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.

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

To: James F. Hopkins who wrote (14774)	3/8/1998 11:59:00 AM
From: Bilow	Read Replies (3) \| Respond to of 94695

Hi James F. Hopkins; Regarding 1929 and comparison to today's modern markets. You said: The nature of the market , mutual funds, lack of gold standard, futures, and options make comparing them such a total farce that I can not grant any thing but contempt to those who use artifice on the gullible in their attempts to induce a fear so that the market and perhaps them with it can feed off that fear. There is a certain tendency for each generation to assume that theirs is the one that invented something, and that previous generations hadn't thought anything like that up. Back when I was a kid, we thought our generation had invented sex. Not the case. And the 80s wasn't when stock market speculation was invented: (1) Of course the 20s had mutual funds. (2) The gold standard is now pretty much the dollar standard, but it really doesn't have much to do with the stock market. (3) Did futures not exist in 1929? I think they did, at least for private transactions, but I don't have any immediate evidence one way or the other. (4) There was a lively options market in '29. For a reference, pick up a copy of The Art of Speculation by Philip L. Carret, written in 1930, and recently republished by John Wiley & Sons, Inc. Chapter XVIII is devoted to "Options and Arbitrage." I should note that the options markets were not then standardized the way they currently are. Instead options typically had a fixed term of 30 days, covered 100 shares, and were struck at a value enough out of the money to get the sales price of the option down to $137.50. This was their standard, and they traded them for the same reasons that we trade options today, i.e. speculation and risk management. Rather than feeding off fear or using artifice, I suggest that those who make the comparisons with the 20s are simply better read than the thundering herds. After the debacle of 1929-32, the investing community had to gain back the confidence of the investing public. They did this simply by using investors greed to sell them revisionist histories of the '29 bubble and crash. Everybody pretty much believes what they want to believe. And investors who want to believe that "This time it's different." will believe in the face of all facts to the contrary. So the revisionist histories of the '29 market crash live on. And the 'facts' have been repeated so many times that everybody just assumes they must be true. To find out the facts, you have to go back and read the original sources. Another good book on the '29 crash is J.K. Galbraith's book, which I have quoted at length on Silicon Investor. On the other hand, I agree whole heartedly with your statement that TA isn't going to tell us much in advance when the market is going to wreck. On the other hand, since the market is at an all time high, I can predict with great certainty that Monday will not be a panic (i.e. market closing) day. -- Carl