Judging from the lack of response to my "Peak Watch" post http://www.gurufocus.com/forum/read.php?2,5650 , I thought I would take another stab at the "I think the market is overbought" statement.
The Dow industrials ended at another all-time high Monday, closing with gains for the 24th out of 27 sessions - a streak that matched an 80-year-old (1927) record on Wall Street. Should the Dow end higher on Tuesday, it would set a new record.
http://money.cnn.com/2007/05/07/markets/markets_0500/
Recently, I've been hearing a lot of 1927, 1929, and 1944 records either being met and/or broken for bullish runs.
Tonight, I read Chapters 12-13 of "Only Yesterday: An Informal History of the 1920's" by Frederick Lewis Allen. The book talks about how stock prices tripled during the ascent (Mar 1928 - Sep 1929), and got cut to 1/3rd during the fall (Sep 1929 - Nov 1929). If you don't own the book, buy it.
Today's U.S. market doesn't have that 300% gain, but China's market DOES have it http://finance.yahoo.com/q/bc?s=000001.SS&t=5y&l=on&z=l&q=l&c= , and therein lies the problem of where I feel the fall will begin.
The book outlines the events which led up to the crash (eg. ticker tape delays, margin loan highs, interest rate increases). The book was written in 1931 - as a first-hand account of the destruction.
Naysayers will talk about how we're all witnessing yet another "new economy" where: (1) the Internet crowd is reestablishing themselves at the expense of newspaper/radio, and; (2) how the real estate flipping crowd moves into equities as they sell their excess real estate, and; (3) how the China "boom" continues as 10-cent/hour (circa 1995) Cloisonne workers continue to be replaced by worldwide demand for industrial workers.
After I think about this, I think the bust will occur in China first - not in the USA, but the bust will tidalwave into other economies, including the USA.
- Vooch
The Dow industrials ended at another all-time high Monday, closing with gains for the 24th out of 27 sessions - a streak that matched an 80-year-old (1927) record on Wall Street. Should the Dow end higher on Tuesday, it would set a new record.
http://money.cnn.com/2007/05/07/markets/markets_0500/
Recently, I've been hearing a lot of 1927, 1929, and 1944 records either being met and/or broken for bullish runs.
Tonight, I read Chapters 12-13 of "Only Yesterday: An Informal History of the 1920's" by Frederick Lewis Allen. The book talks about how stock prices tripled during the ascent (Mar 1928 - Sep 1929), and got cut to 1/3rd during the fall (Sep 1929 - Nov 1929). If you don't own the book, buy it.
Today's U.S. market doesn't have that 300% gain, but China's market DOES have it http://finance.yahoo.com/q/bc?s=000001.SS&t=5y&l=on&z=l&q=l&c= , and therein lies the problem of where I feel the fall will begin.
The book outlines the events which led up to the crash (eg. ticker tape delays, margin loan highs, interest rate increases). The book was written in 1931 - as a first-hand account of the destruction.
Naysayers will talk about how we're all witnessing yet another "new economy" where: (1) the Internet crowd is reestablishing themselves at the expense of newspaper/radio, and; (2) how the real estate flipping crowd moves into equities as they sell their excess real estate, and; (3) how the China "boom" continues as 10-cent/hour (circa 1995) Cloisonne workers continue to be replaced by worldwide demand for industrial workers.
After I think about this, I think the bust will occur in China first - not in the USA, but the bust will tidalwave into other economies, including the USA.
- Vooch
