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invstr@xxxxxxx wrote:
> Dear Chris,
>
> As I've mentioned in previous postings, simply comparing numbers
> (which
> actually are arbitrary, since you could easily pick a time slot before
> the
> '87 crash) is useless. What was the cause of the crash of '29? The
> cause
> is pretty well understood: The Federal Reserve Bank reigned in over a
> third
> of the credit it had easily provided in the previous 10 years, in a
> short
> time frame- calling loans etc. In other words, the stock market was
> rising
> at a relatively normal pace, when cash was pulled out from underneath
> it.
>
> The market is driven currently by boomers using it like a savings
> bank.
> The mutual funds are really the driving force behind the DOW's rise.
> Very
> different financial circumstances. Who's to say that a national panic
>
> won't set in? Unlikely though.
>
> Dan
Dan,
Actually the time frames aren't arbitrary, if you're into Elliott Wave.
The '21 - '29 bull was Cycle wave 5, and it is highly likely that the
bull since '87 is also a Cycle wave 5.
As for whether a national panic will set in... I highly believe it
will. People have ALWAYS panicked after manias. Why would this time
period be any different than any other in all of human history? And if
this isn't a mania, I don't know what is. There's a book called
_Extraordinary Popular Delusions & the Madness of Crowds_, by Charles
Mackay. Written in 1841, it is still applicable today.
I agree that it likely won't be the same trigger as in '29. But there
are others...
As to when it happens, who knows? That's what I was speculating on in
my original post.
BTW, there's a law in physics that says that the incidence of reflection
is equal to the incidence of refraction (I believe that's how it goes).
E.g., if you shine a flashlight on a mirror, it will be reflected back
at the same angle as which it struck (though in the opposite direction
of course). If you look at a lot of charts, I think one comes to think
that the market tends to follow this law. IOW, straight up, straight
down. :)
Chris
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