Quote:
Originally Posted by Slava
Well there are a few fundamental differences between what you contend and what I think to say the least. First the impact of this recession and depths of it.
To say that this recession is worse than previous recessions or that the sell-off is unprecedented is factually incorrect. The slope might be steeper, but the actual sell-off is not worse than before. Surely the fear-mongering that the media has participated in this time is worse than before though.
Second about the market dropping and recovery there is a misunderstanding: the index that goes down is not the same as the index that recovers. That is the case in any of the events; certain companies will not survive or recover to their previous strength while new companies and industries will begin their journey to stock market darlings.
The current situation and Japan are actually quite dissimilar as well. In under-estimating the US economy you are effectively under-estimating the most innovative and forward thinking group of people on the planet!
Lastly, I think that the idea of hitting rock bottom from an investors point of view is overblown here. While we would all like to be able to buy-in at the exact bottom of the market the sentiment has been that we are historically low and there are great opportunites. Even if you bought in at 9500 you were nowhere near the top of the market; so that will be a bargain down the road.
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Where did I say this recession IS worse than previous recessions? What I am saying is that this recession is seemingly shaping up to be worse than previous recessions (not the depression, just recessions). With virtually every pillar of the old American economic guard on the brink of collapse I am not sure how that is even debatable?
You are saying the fundamentals out there say otherwise to you? That LESS people are going to lose their job than in any other recession? That LESS people are to face true once in a generation hardship? Because that is where are now, not much actual bad stuff has started to manifest itself in the real world yet...
All these traders seem to think this is some paper/computer game where the numbers go up then down then up again, easy as pie. This is the first time IMO in the adult lifetime of virtually anyone alive that there looks to be very serious consequences to all of these swings and poor fiscal decisions. I am not convinced we are going to see a recovery before the pain has even set in!? Seems absurd?
I guess I look at America as in full decay. Massive debt (among companies AND government AND consumer/citizens), massive deficits (among companies AND governments AND consumers/citizens), growing unemployment, a hollowed out industrial complex, a bankrupt healthcare and (largely) education system, rapidly growing disparity and disconnect between rich and poor, rapidly aging population, government corruption and mismanagement, etc etc.
There is no law that America has to be on top in the world and the mismanagement of the position they had at the end of the cold war is at best shocking and at worst criminal.
Other places on earth have been quietly building their reserves, educating their peoples, and industrialising their heartlands all at America's expense. They have some ways to go but they are gaining ground as quickly as America is giving it up....
America is still obviously the worlds super-power but only real change and strong leadership will guard that position going forward over 10 years, 25 years, etc.
CEO's, lobbyists, and day traders looking for a quick buck have served to undermine that position and that is what this whole decline is all about in my mind.
The real everyday PEOPLE of America, and future generations of Americans, (and thus in parallel Canadians) have not been benefiting at all in the last 25 years and if you look to returning to that world, where companies cannot simply leverage 25-to-1 (like GE for example) to falsely inflate their balance sheets, where they cannot offer cheap money (debt enslavement) to the struggling middle class and where they have to offer REAL value in goods and services and not simply lok to make money out of money will now have to return to values closer to pre-2000's historical norms (where we are just arriving now).
This market IMO is not bouncing back above 10,000 any time soon. (Outside of hyperinflationary scenarios which is a whole other negative scenario obviously, or perhaps mass volatility, but i doubt it.)
You sound like you want to bet on America and I can get that, historically it is not a bad bet to make. I just think America needs more pain in order to create the will necessary to change for the better. Change that should start creating REAL value in American companies again, and in turn REAL value in all of the other major economies that partake in the systems of trade that depend on that value.
Medium term though I still just see wave after wave of bad news tempered by brief periods of denial....
Claeren.