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The Market’s Death Spiral
On October - 9 - 2008
If there is any good to come out of what is happening right now in the financial markets it is this. We can say to our children that we witnessed a catastrophic decline in equity markets. It happened during the first Great Depression in the 1930′s and its happening today. An era of excess and outright sick greed has led up to this. But I will say this, this market has the same characteristics of alot of other markets that we have lived through. The dot-com boom was witness to an unprecedented rise in technology and Internet stocks. The fall-out that followed the run-up was more or less the same thing we are seeing right now.
I don’t know when this market will stop falling, but there will come a time when it does and the relief rally we will see will be nothing short of breathtaking. I foresee the market rallying as much as 1,500 points on the Dow. Fear for the most part is at every nook and cranny of the financial markets, not to mention hitting home on every block in America.
As far as the economy goes I believe we have more pain to go through, and much of the painful malaise will not abate until late 2009. The government has been doing plenty to help alleviate fears and the frozen credit markets, but it will take time to work through the system.
Until then expect more or the same, more uncertainty and fear. Stick it out and be wise. Those that pull out of the market always wind up missing the ride up!
