I disagree that the Fed knows exactly what they are doing. I'm no fan of Greenie but by devaluing the dollar they make the Japanese and Chinese intervene , flush with cash they buy OUR bonds. Who's the PPT, we are but I won't get into that here. Major difference between 87 and now are the bond yields, and they could go even lower this year. This is all financial engineering at it's best. I just pity the fool who takes over after Greenspan retires.Look at what happened when Volcker left, the 87 crash.
so basically most would agree there would be a crash.. but disagrees on the magnitude of the crash.. I will stick with the 87 scale crash simply because nobody believe it will happen again..that by itself is a good reason it will happen. as long as no one wants to buy at any price and there are people who need to liquidate any price,anything can happen.
1) a weak dollar is good for our exports- positive there 2) stock prices may not be justified yet, but with future earnings they will be 3) the US would have to have another 9/11 to see a crash. Wont happen
That's simply circuitous logic. I say it is so therefore it must be? Contrarion logic is overrated not to mention basically unprofitable as a trading system (Robert Colby, Encyclopedia of Technical Market Indicators). Recent, actual legislation not to mention curbs, limits crashes from ever attaining 87 potential. The stock market never was and not currently a true "free market" since outside regulatory bodies exist to enforce the financial markets. The most wild, wild west free markets are the currency markets where the banks compete against one another. If you're going to expect a crash, examine 9-11. That is an example of this era's crash and magnitude.
no..that's only part of the logic. the other part is that I have nothing to gain to assume it won't happen again. If we only have 911 magnitude crash then thank the almighty because I don't like crashes too, but If a 87 magnitude crash really does happen, I stand to lose a lot money by being wrong on my risk parameters and a profits if I was short and took my profits too early. I think I am being prudent by taking into accout worst case scenerios. only the paranoid survive (and I am definitely not being paranoid here..)
Hey you traders - great comments. Do you suppose us investors got the last laugh that week? For sure, no one I know sold the panic or the bottom - we couldn't - nobody answered the phones! Can't remember how much of the 508 points were regained right away but it was a very sharp snap back. Geo.