I do a lot of work with these Chicago guys who are very knowledgeable and have a long history of successful trading. Anyway, they me told this morning that the DOW would go to 2600. That's right 2-6-0-0. I know, it's insane, but these guys believe itâs as certain as the sun will rise tomorrow and I don't have the experience to refute them. Anyone think its possible?
No, it is not going to happen. I won't say impossible. The Dow will not hit 2600 in the next 2 years. I'll bet on it.
Yea, I hear ya, but the Dow has been averaging about a 100 point loss a day for the month of July. Another two and a half months of that and we're there. I think the Dow is selling at about 25 times earnings right now and when the market turned in 1982 the Dow was at about 8 times earnings. A little quick math will tell you that 2600 isn't impossible if the past repeats.
I agree. It took the market 13 years to settle from the 1968 bubble. However, in the 1929 crash the Dow lost nearly 80% of its value in just 3 years. I still think its crazy, but it becomes more believable every time I think about it.
Absolutely. It's about 20 floors higher than Prechter's call. Also, 2600 is where she lay before the bubble trouble began. If the 'new economy' really is vapor, it stands to reason that we'll see 'old economy' valuations, minus all the wealth lost in the bubble, plus inflation....+/- whatever I forgot or don't know about.
No offense but I am getting pretty sick of that rationale. From a traders perspective sure but there are so many negative things that can come from a market crash that affect our non-trading lives. Everyone is talking about the potential real estate bubble now. Maybe it is maybe it isn't but a market crash is a nice way to test that theory as it would surely impact (already has) homeowner' confidence in buying/mortgaging big fat houses. I for one don't want to see my house lose 50% of its value. And what about all our loved ones who invest traditionally for the long term?! Should I be glad that my parent's long term investments have been crushed just so long as I can still trade the volatility? What about friends/family that work for companies that will be negatively impacted buy falling share prices. Hey bro don't worry about losing your job....I'm kicking ass trading and I'll buy your milk and cereal for your 4 kids while your unemployed. Don't get me wrong, I think the whole bubble/tech/net mania time was absolutely a joke and it had to come down hard. But that surely doesn't mean we have to be happy about it just because volatility is still present and we can trade it. THere are just too many sad things happening to too many good people regardless of how naive or ignorant they may have been.
OK, thanks for saying what I was thinking. Another thing about crashes is that they drain liquidity from the market -- the market contracts, and it's not really good for anyone when the tumor of a major mania has to be dealt with. The ramifications are going to be far and wide and the quality of life for everyone will change; if it gets bad enough, traders will be despised. This is kind of worst-case-scenario stuff, but it is possible. Markets aren't just financial, they're social, and there are social effects to bubbles, both inflated and popped. Big Party ---> Big Hangover. Who likes that?
DATTrader, I also wish to thank you for saying what a lot of us are thinking. I have been having my best month in a long time and can not help but be depressed about this whole market. While I am glad to see the excesses of the bull market disappear, I know a lot of people who are suffering greatly from this decline. I am sure we all have friends and relatives who will likely experience a negative change in their lives as a result of this market. I can not pretend that I am providing some great service by trading for a living, but it is all I know. I will continue to do what it takes to make money which lately has meant taking advantage of the dramatic moves to the downside. However, I will not celebrate the fact that by trading I can make money while the majority people are watching their nest eggs evaporate on a daily basis.