Worst crisis since 1930 and we only had 1 down yr?

Nasdaq up 82% off lows and up an incredible 45% for the year. nasdaq on pace for its 3rd best gain in its 38 year history.I ask one question. $3 trillion of world wide bank loses, $5 trillion of value is gone in falling housing prices in the us,$800 billion a year of atm home equity lines per year that reved the economy from 2003-2007 is gone,$4 trillion of open credit card lines are being taken as we speak.oh i forgot 10% unemployment. the list goes on and on and throw in 100's of stocks up 500% or more in 2009. SO MY ONLY QUESTION IS CAN THE GREATEST CRISIS SINCE 1930 BE OVER IN 1 LOUSY STINKEN YEAR?And the fall in 2008 is coming off a 5 year bull mkt.The gov't has postponed the inevitable. The gov't basically took the place of the consumer in 2009. thats fine but now its payback time in 2010-2012 with much higher taxes and higher rates to finance the huge debt. All the gov't did was not allow us to feel all the pain at once and it will now be spread out of years or decades with below avg growth. Trillions of $'s went into black holes that should have gone under. so that misallocation of capital will be a huge drag on growth for a long time.The gov't has basically punished savors and people that have been responsible with there money.They have rewarded speculation and moral hazard.During the coming double dip down turn all this will come out.

 

You are looking at it the wrong way.

USD has been the shittiest of currencies for a decade now.

Stockmarkets have had a negative 10 year return which is quite rare.

All the jobs are gone, social security is bust, pensions wiped out, unemployment is skyhigh, people have never been dumber and politicians never more on the take.


All the signs of some of the darkest hours during times of economic distress.

If you bought somewhere along the 1930's you would have been fine 10 years later regardless of all the bad things still about to take place.


Buy stocks.

 

Debaser i diasgree because you're NOT LOOKING AT THE PRECEDING PERIOD OF 1982-1999 WERE THE MKT HAD RECORD RETURNS OF 18% PER YEAR INCLUDING DIVIDENDS.so if you take the 2 periods together returns are in line with avg returns the last 100 years. All we did is correct back to the norm but now we could undershoot to the downside to correct for the deleveraging we will see in the coming years.because of the 30 year mania we've had in stks and the huge over ownership of them i forsee a japan type environment were people will hate stocks before this is over

 

Great trading has always been about recognizing fear and greed and exploiting it.

Personally I have a hard time recognizing greed but fear I find it to be much easier.

No Heat

 

These are some great comments. The government has simply taken the place of the leveraged consumer. Instead of the consumer directly taking on too much debt the consumer has indirectly taken on too much debt, through the government. The day of reckoning will come when the government can't roll the debt forward at a cheap rate. The US will have to pay a higher rate or print to pay the debt down. Either case causes huge problems for the tax payer. You either pay high interest through taxation or you pay high prices through inflation. Either way you pay.

The Fed has avoided another depression but all they've done is roll the real pay date out a few years.

There is another possible scenario though. We're knee-deep in a technological revolution that makes the industrial revolution look like making legos. Can the advance in technology pick up the slack from all the debt? It's possible but people have to have the ability to buy new toys. Interesting times are ahead for sure.

 

Actually, we're right on track, if you consider the historical parallels of the First Great Depression or Japan. In particular the First Great Depression. They had a crash in 1929, then a massive unprecedented rally in 1930, followed by a long slow slide into oblivion in 1931-1932 where the depression was the worst and the bottom was finally in.

We crashed last year, had a massive unprecedented rally this year, and I'm sure most of you can guess what is coming next...:eek:

As a bonus, here are some choice quotes from politicians, economists and pundits during the First GD proclaiming that the depression was over. Again, sound familiar?

“[1930 will be] a splendid employment year.”
- U.S. Dept. of Labor, New Year’s Forecast, December 1929

“There is nothing in the situation to be disturbed about.”
- Secretary of the Treasury Andrew Mellon, Feb 1930

“While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.”
- Herbert Hoover, President of the United States, May 1, 1930

“The worst is over without a doubt.”
James J. Davis, Secretary of Labor.
- June 1930

“Gentleman, you have come sixty days too late. The depression is over.”
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930

‘BUSINESS CYCLE’ SEEN AT NEW PHASE; Bankers Hold Downward Trend in Markets Indicates Recovery Is Near. DENY ANALOGY TO 1920-21 Economists Point to Superior Credit Conditions Now, Holding Easy Money Points to Revival.
-July 6, 1930

“We have hit bottom and are on the upswing.”
James J. Davis, Secretary of Labor.
-September 12, 1930

“… the present depression has about spent its force…”
- Harvard Economic Society, Aug 30, 1930

“Stabilization at [present] levels is clearly possible.”
- HES Oct 31, 1931

SCHWAB FORESEES RECORD PROSPERITY;
-October 25, 1930

“We are now near the end of the declining phase of the depression.”
- HES Nov 15, 1930

“30% OF STOCKS SELL UNDER BOOK VALUES; Capital Is Above Market Price.”
-December 14, 1930

“The depression has ended.”
Dr. Julius Klein, Assistant Secretary of Commerce.
- June 9, 1931

And the wheel of history keeps turning...

 

Those quotes do sound familiar but no two recessions/depressions are the same. The Government/Fed are hell bent on keeping their pedal to the metal to prevent another depression. It will be years before we have to pay the piper again. I do believe the worst is behind us and businesses will begin hiring in 2010 but eventually the debts incurred to prevent the depression will have to be paid. That will be the next crisis but that could be 5 years down the road.

 

Either the crisis was more or less a figment of our imagination, or there is another shoe to drop, or this is going to be an endless decade-long slow-grind "collapse" a la Japan.

I would say those are the three most likely scenarios - place bets accordingly.

 

Perhaps it's because I'm a trader and not an economist. In my case, as long as there is volatility I can let those winners run.

Up or down, the less I think about the fundamentals the better I do.

Consider this past year, if you traded fundamentals you got killed.

Study price action to the best of your abilities and trade what you see and what we saw in 2009, past March was a constant change of resistance into support, a classic pattern of strong uptrends yet fundamentals told you all along the way, we should go down.

Judging from some of the posts I have read on this very same thread it seems some have already made up their mind about the upcoming years direction, this is a mistake, careful.

No Heat

 

Very eye-opening post, zboy. Good find.