i disagree. Specualation is always abound, just in different investment classes. We just finished (i think) a housing boom. Now its commodities. And we're not the only players in our markets now -- other countries, especially ones collecting large amounts of dollars from their gas and oil revenues, want to get return on their capital. they potentially can make a huge impact on our markets. I for one think we could be just in the ground floor, right now, of a slow major world market pop. The fed (and other countries) raising int. rates could further undermine confidence in the stock market as a whole. And then... suddenly bonds and money markets will once again fall into favor. So whether a 50% correction happens overnight, or over a year or three, it is still a crash - and I think it may well happen. Only the most profitable companies that pay highest dividends and are best managed, ones that are able to compete dollar to dollar with bonds and money market returns, are the ones that will survive. Suddenly, you'll see companies like Cisco starting to pay dividends just to keep up. There will be no room for companies like Sirius being over valued. The market will expect more.
This is not a relevant question, if you are trading. Trading here means not investing or not dicking around solely with long positions overnight or longer. Crashes occur in retrospect. Day by day its only series of days with more down days than up days. Each such day can be played very successfully. And anyone in the market can only play one day at time anyhow. Even day traders playing before they really know what they are doing are limited to EOD losses. As to your question, without going into the nuts & bolts, it should be obvious to you that a derivatives strategy can be operated as an overlay to serious or substantial long holdings in stocks.
I was exaggerating a bit. He was trading before the 1933 Securities Act, so he would get a group of investors together to go after a single stock or the market, long or short. He would go after biggies like Union Pacific. Here's a quote from Wikipedia: He first became famous In 1907, when he short sold the market as it crashed. He noticed conditions where a lack of capital existed to buy stock. Accordingly, there would be drops in prices with too many sellers, driven by margin calls. With the lack of capital, there would be no buyers in sight to absorb the sold stock, further driving down prices. The market then crashed to the point that there would be insolvency of the stock market system and even the national economy itself. A common story heard was that during the crash of 1907, J. P. Morgan himself pleaded with Livermore to stop pounding the market down. After the crash and its aftermath, he was worth $3 million.
Nonsense. There always has been, and always will be market bubbles. From Dutch tulips, to current commodities, it doesn't matter what the market is. Its a psychological thing. A greedy, can't lose mentality. So what if Naz volume has remained flat? The second people feel there is big opportunity in Naz stocks, the volume will accelerate like mad. Don't base the future on today's activity alone. That's silly. As for recession, I believe we will get thumped pretty good next year or so. Jay
i see stocktraders point, there will be no major influx of speculator funds. To say never again is a stretch. Take a look at the roaring 20's, i guarantee back then no one thought a market would be so robust ever again. And look what happened the tech bubble was many times bigger. Two key reasons for those two major booms was revolution. Industrial for the roaring 20's Technological for late 90's The next major boom will need a new revolution and what it is i don't think anyone knows. We had to wait 60 years from the roaring 20's to even develop the technology which would spur the next revolution, and had to wait another 15 for the boom. So for the next revolution the technology may not even be thought of yet. How long will a new revolution take??? Which makes me think, today's speculator will have to adapt and make money with leverage and catch small moves in a combination of futures, currencies, and maybe some emerging markets. But it can be done.