VIEW: STOCK MARKET CRASH IS OLD NEWS

[SFO_DEAL]

I STUMBLED ACROSS THIS WEBSITE AFTER MY FRIEND REFERENCED THIS GENERATIONAL DYNAMICS SITE AS PROOF THAT THE STOCK MARKET WAS GOING TO CRASH EVEN FURTHER. I THINK YOU ARE ALL MISSING AN IMPORTANT POINT -- THE MARKET ALREADY CRASHED 8 YEARS AGO!!!

DOESN'T ANYONE REMEMBER THE GREAT NASDAQ BEAR MARKET FROM 2000-2002?????? IN MARCH 2000 THE NASDAQ HIT A HIGH OF 5,132, GOOD FOR A MARKET CAP OF ~6.5 TRILLION. FLASH FORWARD TO OCT 2002 AND WE WERE AT 1,108, AN 80% HAIRCUT. COMPARE THAT TO IN 1929 WHEN THE DOW HIT 380 AND FINALLY BOTTOMED OUT AT 40 IN 1932, A 90% DROP. NOW CONTRAST THE NASDAQ'S 2008 PERFORMANCE TO THE DOW'S 1938 PERFORMANCE. SIMILARITIES INCLUDE AN APPROXIMATLY 50% DECLINE PRECEDED BY A FIVE YEAR RALLY WHICH HAD FOLLOWED A THREE YEAR DECLINE OF MORE THAN 80%. THE 50% DROP OVER A FIVE MONTH PERIOD FROM 1937-38 ALSO HOLDS A SIMILARITY TO THE MARKET'S RECENT DROP IN THAT NEITHER HAD A HIGH VOLUME CLIMAX. BASED UPON THIS AND A WHOLE LITANY OF OTHER EVIDENCE I BELIEVE US STOCK MARKETS HAVE SEEN THEIR WORST.

THESE DAYS, WHEN I RESEARCH STOCKS TO ADD TO MY PORTFOLIO I FEEL LIKE AN OVER-SEXED TEENAGER IN A WHORE HOUSE. I CAN NOT WAT TO BUY BUY BUY!

DEAL.

[MarshAviator]

THESE DAYS, WHEN I RESEARCH STOCKS TO ADD TO MY PORTFOLIO I FEEL LIKE AN OVER-SEXED TEENAGER IN A WHORE HOUSE. I CAN NOT WAT TO BUY BUY BUY!

caveat emptor

You may want to read more on http://www.generationaldynamics.com/cgi ... 0.i.basics

Generational Dynamics (or the work of Strauss and Howe's forth Turning) is not primarily a stock forecasting tool.
The market trends are influenced on too large a scale for timing the market.
Personally I don't know if there is going to be a short term rally and then a crash or if the crash is starting today or next week, next month, but it's near.

Basically a lot of today's investors are driven by the greed side (as opposed to the fear side) of the equation.
This will change after what is coming.

A privileged few (institution and government insiders) have manipulated the market with deceit and fraud, for personal benefit and now the fruits of these past actions are at hand.

Peoples attitudes will be changed by their personal experience of a true decline whereas most present investors have never personally experienced anything but a rising market (over a one to five year period).

[MarshAviator]

Two points which I didn't make on the last post:

1) A short term market decline is not a crash (i.e. 2001-2002, or dot com crash).
Generational Dynamics is about the behavior of large groups of people and their attitudes.
Once a true crash happens people are permanently changed by it.
Remember how people (like my grandparents) who actually experienced the great depression would save 17 peas in a jar rather than throw in to the garbage.

They avoided the use of credit absolutely, if they used credit cards paid them off every month.
We have been operating on a massive credit expansion for the last decade, eventually people and companies run out of credit and the expansion stops
then reverses and the economy shrinks. Classical Bubble & Burst process, very much Austrian school of econ.

