Stock Market Bulls are the Bears Being Reckless?

[Daal]

Ken Rogoff research of 18 financial crisis shows that financial crisis tends to depress stock markets for 3.5 years on average, this suggests a stock market stabilization in late 2010. The study also suggests unemployment is heading to 11%. The large IMF study of financial crisis and global recessions since WWII shows that recoveries are very slow and anemic, this is both a global financial crisis and also a global recession. Yet the stock market expects recovery in the 2nd half and and likely a somewhat stagant almost non-rising unemployment rate in 2010(that would be consistent with something like 2% GDP growth the stock market seems to expect)

Whos being reckless?

 

[S2007S]

Quote from Daal:

Ken Rogoff research of 18 financial crisis shows that financial crisis tends to depress stock markets for 3.5 years on average, this suggests a stock market stabilization in late 2010. The study also suggests unemployment is heading to 11%. The large IMF study of financial crisis and global recessions since WWII shows that recoveries are very slow and anemic, this is both a global financial crisis and also a global recession. Yet the stock market expects recovery in the 2nd half and and likely a somewhat stagant almost non-rising unemployment rate in 2010(that would be consistent with something like 2% GDP growth the stock market seems to expect)

Whos being reckless?

Everyone believes that spending trillions of dollars will lead to economic recovery, I hope they understand that this time around its not the case, unemployments rates will continue to rise, foreclosures as well have yet to peak, yea the economy might stabalize sometime over the next 2-3 years however growth is decades away.


I laughed last night watching jim cramer say that we are not like japan, where japan had a lost decade, cramer believes that we will come out of this quicker than most think. I disagree totally, the US economy will see a lost decade just like japan has, anyone thinking this is going to be a quick turnaround is going to be taken completely by surprise.

 

[Banff01]

The music has long stopped but sadly a lot of people are still dancing. Things are not going to be what they used to be and no amount of financial wizardry will erase the mistakes of the past. We need to get back to the basics and everything will get slowly better.

 

[Cutten]

Yeah, doesn't seem much different to early 2001 when we had a similar rally. That was huge but totally wrong too.

A further point is that this may well be a secular (10 year +) decline, like Japan's. In that case, the money is going to be in trading it from both sides flexibly, not in just sticking to one side.

Which is better, a 3 year bear of 89% like 1929-32, or a Japan decline of 83% over 18 years? The former is better for someone who likes to ride a view all the way to the end, the latter is better for a trader with more flexibility.

 

[gigsup]

Quote from Daal:

Ken Rogoff research of 18 financial crisis shows that financial crisis tends to depress stock markets for 3.5 years on average, this suggests a stock market stabilization in late 2010. The study also suggests unemployment is heading to 11%. The large IMF study of financial crisis and global recessions since WWII shows that recoveries are very slow and anemic, this is both a global financial crisis and also a global recession. Yet the stock market expects recovery in the 2nd half and and likely a somewhat stagant almost non-rising unemployment rate in 2010(that would be consistent with something like 2% GDP growth the stock market seems to expect)

Whos being reckless?

I would bet it goes above 11% in the next year.

 

[austrijec]

hi, my first post here....

At least in my chart, DJ pass 50% from high only 2 times since 1920. 1930 and 2009. 50% seem to be support on many occasions in history. So, it think we are not done on downside.

Noticed how uniform negative thinking in above posts. Suggests extra burst on the upside is likely to extract money from shorts....

 

[gigsup]

Quote from austrijec:

hi, my first post here....

At least in my chart, DJ pass 50% from high only 2 times since 1920. 1930 and 2009. 50% seem to be support on many occasions in history. So, it think we are not done on downside.

Noticed how uniform negative thinking in above posts. Suggests extra burst on the upside is likely to extract money from shorts....

It is plenty negative that is for sure. Statistics are on the bulls side temporarily.

 

[ba1]

The Japanese market is hitting a 26 yr low and the 1989 crisis is approaching 20 years depending on which events mark its beginning - BOJ raising rates in May or the utter market collapse in December 1989. Japan may recognize those involved as a lost generation or that, in future histories, the "lost decade" phrase adds and compresses this decade into a "lost generation".

One of the concerns with this event is that many survivors of the 1930s were forever scarred and changed by the experience. Obama and his fans seem to think he is FDR in the positive association sense (1930s history subject to reanalysis), when a closer view of history would show parallels with the Carter and Hoover administrations, too.