Two Graphs Explaining the Coming Market Crash

Discussion in 'Trading' started by cmitseff, Aug 7, 2009.

  1. cmitseff


  2. cmitseff


    Wow, a lot of views, but no replies yet. What do you guys think? Do you believe this ARM Reset talk is overhyped? It's hard to argue the data. Just trying to get a discussion going about this upcoming crazy market.
  3. comparisons to 1929 are entertaining but of little value. things are different now.
    the extent of the arm reset is uncertian at this time but do you think it is unknown to the market? markets seldom have extreme reactions to know events.
  4. Lucrum


    That's what they said during the dot com bubble too wasn't it.

    My point being, history tends to repeat and it's supposedly always "different this time".
  5. cmitseff


    although anyone would agree that things are "different" now than in 1929, both economically and general market differences... however, if comparing the two timeframes is not valuable due to the drastic differences, why has there been such correlation to this point?

    sure things are different, but that graph proves things have been VERY CLOSE to the same
  6. most people are living in a dream world and they refuse to wake up. Even your president told you to take the blue pill.
    Ride the Bull until you fall off........then stab it and eat it.
  7. I'm not quite sure or should I say I haven't read any evidence yet that ARM resets played much or ANY role is the current liquidity crisis. BSC Leh or AIG problems cannot be traced back to resets.

    Foreclosurers are a different animal.
  8. You're exactly right, but there is a large gap between governmental response back then, and what is going on now. Remember, many things like unemployment insurance and social security came to be during the depression. Bernanke is an expert on the Great Depression, and he knows that he's got to throw the kitchen sink at this thing to give us a fighting chance, thus his "bet-the-farm" response.

    Market correlations can be strikingly similar for short (sometimes long) periods of time due to a variety of reasons. Seasonality, similar monetary policy, and similar investor psychology are just a few reasons for these correlations. The risk with correlation based trading/investing is that the correlation can vanish, or worse, invert at any given point. Correlations are transient in nature, and come and go as they please. You've also got to remember that the Dow Jones has been trading for over 100 years, and it has seen all likely scenarios. When there's only 3 scenarios for day-to-day changes (up, down, unchanged), most of the possible scenarios have already played out in the past and we won't see anything new, except for magnitude of movement.
  9. I am not sure if your comment was meant to be bullish or bearish, but it is definitely bullish. Since history repeats itself, that means that we will come out of this recession in time, and everything will be just fine. It is not "different this time".
  10. Lucrum


    #10     Aug 7, 2009