principal and interest on debt didn't change. So companies and individuals found themselves having to pay the same amount to avoid bankruptcy, but with less income (because of deflation) to do it. Of course, bankruptcies increased, taking lending institutions down the same path as their debtors. It's too early to say whether this scenario will develop this time. Also in '29, as the slide started and increased momentum the gov't. under Hoover refused to do anything to buoy it up. His successor Roosevelt tried, but the efforts were misdirected (NRA) and much too small. It took a world war to stop the depression. While I have trouble believing the market can continue up much further, I also can't see catastrophe ahead. OTOH, Mother Nature favors the hidden flaw, and the way it happened last time won't be the way it happens this time, simply because we know about and have blocked those paths.