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Dennis Conn wrote:
> I do disagree with your (implied) assessment of today's crowd
> being different than their predecessors of 1929 (or, for that matter, 1720 -
> a far worse crash than any other in history).
> What makes you so sure that, since the crowd is different, human nature is
> different too? Human nature doesn't seem to have changed in the past 1000
> years, so the same insanity can and probably will repeat.
Sorry for not making this clear enough. First, what I meant by this is that the
identity, magnitude, and motives of today's investor has changed considerably.
Whereas the markets were once a playground of the wealthy, looking to supplement
their wealth, playing the market has become a major institution today. Put
another way, there are a great deal more people who rely on equity-like returns
to reach their financial goals than was the case in earlier times. As for the
likelihood of a crash - this wasn't what I was commenting on here per se - I was
instead speaking of what I feel is the real underlying reason for price change -
aggregate capitalization.
> 1929 was child's play compared to the decline we're facing, IMO.
I seriously doubt it. I believe that corrections are seen more as buying opps
than anything, but the real reason is that that sort of mass exodus would place
millions of people's retirement plans in serious jeopardy once anywhere near
this kind of reversal would occur.
> Unless I go to my deathbed having been proved wrong, ALL markets suffer
> corrections, and I'm inclined to think that the bigger the run-up, the more
> devastating the collapse, whether sudden or prolonged.
Corrections are normal in the context of bull markets - however, whether it will
end is another matter.
> The collective conciousness (or in this case, unconciousness), is what
> propels a market mania to a final top, and the change from optimism to
> pessimism (for whatever reason) is what causes the selloff preceeding a
> crash.
What would this pessimism be based on though? It would take a real crisis to
propel this, and I really doubt that we will encounter anything close to this in
the next few years. The time will come, though, in the 2110's or so, where
things could get REAL interesting.
> If the first thought that comes to mind for some of you is
> ''programmed trading", let me remind you who it was who programmed the buy
> and sell criteria; just another human being who happens to be subject to
> his/her own particular expression of the group conciousness, a fellow victim
> of human nature.
Not at all sure how this fits in.
> Good luck to all who give credence to this "New Paradigm"
The paradigm really isn't *new,* but is rather bringing some old and flawed
ideas about how markets work to light more. Nothing's really changed, though -
it's always solely been a matter of inflows and outflows of capital. There's
simply too much capital married to the market for what you are suggesting to be
a even a likely possibility anytime soon, let alone be inevitable.
Regards,
A.J.
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