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There are factors in this market that were not around in the 1920s and 30s. The
only thing that will allow a collapse of this market is the public. Right now
we still have more mutual funds then ever before. To get a complete picture of
what is involved one would have to know what each of these funds is allowed to
invest in, how much of there total assets must be in stocks at all times, how
much can they have in cash and what it would take for them to close their
doors. With trillions in various retirement and investment funds deposited in
mutual funds that must retain a stock position their only alternative is to
rotate from one sector to another. The real crash will come when and if
redemptions start to accelerate and these funds start closing their doors.
Right now all you have is a minor retracement in the indexes. Yes some stocks
are worth zero and others are down 90%, but there are still those that are
selling with PE ratios of 50 to 100. Because a company lost money last quarter
doesn't mean that it is going out of business or that its growth potential is no
longer there. I am not a bull or preaching a bullish scenario, I am only
pointing out that if this thing starts to snowball, it will be redemptions that
do it. With over 2 billion shares traded a day, how long would it take to
liquidate $4 + trillion dollars in stock assets? Until the public throws in the
towel, I don't believe a real good old fashioned crash will occur. Right now
the public seems to be, "fat, dumb, and happy". this is just one mans opinion.
Dorothy Carter wrote:
> Just wait long enough.. the DJIA and the small and mid cap stocks where the
> money managers have been hiding will come under pressure as well.. The
> strength in the DJIA has not been confirmed by any of the other averages..
> and recent weakness in Transports which usually leads to DJIA does not look
> good for the bullish case.... The bullish case was that manipulating 30 DJIA
> stocks and trying to run for 11000 would cause short covering and that the
> NAZ would turn around and rally to follow the senior index.... Looking at
> the DJIA 30 stocks only a couple have held up and those have downside
> targets now.. If I owned the DJIA 30 stocks I would not be sleeping at nite
> any better than if I owned the NAZ... probably worse as it has a lot of
> catching up to do... so to each their own bunk I guess......
> ----- Original Message -----
> From: "Ralph Volpe" <rjv@xxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Sunday, September 09, 2001 4:15 PM
> Subject: Re: [RT] 1929 Comparisons
>
> > A chart was recently disseminated that was supposed to show the
> similarities
> > of the 1929 crash to the market today. Let me comment on that very
> briefly --
> > it's bunk!
> >
> > The collapse today has so far been a token crash that's primarily
> affecting
> > the tech stocks. Let me point out that the Dow has only lost 17 percent in
> > nearly 21 months (and that's a good Fib. relationship). Investors in 1929
> > would have been ecstatic with that type of decline. As well, the S&P500
> has
> > lost 25 percent in the same time period. If you compare years 2000/2001
> > against 1929 you'll see that there's a world of a difference in price
> > deterioration.
> >
> > Also, you're drawing trend lines on a semi-logarithmic scale and I don't
> know
> > if that's an accurate way to arrive at comparisons. For example, Back in
> 1929
> > the S&P lost 50% in a month after the '29 top and up to 60% only a few
> months
> > later. The flaw in such comparisons is simple: you can't compare apples to
> > oranges -- all things considered, it's impossible to draw comparisons. For
> > example, the universe of traders and trading vehicles are totally
> different,
> > commodity prices may be totally different, and the government has more
> > accurate data to proactively involve themselves at an earlier stage. On a
> > final note, even though the scale in the gif were semi-logarithmic there
> > wasn't any adjustment in price to account for inflation --- and that makes
> a
> > world of a difference. And, although I'm into celestial influences, are
> they
> > the same? Let's ask those who follow this discipline.
> >
> > On a note I'm happy there's so much negativity in RT. Why? I see a nice
> > counter wave here that I think will carry for several weeks. I'm basing
> this
> > on an Elliot pattern and some Fib relationships that may hold. So, with
> all
> > this negativity, it may be a great contrarian investment.
> >
> > Ralph
> >
> >
> >
> > To unsubscribe from this group, send an email to:
> > realtraders-unsubscribe@xxxxxxxxxxxxxxx
> >
> >
> >
> > Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
> >
>
>
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>
>
>
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