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Scenario for next week '87 or '29?
10-11-2008, 01:13 PM
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#1
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Full time employment: Posting here.
Join Date: Jun 2008
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Scenario for next week '87 or '29?
I never thought I would hear in my lifetime any serious talk of 1929 unfolding again yet Cramer threw that scenario out as a possibility on his show last night 10/10.
He also believed that a worse case scenario has the DOW at 6000 by end of trading on Tuesday.
He was advising people to come back into the market with a quarter of the 20% he said to take off the top both Monday and Tuesday.
He seemed to indicate the 1929 scenario as the least likely but he went to talk about the difference now from 1987 and commented the 1987 scenario is Bullish at the moment.
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10-11-2008, 01:35 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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I've read several articles that seem to think we are in 1938, and that 1999 was really 1929.
FT.com / Markets / The long view - Heed the harsh lessons of history to find value
I think the only implication is that the stock market only grew 5% over the next decade.
Audrey
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10-11-2008, 01:42 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Quote:
Originally Posted by audreyh1
II think the only implication is that the stock market only grew 5% over the next decade.
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If that doesn't included dividends, that's not bad, because in 1938 the S&P was yielding on the order of 5-6%. Indeed, reinvested dividends make the entire decade of the 1930s quite a bit less horrible in the extreme.
We don't quite have that now, but there are a lot of solid companies out there now with dividend yields well north of 3%. Even 5% in nominal Dow/S&P gains would mean about 8% return. Not great compared to history, but not too shabby either...
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10-11-2008, 02:05 PM
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#4
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Full time employment: Posting here.
Join Date: May 2008
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All that matters is whether stocks are better than any other general investment category in the long run. Which they were, even in the Great Depression.
If someone has a short term horizon for a significant portion of their assets, it is very understandable for them to seek safety for the portion of their assets they need to keep safe for the short-term.
But for anything that is long-term, it is ridiculous how people keep jumping to the conclusion that stocks are bad. The numbers simply do not support anything else.
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10-11-2008, 02:11 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Quote:
Originally Posted by ziggy29
If that doesn't included dividends, that's not bad, because in 1938 the S&P was yielding on the order of 5-6%. Indeed, reinvested dividends make the entire decade of the 1930s quite a bit less horrible in the extreme.
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The exact quote is:
Quote:
We are not, therefore, in a new 1929. Our position is more similar to that of the late 1930s. That is not so encouraging: in the decade after October 10 1938, the S&P gained 5 per cent.
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Maybe that implies dividends not included - not sure. Since I haven't seen a chart of Oct 1938 to Oct 1948 I have no clue.
Audrey
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10-11-2008, 03:15 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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A couple of points:
We are in uncharted territories now. I look at a technical analysis board where people are usually berating one another for being a perma bear or bull - it is silent.
I'm getting a little bored with all these comparisons with the depression. The economy of the USA was in trouble before the bubble burst. And only got worse - unemployment 25%, deflation 25%, the dust bowl.
Even the way money was invested between the 30's and now is different - then relatively few individual people into individual stocks/bonds. Relatively many individuals, pension funds, sovereign funds, mutual funds
There is $3.5 trillion in money market funds that people will want to put to work.
http://www.usatoday.com/money/perfi/...6-damage_N.htm
A bear market like this one is like a tornado- it confuses us (Cramer doesn't know what he is talking about; he's guessing) - it wipes everything away - investing philosophies; gurus . I read an article today that said when the "buy and holders" capitulate we will be at the bottom.
It will get worse - higher unemployment - made even worse by the news media, personnel debt and people haven't been through a general recession in a long time.
I don't know what is going to happen. I think that there can be more downside, a couple of quick rallies (some sell into and others short) & some more steep declines then a slow recovery.
So, how about it - can we stop the 30's comparisons?
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Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
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10-11-2008, 07:36 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Jun 2005
Posts: 1,543
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i read an economist's opinion a few days ago that this is more like 1873 than 1929. The 1873 depression was a lot worse.
either way if the world governments don't step in we are pretty close to going to an ATM or a store checkout and none of our cards working or a bank failing and you can't get money out for a while. and most of the banks in the world collpasing
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10-11-2008, 07:42 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Dec 2007
Posts: 4,764
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Quote:
Originally Posted by al_bundy
i read an economist's opinion a few days ago that this is more like 1873 than 1929. The 1873 depression was a lot worse.
either way if the world governments don't step in we are pretty close to going to an ATM or a store checkout and none of our cards working or a bank failing and you can't get money out for a while. and most of the banks in the world collpasing
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Well instead of talking stock markets. Shouldn't we be going over the proper ammunition and survival gear to outlast these bad times? Like the proper weapon to defend yourself in your compound by the hordes of starving masses?
I read World War Z a few months ago maybe Ill re-read to get some pointers.
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10-11-2008, 07:46 PM
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#9
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Gone but not forgotten
Join Date: Aug 2006
Posts: 6,924
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Quote:
Originally Posted by Notmuchlonger
Well instead of talking stock markets. Shouldn't we be going over the proper ammunition and survival gear to outlast these bad times? Like the proper weapon to defend yourself in your compound by the hordes of starving masses?
I read World War Z a few months ago maybe Ill re-read to get some pointers.
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I'm getting too old for this ^&*(.
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10-11-2008, 07:57 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Quote:
Originally Posted by Khan
I'm getting too old for this ^&*(.
