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Re: “..And The Crash of 2007 Begins”. Is it another ’29 on Wall Street? March 5, 2007

Posted by deminvest in investment.
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countertrend I read your new and your previous post, but I am not convinced.

1929_panic_on_wall_street.jpg

Technically your deductions make sense, but they seem weak from macroeconomic point of view.

I do see a stock sell-off (… everybody unfortunately does), but I don’t see evidence of a global recession.

US economy is still growing at a good pace, rates are pretty low, companies are posting good earnings, inflation is under control.

Developing countries economies are growing extremely fast. Nobody really knows how to stop China and India. Europe economy, after years of modest growth, is now takin off, even with such high valued EURO.

Japan just came out of a long depression.

Yes there are US Twin deficits, yes the dollar is showing signs of weakness, but World Economy seems to me in good health and Wall Street is so large packed with global companies that in my opinion it could represent more global economy than US economy…

Yes there are less cars sold this year than last year… But more EBAY objects traded, Google searches performed, low cost trips booked on-line, and a little Robot called Roomba sold more one million units to clean houses all over the planet…

As I said I am not convinced, but I may be wrong.

Where you totally convince me… Is where you distrust GURUs writing that it is time to jump on bargains.

No No No… Let’s not jump on anything that may turn out to be a mine!

I am not selling stock nor buying looking for bargain. I will do what a simple investor can do in times of trouble: hide, wait and see… and hope you are wrong!

Comments»

1. retirein - March 5, 2007

Since first sell-off last week, there seems to be a scheme that repeats itself every trading day:

In the morning bargain hunters buy with the result that Dow and NASDAQ open with modest gains, then in the afternoon sellers prevail every time and indexes slide into negative.

Is this scheme something that should worry? Did it happen like that in the past when there were big crashes?

2. deminvest - March 6, 2007

I don’t know what it means, but I dont like it.

3. James - July 25, 2008

The numbers are crazy now, especially with oil hitting ridiculous highs.

Although we are often led to believe in cycles, these are not ‘predictable’ in the true sense. With hindsight, you can ‘predict’ anything.

The ‘dot com boom – bust bubble’ was built entirely on optimism and lack of research. It looks like that now, but with the added burden of war and massive debt to foreign nations.

1929 may yet lose the unenviable title of ‘worst in history’.

Lets hope not. Be prepared.

4. Artic Cricket - July 28, 2008

James, do you refer to excessive P/E ratios for the market?

5. katie - September 19, 2008

i think this is a good picture of some of the people that was involved in the stock market crash

6. Bob - September 25, 2008

‘Technically your deductions really did make sense after all, didnt they?’

7. deminvest - September 26, 2008

Bob we don’t have a ’29 like crash, yet. Moreover in March 2007 there wasn’t much hint of the subprime mess that starte all this.

8. dandeman - September 29, 2008

There is some similarity in the 20’s compared to now. This thing called margins. Now I know I am a novice at this but with margins an assumption was made that you can borrow monies and then buy stocks, watch them sky rocket, sell them pay back your margins and have a profit. Crash not taken into account and boom you have black day. Now: you have a house borrow monies, buy it, wait for the price to soar, resell it make your monies and earn a profit. The similarity in these cases is the assumption that there would never be a down moment and these mortgage backed securities and the margins (loan monies) that were used in the 20’s were not expected to fall. But once it did, oh boy u have history repeating itself. Those who fail to learn from history are damned to repeat it.


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