On Mar 20, 2:54 pm, Tortoise <nos...[at]sunshine.com> wrote:

“…How then did a severely depressed economy manage to generate
5-year stock returns which were superior to anything generated during
the record
boom which preceded that era?”

Great history lesson!

I don't believe main street is damaged anywhere near as bad in the
present as it was during the 1930s. I believe the road to recovery on
main street is relatively short. Unlike the 1930s, the government has
manipulated the market (right or wrong) this factors
in...additionally, today’s investors through 401 (k)s and day trading
(both nonexistent in the 1930s) as well as hedge funds favor trading
over investing long term, today’s markets (even before the downturn)
are more volatile than the 1930s. The lust for playing the volatility
of the downturn won’t end until a return to fundamentals is supported
by main streets stabilization. We will also need to see job markets
returning from corporate belt tightening and credit markets moving
making M&As more frequent and daily business operations more fluid.
So far, nothing about this downturn has behaved like the 1930s
therefore I don't expect the recovery to either.

On 2009-03-18 12:13:58 -0700, JoeTaxpayer <JoeTaxpayer[at]comcast.net> said:

- quote -

Banks got into big trouble when most people thought they were solid and
safe. I am wondering if some of the big mutual funds are next.

Igor Chudov wrote:
- quote -

Interesno. I haven't heard that kind of interpretation before (not that I would
pretend to be conversant in the nuances of early 19th century history), but what
you say makes sense, at least theoretically. How well this matches up with
historical evidence is not something I'm (presently) able to judge. But two
things prompt me to lean in your direction:

1) I've always been bothered/puzzled by the fact that the US was one of the
first countries to officially recognize the USSR, which in hindsight seems
deeply ironic. Taking such an official stand in the 1920's would be difficult
to justify without some measure of support among the voting public. This in
turn might suggest that communist ideology had a far greater foothold in the
mind of the American public at the time than it has had later on.

2) Popular American culture at the time I grew up dwelt on eras in American
history which either preceded the early 1900's (the cowboy ethic, i.e., the Wild
West) or the feel-good theme of the post-WWII era. (In terms of sentiment, I
loved both, but deep down it always puzzled me why there was this obvious
deliberate effort to embellish the positive and suppress the negative. If you
wish to pursue health, that's great; if you're after the truth, you're on your
own. I suppose it's normal human nature to try to remember happy times and
forget the bad.) At any rate, I've never been able to shed the impression that
America has been (and is) somehow embarrassed by the dominant sentiments which
dictated people's thinking in the early part of the 20th century, which I know
in Europe at the time was marked by pitched battles between communist and
fascist groups in a quest to gain prestige among the society at large.

Thus, your allusion to the specter of abolition of free market principles in
America during the Great Depression may well have some substance to it.

- quote -

"Normally," yes. But what ultimately happens has very much to do with the
(covert) goals of the incumbent leader (or aspiring usurper) and his active
supporters. Russia, for example, was a relatively civil society on the eve of
the Bolshevik revolution (contrary to popular belief), where the Tsar had more
of a ceremonial function than true political power (somewhat like the British
Queen); still, this did not prevent the hard-left ideologues in Russia from
imposing their agenda on the unwashed masses for several generations before
their madhouse collapsed. A decade after Lenin, another madman pushed his
agenda in Germany (responding to the ultra-liberal sentiments of the Weimar
Republic), and his insanity generated unprecedented suffering on all sides.
Saliently, this was another "civil society" which came to be subject to the
whims of wanton tyranny. Cutting this argument short, one final example:
Yugoslavia under Tito was by and large a "civil society," even though it was
beholden to a "soft" version of socialism (and government corruption), but
vehemently opposed to Soviet hegemony and open to the West. Soon after the
"benign despot"'s death, civility went out the window and former "best friends"
went at each other's throats in a bloody civil war. I shall never forget the
intense irony I felt at the sight of the stark physical devastation I witnessed
at a ski jumping facility in the Balkans (obviously as a result of civil war
operations) which only a little over a decade earlier had been the site of
peaceful Olympic competition with champions crowned and young and old in happy
applause (a decade earlier).

Thusly ... the presence of "civil conditions" at any given time is not
necessarily an indicator of what is to come.

- quote -

Oh boy, you're addressing the wrong audience ... the worst hyperinflation in
history ... what kind of fella "fixed" it ... where am I gonna run to next?

- quote -

Shto' zh??

On 2009-03-20, Tortoise <nospam[at]sunshine.com> wrote:
- quote -

My own explanation is that at some point during the bottoming of the
Great Depression, a concern appeared that the US will see a "Great
Socialist Revolution", with the assets confiscated and stock values
going to zero (as it happened in, say, Soviet Union).

That concern, which was not entirely unfounded, depressed stock
prices, as suddenly you could not safely assume that you will get
perpetual dividends from them.

Once things stabilized around 1933-1934, this concern has been
removed.

- quote -

It is interesting to note that you exhibit concerns that have some
parallels with concerns of the Great Depression. While they are not
unfounded, past experience of many countries similar to ours, shows
that removing free market mechanisms is very difficult to do in a
framework of a civil society.

Now, hyperinflation and runaway debt increase, are much more in the
realm of possibility than dismantling of the market system.

I see the current debt crisis, as only the first step towards a
possibility of recognizing our inability to manage our gross debt as a
country. We have private debtors, states as debtors, and debt of
federal government. The total debts are very large and they do not
cancel out (which would be if I lent money to you and you lent money
to me, of if states owned treasury bonds)

As a mental experiment, we can try to see how would interest rates of
7 percent per annum, affect US government budget. With the debt going
to 12 or so trillion dollars soon, it would mean 840 billion dollars a
year for just interest servicing on federal debt, in what presumably
would not be a strong economy.

