Historical Prices Djia
Stock market crash – Watching Rome Burn
Both presidential candidates want to crucify SEC Chairman Cox for failing to control our institutions creative financial. But rumor has it that Congress specifically excluded the devilish derivatives from SEC field. We will fire the right bunch of "poips" for a change!
Scary markets are the result of many factors, some normal and some not so normal. It is often helpful to look backwards before getting too close paranoid about this. The S & L crisis of the early 80s might be an appropriate starting point.
Later that decade, a demonstration several years had his head cut off by high interest rates, high inflation and a computer loop. Ten years later, another rising market was overthrown by the economic factors. The turn of the century witnessed the disappearance of blood without value in all the dot-com illusion.
A profit taking strategy during rally the day was all that was necessary to capitalize on "The crash of 87." In 2000, the route to immunity could be summarized as: "no offices intellectual property, not investment funds, no dot-coms, no problem. "
The common historical (hysterical) thread is clear. Rally begets correction, correction generates rally. This time, ironically, conservative investors had no trouble avoiding the derivatives that eventually sunk the markets. But the products are just "out there" and the regulatory agencies to be flanked, that the correction has taken off several icons of global investment. This correction is different — but not in ways you might think
The scope of coverage of the media, analysis, and sensationalism; masses of inexperienced, non-professional, speculators, and the popularity of investment products are a new phenomenon. Millions of nameless non-credentialed experts in investment Internet and financial bloggers add to the pandemonium.
Similarly, the proliferation of means of passive investment (index funds), tolerance Regulators speculations of all forms, shapes and sizes, and the relaxation of trade safeguards that have protected investors for decades encourage reckless approach the game into what was once investing. We've seen what conscienceless speculators in commodity markets have been global.
We have experienced a major movement away from plain vanilla stocks and bonds, and have popularized the thrill ride of speculative activities. 401 (k) fund selections include short-term funds, currency trading strategies, and commodity futures. IRA investors seek the most exotic speculation, convinced that with a Blackberry and a lunch break, they can master the intricacies of high finance.
Regulators have allowed funds of hedge funds in the portfolios of small investors, brokerage firms short shares that do not exist multiple times, once sacred up-tick rule has been abandoned when short circuit should be a banned substance, and the CDO that is difficult to determine who owes money to whom.
Enough? There are more, but get the idea. Today's problems are much more visible than yesterday. Today's worries involve bigger numbers. solutions of tomorrow, no doubt, will bring creative MBAs discovering new financial perspective Weapons of mass destruction. The gods are angry investment. We must bring back the old days when rock and roll, and a content of the investment world with individual stocks and bonds.
In less complicated times, the difference was in the setting. Speculators suffered, but safer investment styles were less vulnerable. Let's elect a Congress that will regulate the speculations and allow us to return to the basic, fundamental, adventure of building and protect the eggs from the nest. Think back, makes only a few cycles — familiar?
The market was Breezing along during the summer of '87, enjoying one of the largest demonstrations seen on Wall Street. From the beginning, equity prices seemed incapable of down. The mystical DJIA 2000 barrier was broken earlier this year and upward the market soared.
Up to the year 2100 that rumbled, then 2200, and 2300 — even the comic, the target approach successful, and many subscribed to it. The securities markets were simple, with fewer labyrinthine products, and only the dark cloud of interest rates rapidly increase in a clear sky. 2400 on the Dow Jones by July and on it went. Endless sight.
The institutions introduced hundreds of new investment funds are pumped into their marketing efforts, and pushed the race into the sky — 2500, 2600, 2700, just incredible. None of the salivating mutual fund holders unit to which saw it coming, Wall Street did not care. The Dow topped out in the month of August 2722 — about the same number of points involved in a swinging September 2008. Only the names and products have changed —
The parallels to today's markets are interesting. Value stocks and bonds moved lower while IPOs and other speculations were bubbling higher. As prices weakened, analysts began to mutter. The economy certainly did not seem a punishment and the setting — pessimism interest rates just annoying. And then it hit the fan.
Technology bombed the market when trading program signals Sales ran fast and furious through the cables, resetting bend, and lower and lower bodies — but that was sold actually existed! Wall Street Dam Panic! inflation fears, higher interest rates, the tension in Europe, foreign oil, the war in the Middle East, and so on. All the usual suspects were displaced by the media as the culprits that caused "the crash of 87."
Just do not have to be a lot of Wall Street manipulation (or arrogance) to turn speculative greed into investment fear. Attendees did it again, sucking the unwary Franklin portfolios individual investors, as would two cycles later when their dot-coms sealed the fate of another generation of speculators.
Yes, the similarities are striking — one crisis to another. But this time is a little different. This time the Masters of the Universe were helped by Congress and the SEC to pick our collective pockets, and some of them have done, and appropriately, drowned in his own waste. I will shed a tear of the fallen giants, but we all mourn aloud about the problem — A problem that both Barack and John were a part.
It is Congress that gets to chastise and create standards for the bad guys. This year, and those that follow, we will fire the DC fat cats that caused the problem, and find some regulators with the guts to label speculations as thoroughly as do drugs.
About the Author
Steve Selengut
Sanco Services
Kiawa Golf Investment Seminars
Author: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read” and “A Millionaire’s Secret Investment Strategy”.
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