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I'm pretty sure that Khan was no spring chicken when he went up against Capt. Kirk and company
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10-11-2008, 08:03 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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No, but he still looked good! LOL!
(That was the second time Khan went up against Capt. Kirk BTW - there was an original TV episode - same actors.)
Best start trek movie ever! - an one reason was it was a perfect sequel to the original TV episode.
Audrey
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10-11-2008, 08:10 PM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Quote:
Originally Posted by al_bundy
either way if the world governments don't step in we are pretty close to going to an ATM or a store checkout and none of our cards working or a bank failing and you can't get money out for a while. and most of the banks in the world collpasing
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But the world's governments have been stepping in, and very aggressively too. This could have turned in to a depression but I'm pretty confident it won't happen. The world's government's are throwing money at this crisis and pumping liquidity into the system. That is very, very, very, very, very (add many more veries . . . ) different from the response to the crash of 29.
That isn't to say we won't go through a nasty recession. Earnings will decline, unemployment will go up, etc. etc. But also remember that the stock market is a discounting mechanism. As bad as you think the future will be, the market is discounting that fear in today's prices. For stocks to continue to decline over the long-term, the future has to be worse yet then most people fear. That is a tall order.
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10-11-2008, 08:14 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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I agree. A big arsenal of tools has been brought out. Countries are willing to cooperate. All hands are on deck. No, this won't be fixed overnight, but I think we can avoid a depression.
Audrey
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10-11-2008, 08:25 PM
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#14
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Gone but not forgotten
Join Date: Jan 2007
Location: Sarasota,fl.
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Quote:
Originally Posted by Khan
I'm getting too old for this ^&*(.
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Remember you still have the SS option !
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10-12-2008, 06:05 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Jan 2006
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I'm stockpiling ammo. Its expensive now. Will pick up a couple NATO caliber rifles shortly. I've been selling some of my less used firearms and get the same amount of $ I bought them with. Of course $800 10 years ago was worth more than $800 now...
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10-12-2008, 06:32 AM
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#16
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Thinks s/he gets paid by the post
Join Date: Sep 2006
Posts: 2,844
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Quote:
Originally Posted by dex
A couple of points:
We are in uncharted territories now. I look at a technical analysis board where people are usually berating one another for being a perma bear or bull - it is silent.
I'm getting a little bored with all these comparisons with the depression. The economy of the USA was in trouble before the bubble burst. And only got worse - unemployment 25%, deflation 25%, the dust bowl.
Even the way money was invested between the 30's and now is different - then relatively few individual people into individual stocks/bonds. Relatively many individuals, pension funds, sovereign funds, mutual funds
There is $3.5 trillion in money market funds that people will want to put to work.
Reserve Primary money market fund breaks a buck - USATODAY.com
A bear market like this one is like a tornado- it confuses us (Cramer doesn't know what he is talking about; he's guessing) - it wipes everything away - investing philosophies; gurus . I read an article today that said when the "buy and holders" capitulate we will be at the bottom.
It will get worse - higher unemployment - made even worse by the news media, personnel debt and people haven't been through a general recession in a long time.
I don't know what is going to happen. I think that there can be more downside, a couple of quick rallies (some sell into and others short) & some more steep declines then a slow recovery.
So, how about it - can we stop the 30's comparisons?
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Dex, I like your posts, I agree with your thought process
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But then what do I really know?
https://www.early-retirement.org/forums/f44/why-i-believe-we-are-about-to-embark-on-a-historic-bull-market-run-101268.html
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Headlines like this are not helping to restore calm
10-12-2008, 07:22 AM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Headlines like this are not helping to restore calm
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10-12-2008, 07:49 AM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2003
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Quote:
Originally Posted by Bimmerbill
I'm stockpiling ammo. Its expensive now. Will pick up a couple NATO caliber rifles shortly. I've been selling some of my less used firearms and get the same amount of $ I bought them with. Of course $800 10 years ago was worth more than $800 now...
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AMMOMAN.COM d/b/a Discount Distributors
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
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10-12-2008, 08:42 AM
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#19
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Moderator Emeritus
Join Date: Jan 2007
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Quote:
Originally Posted by Meadbh
At this point I wonder if it's time for a market holiday until clear heads prevail.
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Maybe it's just me, but now that I have had a chance to catch my breath I am rapidly regaining confidence in the market. I find myself wishing that I had bought more last week, and planning to buy next week. My panic is giving way to greed.
I do think that a market holiday for several days would be a good idea, if we are below 6000 when the NYSE closes on Tuesday.
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Happily retired since 2009, at age 61. Best years of my life by far!
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10-12-2008, 12:12 PM
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#20
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Join Date: Feb 2007
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I just watched a Fareed Zakaria interview with George Soros (CNN). Interesting perspective he has on the better (not perfect) solution. Fundamentally,
* the markets are in capitulation
* markets are not perfect because they are social instruments subject to political influence
* no one can call the bottom
* government investing in banks (rather than buying bad debt) is a better solution as it encourages loan-making
* restructuring the underlying mortgages reduces the total loss to a bank, i.e. they lose more if they allow the homeowner to go into default than if they restructure loans to 85% of market value and take the resulting loss
* between investing in banks and restructuring loans, more loan $ would be available to new homeowners, strengthening the housing market.
I imagine there will be a summary on his website.
-- Rita
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