I'm not talking about a -22% one day wonder, like 1987.
The coming crash will manifest in a several-year procession of -XYZ down days on the Dow, where X = 1 through 9. There is an excellent chance we'll see at least one -W,XYZ day, and even more likely a +W,XYZ day. Throughout the decline, optimism will remain high to extremely high. "Buying opportunity" after "buying opportunity" will be the news; margin call after margin call will be the reality.
Survival tip: DON"T BUY.
If you think a NY Times headline of despair might provide the usual clue to the bottom, think again. The Times headline, "WE ARE OUT OF BUSINESS" isn't the bottom, either.
On the loose...
Could you further explain -W / +W. I assume this is some Elliot Wave stuff and I will refer to my manual in the meantime, thank you
ReplyDeleteFDR,
ReplyDeleteCan you elaborate on the following comment:
"The coming crash will manifest in a several-year procession of -XYZ days, where X = 1 through 9. There is an excellent chance we'll see at least one -W,XYZ day, and even more likely a +W,XYZ day."
Thanks
I saw that your buddy Warren Puffet joined the S&P. Will this be a good to go Short now?
ReplyDeleteA little humor befor the storm !
Hello FDRAOA,
ReplyDeleteI figure you would say there is no one event causing the several year decline you are calling for now...but is there an event that is causing the 'imminent' wording?
Dubai? Germany sloughing off Greece? You're article on the Fed vs. Cali?
Thank You.
"Dubai? Germany sloughing off Greece? You're article on the Fed vs. Cali?"
ReplyDeleteIt'll be whatever people decide it is. In other words, the news is always interpreted to suit the psychological mindset that EWs so reliably forecast.
If people were ready to make the market boom, identical news to the event that kicks off our crash and tumble would be interpreted as a buying opportunity, and kick off a surge higher.
"Could you further explain -W / +W. I assume this is some Elliot Wave stuff and I will refer to my manual in the meantime, thank you"
ReplyDeleteIt's not EW nomenclature, just my way of saying we'll have a lot of 3-digit down days and probably at least one 4-digit day. As in, the DJIA down 1,186 points in a single day, or similar.
The truth is, the crash started in Y2000. 2007 was a counter rally plus severe, almost hyper-inflation. Even at 14,000 the Dow was down about 60% from Y2000 after adjusting for dollar buying power--using real estate and gold to gauge buying power.
And that horrible Dow performance is AFTER 10 of the 30 "Blue Chip" components were discarded for lack of performance or went bankrupt. So the broad market is diving much harder since this crash began than the rotating sales indexes indicate.
So the crash began long ago, but it's about to intensify, again. The coming couple of years will be the most intense part of the crash--absolutely relentless. 250 years of absolute bullishness, of "stocks always go up," has to be broken. The market won't stop tumbling until the general public honestly believes they are out of stocks forever, 1930's style.
The market technicals look ugly with monstrous head and shoulder patterns anywhere there's a stock market to measure. The fundamentals will fit in with the mood de jour, as FDR predicts.
ReplyDeleteBTW, I very much appreciate you FDR.
'You will know a true genius when all the fools are in a conspiracy against him' (can't remember who said that first).
No doubt there are a lot of fools out there who hate you.
http://pragcap.com/a-proposal-for-the-fed-treasury-fdic-and-banking-system
ReplyDeleteRegarding the link above...
ReplyDeleteSince deficits don't matter, we should definitely give every citizen 20 hundred trillion dollars so we can each buy a couple hundred thousand houses.
Why not? Debt is so wonderful (says the central banker collecting $trillions in interest while contributing nothing).
Why do you think John Paulson keeps piling all his money into financials?
ReplyDeleteHow are you so certain?
ReplyDeleteThis market is maddening!
ReplyDeleteFDR
ReplyDeleteAs you know there is talk to attempt to monetize our national debt. What does this mean to someone positioned for deflation, and how do you see it play out?
Thanks
In the 1930's we experiences 21% deflation which reduced the decline in the DOW to 1932 to about 60%. The problem now is that outside of housing we have inflation. Everything around me that I use on a daily basis costs more money, like groceries, gas, and coffee. Yes, my house is lower, but I don't care, as I live in my house for years, so the fluctuation in price in meaningless to me. When I see Starbucks lower their prices 20% for good I will jump on the bear train, for now I will play long/ short and look for the best and worst charts till the government proves they can't ruin the currency. I understand the argument for deflation, I am just surprised it has not shown up. I am sure you could write a statement that it has, but one just need to walk outside to show you that argument is bunk for now. Good luck everyone, I have no idea what this whole thing looks like in 5 years, but I don't see the bright picture either.
ReplyDeleteThis one is good for a laugh,
ReplyDeletehttp://www.theonion.com/content/news/u_s_economy_grinds_to_halt_as
"In the 1930's we experiences 21% deflation which reduced the decline in the DOW to 1932 to about 60%. The problem now is that outside of housing we have inflation. Everything around me that I use on a daily basis costs more money, like groceries, gas, and coffee."
ReplyDeleteThe 1932 Dow declined 90% over 2 years. Today, we have a faster pace of deflation if you match up the curves. But the 1929-54 depression will look tame by the time we're finished. It was the second depression to go by the name "The Great Depression." The first one was in 1921. Ours will be the first that truly merits that title.
FDR's Law: Anytime a president claims he has "averted a Second Great Depression," you are in one.
Government never talks like that when times are good, they are asleep at the wheel.
FDR not to be too picky but wasn't the 1921 "depression" over relatively quickly, at least when compared to the one that ran from 1873 to 1895? According to my read of history it was the nineteenth century downturn that was the first to achieve the Great Depression moniker, albeit somewhat after the fact.
ReplyDelete"FDR not to be too picky but wasn't the 1921 "depression" over relatively quickly, at least when compared to the one that ran from 1873 to 1895?"
ReplyDeleteWell, I didn't name them. :)
The 1921 Depression was called the "Great Depression."
1874 was the "Long Depression."