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In trying to compare this bear with any other bear
should be done on a like for like basis. The question is, does this market
have further to go based upon past markets?. One can look at it in
many different ways. Look at percentage drops. So far the Dow and
S&P have not made the same percentage drops as those in '87 and 74.
Dividend return on the S&P is nowhere near the '74 or '87 levels. The
PE ratio for the DOW and S&P are still above that of '74 and '87.
Those of you that are believers in fib numbers have not seen a 50%
or 0.618 retracement of the Dow or S&P. I don't have the
specific numbers and a lot of this is from memory, which tends to fail one at
times. The Dow would have to be about 5000 to replicate the 74 percentage
drop. Boy, we are currently back at levels not seen since 1997 and
that is bad looking at it from the 2002 standpoint but the Dow is still up 7000
points from where the breakout took place at 1000. What happened to all
the wealth created by that move. It was heaven then and it is hell
now. Why shouldn't the bears have a party every 20 years or so? In
'74 mutual funds dropped like flies. One after another went out of
business. We haven't gotten there yet. The nifty 50 did then
what the tech stocks and telecom are doing now. Just be thankful that
we had this bear now, your social security is in enough trouble with the
government using the money in the general fund, all that had to happen was for
some government official to start investing the assets in the stock
market. I would bet that they would have owned Enron, WCOM, Global
Crossings and several other bankrupt companies. The market is now, always
has been and will always be based upon the greater fool theory. As for a
crash in the futures markets or the strength of the dollar. I remember the
British pound trading just above $1 and the SF and DM at 25 cents
with sugar at 2 cents and lumber at $75/1000. Be thankful
that someone saw fit to provide us with a wonderful way to make a living by
creating a liquid marketplace for us to trade in. What ever the markets
direction all I ask for is liquidity and volatility.
Ira.
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