Both government and private sector participated and facilitated this expansion and help blow the bubble.
How could anyone believe that a 2000 sq ft house priced at $750,00 could continue to grow in price?
Wages haven't grown much if any in the last decade.

House sales were about 2 million 5 years ago, now their about 500K if you include multi-family dwellings and just recently the market celebrated a modest increase to 550K as something to cheer. Prices are still declining, so this is NOT the bottom.
A slight bump in volume with declining prices doesn't mark the turn around.

2) Steins Law - If something can't go on it won't.
Eventually people can't pay the mortgage and will default on credit card debts as well as many others.
When people are cut off from the house ATM, and have exhausted their credit lines, have no additional wage increases or loose their jobs,
consumption slows are declines then the bubble deflates, we are seeing the beginning of this not the middle and certainly not the end.

GDP declined the last 3 quarters something on the order of 6.5 %, you have to go back 25 years for a similar decline.
That hardly calls the bottom.
Earnings are declining across all major markets, eventually both people and institutions will have to sell stocks that don't produce revenue.

See how you view this time in a year and then in 5 years.
I doubt we will have the bottom in 5 years, but we might, my guess is decades given the magnitude of the bubble.

[Witchiepoo]

Hey, looks like Jim Cramer joined the forum!

[SFO_DEAL]

I RESPECT ALL OF YOUR POINTS BUT I THINK YOU ARE OVERSTATING THE MAGNITUDE OF THE HOUSING CRASH. THE GREAT HOUSING CRASH WAS NOT A UNIFORM, MONOLITHIC DECLINE ALL OVER THE COUNTRY. IT'S QUITE COMMON FOR AREAS IN STATES LIKE FLORIDA, CALIFORNIA, AND NEVADA WHICH EXPERIENCED THE GREATEST HOUSING EXUBERANCE TO NOW SEE DECLINES OF ~70%. IN OTHER AREAS NICE HOMES CAN BE BOUGHT FOR 50$/SQ.FT. I DOUBT YOU CAN BUILD A HOME ANYMORE FOR THAT MUCH.

AND IF THIS CRASH IS AS DIRE AS YOU CLAIM, NEVER UNDERESTIMATE THE GOVERNMENT'S WILL TO PUT AN END TO IT. WE CAN END THIS HOUSING SLUMP NEXT MONTH IF WE WANTED TO. IF THE GOVERNMENT ORDERED ALL HOMES ON THE MARKET TO BE RAZED TO THE GROUND, THAT WOULD CAUSE THE BIGGEST SCRAMBLE FOR HOUSES YOU HAVE EVER SEEN. I AM CONVINCED THAT BEN BERNANKE WILL PRINT UP SO MUCH MONEY THAT AMERICANS WILL BE EVENTUALLY USING 100$ BILLS TO HANG ON CHRISTMAS TREES, IF THAT IS WHAT IT TAKES TO END THE DEFLATIONARY SPIRAL.

DEAL

[Matt1989]

[MarshAviator]

SFO_DEAL

The housing market is just one aspect of the bubble.
Remember that a cascade effect (multiplier effect) occurs with respect to various supporting industries supporting the housing (building) activities.
While you are correct that the present decline is highly regional the effects are not.
Lumber suppliers are part of the supply chain as are appliances makers, plumbing suppliers et cetera.

Lastly this is the U.S. housing market, a similar one is occurring in the U.K. and other European countries.

Here again, like the U.S. a lot of the recent expansion was (is) debt driven, not growth driven.
Essentially we have collectively mortgaged our future starting in 1999 or 2000.
We delayed what may have been a crash then, but certainly a serious recession.

Our current paradigm is the growth expansion paradigm.
Most of the global economy must grow to service existing debts. People have traditionally (after 1950) purchased houses and cars
with expectation that the payments will get easier to make.
We expect wage growth, and promotions to better paying positions, our investments to gain value, our net worth to grow as well.
Companies work exactly the same, a shopping mall expects the stores to pay larger rents in the future.

