and is well below 10000, for the first time in years.
Asian and European stock markets have fallen 6-7% today as well.
(Let's not forget that the Europeans, in particular, have been just
as stupid and greedy as the Americans these last few years.)
The Fed has expanded its liquidity program this morning. European
central banks are doing the same. They've already done so much, I
didn't think that was possible. But it's not helping. Investors have
finally caught on to the fact that the psychological boost of a
liquidity injection doesn't last more than a day or two.
It's been amazing to watch this, since I set up the Generational
Dynamics web site in 2002. I couldn't foresee the details of what
was going to happen, but I applied generational theory to the
situation, as well as well-established laws:
-- The Law of Exponential Growth
-- The Law of Mean Reversion
-- The Law of Diminishing Returns
I didn't make up these laws, but I've been applying them ruthlessly
for years, to predict what's happening now. And, not surprisingly,
the predictions derived from these laws have all turned out to be
brutally true.
And the fall has much farther to go. Here's Friday's chart of the
S&P 500 Price/Earnings index:

Incredibly, the P/E index hasn't even gotten as low as it was back
prior to March. It's been at astronomical levels since 1995, and now
appears to be the time when the Law of Mean Reversion is applying
itself. That means that it's going to be falling well below 10.
All this is lost on the pundits, however. Many of them see this
selloff as good news, because it's a "capitulation" event that will
cause the market to "snap back" quickly. There's just no limit to
the stupidity of these people.
Sincerely,
John
John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.GenerationalDynamics.com/forum