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Bob Buran has a market theory called "The theory of the Screw." It's premise is that the market must always move in way so as to " do the most people out of their money." Given the backdrop of the equities market, a severe 1987 type crash would not do the most people out of their money as this type of steep drop followed by a quick recovery ( or start of a recovery as was the case in 87 ) is what people have become used to. However, a slowly declining market peppered with false recoveries would posses the correct psychology to squeeze much of the profit from the buy and hold crowd. An alternative scenerio would be a market similar to what we have had the past few days, sharp drops with sharp recoveries, but the recoveries being of a slightly less magnitude than the declines. Both describe berar markets, but it is the way in which they are served up that can prove the most devistating to most investors. People believe if they just sit tight and hang on they will be OK. !
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Given a slow bear vs a quick crash, they could be enticed to hang on all the way down ( where ever down is ) with each small upturn being the hope that keeps em hangin on. Of course, sitting tight would work just fine if we were not all cursed with such short life spans. I'm not saying this is what is happening or that this is what is going to happen, just something fun to think about.
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