Now comes leverage, over the last 50 years our business model has evolved to use leverage to amplify the gains.
Ideally you buy a large mall with room to grow, with as much of other peoples money as possible and control the process
with tidy profits.
Works great until you have a LARGE empty mall.

Leverage works in both directions too, losses are amplified as well.

Wage growth has been stagnant for a decade, Henry Ford clearly was aware that the economy could grow with out working earning more.
Who on earth thought we could substitute debt for wealth?
The substitution of debt for wages has been going on for at least 20 years, and just exploded in the last 10 years.
A lot of people in California were on their 3 or 4 refi in just a decade.
How long could this go on?
Can you pay VISA with a MasterCard?

Just to clarify I am a libertarian (Free Market) believer, I am not making any comments about imposing wage growth, merely noting
that plenty of warning signs have existed.

But suppose that the housing market were put right (or self corrected), then what about the Baltic dry index crashing?
Or China and the Pacific rim export decline?

Name a company that has meet or exceeded dividends or profits.
Most have abysmal earnings with spiking P/E's,
how about even Berkshire plunging?
Most everyone is laying off, cutting expenses, hording cash, lowering the current quarter estimates.

Then these are the good companies, what about GM? Freddie,Fannie, AIG?

Does the whole present global economy resemble somewhat a Ponzi scheme?

Remember these highly complex CDS and CDO's number in hundreds of trillions of dollars.
If even 5% go bad, the losses would exceed GLOBAL GDP.

The whole point of Generation Dynamics is to analyze the behavior of groups with respect to human generations of experience.
Our (I am a Jones'r or late boomer) and the younger Gen-X have combined to create a very serious mess.
The previous greatest generation and the silents (my parents) would have never taken the risk and extreme abuse of credit and leverage.
Personal knowledge of the last great depression permanently effected them, exposing the downside as well as the upside.
Our generation as well as the Gen-X's have never experienced a prolonged downturn, never.
We get concerned when growth slows for months.

The last rally no doubt includes lots of people who CAN'T imagine anything but a pause before a resumption of their personal experience.
Like a B.F. Skinner experiment, they are conditioned by personal experience to only see one side of things.
Once this barrier is shattered, then they too will behave quite differently.

[SFO_DEAL]

HOLY COW!!!!!!!!

JUST LIQUIDATED HALF OF MY SHORT TERM PORTFOLIO TODAY. AM BOOKING A TRIP TO HAWAII AS WE SPEAK . I AM GLAD I DIDN'T FALL FOR THE USELESS DRIVEL ON THIS WEBSITE.

WEAK MINDS ARE SUSCEPTIBLE TO IDIOCY. SO BUY BUY BUY AND MAYBE YOU CAN CATCH THE LAST PART OF THIS RALLY (IF YOU'RE LUCKY)!!!!!!

DEAL

[burt]

WEAK MINDS ARE SUSCEPTIBLE TO IDIOCY. SO BUY BUY BUY AND MAYBE YOU CAN CATCH THE LAST PART OF THIS RALLY (IF YOU'RE LUCKY)!!!!!!

Why do you think so necessary to insult people participating to this blog? Don't come on it! Who knows who is the weak mind? Nobody can!

I understand that you see yourself as a superior man, i wouldn't like to be one your friends.
If you don't agree, why don't you say clearly why, with logic and references no only empty sentences?

Crashes are part of the life of the stock, so they are, by nature, inevitables. They are linked to the way of how herd of people see the world, no reason to think that this "stock market crisis" is over, but it could be. I personnaly don't think so, but the herd just tell me that a bottom could be in for 2009 or so. It doesn't mean that the stocks will go much higher this year, who knows? Do you know the future, do you know the date you'll die, are you so superior?? Are you happy with that?

OR do you try to manipulate the people reading this blog, what is the truth??

[Samir]

lol looks like GD has been trolled.