Should interest rates rise, servicing this debt will be much more
difficult than it is now. However, in the large scheme of things, the
ability of American enterprises to extract value from economic
activity, will remain regardless of what happens to the currency.

Future is easy to predict, but hard to predict correctly.
--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

Edify wrote:
- quote -

The 5-year interval from 1932-37 saw a rise in share prices at an even STEEPER
rate than what investors saw in the roaring 20's! The surprising aspect in all
of this is that those five years were planted smack-dab in the middle of the
Great Depression. How then did a severely depressed economy manage to generate
5-year stock returns which were superior to anything generated during the record
boom which preceded that era?

It may seem a sensible assumption that economic conditions drive stock market
performance, but the historical record includes examples that invalidate such a
simplistic view. At best, one might say that economic conditions normally drive
stock performance, but not necessarily. The extreme emotions of a
manic-depressive collective state of mind can cause the market to whipsaw
unpredictably, for years on-end. It's instructive that excessive whipsawing
occurred in an era that was marked by excessive, inept government intervention
in economic affairs. The ultimate risk trumping every other risk at the moment
is the question mark over whether or not free market mechanisms will be allowed
to function. The silver-lining in the cloud is that intent and ability to
implement aren't necessarily one and the same.

On Mar 18, 1:54 pm, "HW \"Skip\" Weldon"
<skip5700removet...[at]yahoo.com> wrote:
- quote -

What I get from the current trend, is that the market is reacting to
positive news (or less negative than expected) more strongly than it
is reacting to bad news (or more negative than expected). Is this a
sign of a bottom or are traders learning how to play this new
distressed and oversold market? Predictability should not be mistaken
for stability! I think the economy must show signs of stability on
main street before we see a bull market, exactly where a bottom will
occur before that is a call I won't dare to make, I'll just play
whatever cards the market deals

HW "Skip" Weldon wrote:
- quote -

I just replied to an old thread w/something I'd typed up a the time but
hadn't posted - see other. I thought there were some good themes brought
up in that thread.

-Tad

On Mar 19, 2:08*am, Tortoise <nos...[at]sunshine.com> wrote:
- quote -

It's fun, that's why all the cars slow down on the freeway whenever
there's an accident. Maybe I prevented someone from climbing that
tree in the first place. If anyone's investment success depends on
his/her ability to predict short term price movements, that person is
doomed to failure.

dapperdobbs wrote:
- quote -

Many moons ago I was a gardener, the most satisfying endeavor I've known
(back-breaking though it was): every garden has both plants and weeds. In
order for the garden to flourish, the gardener promotes the growth of plants and
inhibits the growth of weeds, but if you think you can eradicate weeds forever
(in this world), you're a social activist dreamer. (I grew up in a utopian
society; do-gooder's who are oblivious to the consequences of their silly
desires are as tyrannical as they are insane.) Rampant zeal not only kills
weeds, but also the plants which are the declared beneficiaries of that zeal.
In the end, blind zeal leaves behind only a barren landscape -- be careful what
you wish for.

Less poetically, America has lived through the age of railroad tycoons and
robber barons, in addition to going through a civil war, two world wars, the
Great Depression, and other trials. None of those epic tribulations destroyed
the country's fiber or impaired its economy so as to jolt US stock performance
out of the steady orbit of a more than 200-year-long trend.

God /has/ indeed blessed America. This is not a right but a privilege, and no
one knows how long this will continue. In the end, one cannot legislate ethical
and moral behavior, but individuals must choose their own courses of action ...
and reap their own harvest. Law enforcement is most effective if it serves to
set an example; if you wish to punish everyone, who will be left?

JoeTaxpayer wrote:
- quote -

Pretty charts (color-wise), but looking at bear markets is like looking at one
half of a face -- it lends itself to misjudging the whole picture.

One more hint: when assessing this bear market, think "twin peaks" and look way
back.

PeterL wrote:
- quote -

Yes, but you didn't even bother climbing up the tree (let alone go out on a
limb) to say that. You're just standing below watching someone else tumble from
the branches screaming :-)

On Mar 18, 11:54*am, "HW \"Skip\" Weldon"
<skip5700removet...[at]yahoo.com> wrote:
- quote -

I'll go out on a limb and say that no one can predict the short term
movement of the market with any consistency.

On Mar 18, 1:54*pm, "HW \"Skip\" Weldon"
<skip5700removet...[at]yahoo.com> wrote:
- quote -

I'll go w-a-y out on a limb. When we set things right according to
rule of law (or simply beheadings), we will have established a bottom.
It will mark a low point in management ethics and behavior, and in
regulatory and Congressional oversight, that hopefully we will never
have to smell again. IMO we have a crisis in ethics (or integrity),
and if we don't find and punish those responsible for trillions of
dollars of losses, and track down the fallacies and end them,
confidence will never be restored. This is what the markets will
anticipate.

I welcome any opposing views.

HW "Skip" Weldon wrote:
- quote -

I missed the call on this bottom by a day (in a conversation with an
MBS-trader friend of mine). I hope this call has more legs than my last
one...

-Will

william dot trice at ngc dot com

HW "Skip" Weldon wrote:

- quote -

Well, when I asked this on my blog, Augustine kindly sent me this link
http://dshort.com/charts/bears-nomin...tml?four-bears
which shows some surprisingly high bear market rallies. I still remain
guardedly optimistic, but I'm also wondering if any shoes remain to drop.

Anybody interested in going out on a limb?


-HW "Skip" Weldon
Columbia, SC