“He observed that human emotions collectively had major impacts on the on stock prices and the patterns seen in the Stock Markets in general.”
- From a book on the teachings of Jesse Livermore
When you think of it in the short term markets are nothing more than a group of people trying to process data and understand what others are doing all under the stress of losing personal wealth. They are trying to solve a problem that in may ways is not solvable unless one can adapt. Similar to a group of Navy SEALs on a mission. They are
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The area of the graph from 8/08/08 – 8/28/08 for the 2011 line could actually be a reflection of the area of the graph from 6/09/08 – 7/19/08 for the 2008 line. The drop in 08′ is more drawn out than the sharp drop that took place recently in 11′, but they look fundamentally the same. I expect a flat period over the next few months with the crash taking place on October 15th (give a day or two).
It sure does look like 2008, but the question is whether the central planners react more quickly this time. I think they are waiting for the investing public to panic so they can roll out QE3 with a minimum of negative political pressure. But the CNBC crowd will be begging for it soon. I think the question is how low they let it go first. I doubt they’ll allow another ’08-style crash, but anything is possible.
Chris – don’t wait for QE or think it’s purely a function of equity prices. Inflation is hot and the Fed has said that will hold off QE. QE can come at some point but I think equity investors have been wrongly conditioned for when the Fed will bail them out.
So Tony,
you don’t see major bounce (such as 10% or so) in the next couple of months, instead, we go all the way to 900-800? I am thinking after we break 1100 and make a new low, like as high as 1080 and as low as 1040, we will see a major bounce (10% or more).
It all depends on what happens with EU debt, US banks, etc. The point of this post was that 2008 had similar issues although smaller in scale as the current market. In other words the 2008 market shows how investors price in/ react emotionally to such issues. Kind of an emotional roadmap. The 2007 market was the roadmap for pricing in slow economic growth. So where we go in the next month depends on how the news plays out. If we get Lehman 2.0 then I see us going down a lot and fast.
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[...] says excessive leverage will destroy the system again, as it did in 2008. Advertisement GA_googleAddAttr("AdOpt", "1"); GA_googleAddAttr("Origin", [...]
[...] Through it all market participants have not changed. They are still a group of individuals trying to process data and understand what others are doing all while real money is on the line. As history has proven once again they will get it wrong. Once again leverage will destroy balance sheets. Denial will get in the way of rational thought. History truly does repeat and the patterns are present in the charts.Sure Looks [...]
It would seem to me that at each successive stage of the collapse that the players get bigger and bigger – at each stage the problem overwhelms the institution which tried to stem the tide of the prior tsunami. I would not want to be in the job of running the “next institution.”
In 2008, the last bastion holding the collapse in check was the State – now this last bastion is itself crumbling. Central banks can not do anything but print even more money. Alas, what has that achieved so far? And it harbors the great danger that a tipping point will be crossed, a point of no return.
[...] The ongoing crash of the stock markets differs from prior events because, for one thing, the Fed is about out of ammunition. At this juncture, there are no easy solutions. In fact, there are no solutions at all. We have just about used up all our “rabbits in the hat” as far as fiscal and monetary policy are concerned. Economics pundit Graham Summers agrees: The Fed is about to find itself completely powerless as 2008 redux appears. [...]
[...] The ongoing crash of the stock markets differs from prior events because, for one thing, the Fed is about out of ammunition. At this juncture, there are no easy solutions. In fact, there are no solutions at all. We have just about used up all our “rabbits in the hat” as far as fiscal and monetary policy are concerned. Economics pundit Graham Summers agrees: The Fed is about to find itself completely powerless as 2008 redux appears. [...]
[...] The ongoing crash of the stock markets differs from prior events because, for one thing, the Fed is about out of ammunition. At this juncture, there are no easy solutions. In fact, there are no solutions at all. We have just about used up all our “rabbits in the hat” as far as fiscal and monetary policy are concerned. Economics pundit Graham Summers agrees: The Fed is about to find itself completely powerless as 2008 redux appears. [...]
[...] pundit Graham Summers agrees: The Fed is about to find itself completely powerless as 2008 redux appears. The great collapse, for which 2008 was merely a warm-up act, is under [...]