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What was it Marty Zweig said in Winning on Wall Street? Let's see, "...when the optimism is overripe--and it's easy to see it in the marketplace--you ought to begin preparing for a bear market. The idea is: Beware of the crowd when the crowd it too one-sided."
If you believe that cash is being produced from air and is a questionable value, why are you surprised that people may be willing to trade cash for shares, which may have greater relative value?
That aside, you need to look at what the media isn't focusing on, which is the growth that happens every day in an economy that has low unemployment and is growing ~3%/year. There is tremendous progress in many leading edge technologies, and no wars that substantially destroy assets and knowledge on the ground. The markets haven't moved much for 5 years, and the laws of compounding are doing their work to reduce the overvaluation.
The Current Equity Valuation fractal View:
The macroeconomic world appears to operate and, operate exquisitely, according to three saturation fractal growth phases, followed by a saturation fractal decay phase. The idealized time unitsthat compose the three growth phases and decay phase, as delineated in the main page of the Economic Fractalist are x/2.5x/2x and 1.5x respectively.
Because equity valuation fractals exactly represent the complex money-debt-asset system, the larger the equity index, the more perfectly representative the index is of the underlying global macroeconomy. This is why the Wilshire 5000 , TMWX, which represents the near summation US equity position is useful in fractal analysis. Even though other Euro-Asian equity markets have had better performance, it is the American economy represented by TMWX that has driven recent global economic growth.
Each day new valuation information is added and the consistent fractal patterns and overall fractal puzzle gains greater clarity.
Periodically review of the entire fractal evolution provides possible new insights. In this context a most remarkable balanced fractal picture has come into focus. It is a fine extension of the prior estimate of future fractal evolution rather than a departure. The echo housing bubble created by the lured debtor of last resort, the American consumer, has crested. This plateauing has been confirmed by such proxies as IYR and HGX and the greater TMWX index. US overconsumption, overvaluation, asset inflation,and servicing of debt
have become predominant factors over ongoing new debt and money creation in the complex money system.
Since 12 March 2003, the beginning of the current major three phase fractal growth period, the idealized fractal evolution has been simply exquisite. In general, major growth fractal units of significant length, e.g., weeks and months, are determined by low valuation points and the connecting underlying slope line which contain all interval points. The below data for TMWX can be easily confirmed by using 'Big Charts'.
First growth fractal (x): 103 days (12 Mar 2003 -6 August 2003)
Second growth fractal (2.5x) 258 days (6 Agust 2003 - 13 August 2004)(note nonlinear drop on August 6, 2004 denoting the hallmark of a second fractal)
(The exact idealized time frame is 103 x 2.5 = 257.5 days. Notice that the closing low is actually lower on 12 August 2004 with an intraday lower low on 13 August for exactly 257.5 days-exactly matching the idealized low).
The idealized expected third growth phase and the idealized decay cycle would be:
Third growth cycle idealized (2x) 206 days
Decay cycle idealized (1.5x) 154.5 days
Notice that the sum of the first and second growth cycle equals the sum of the third growth cycle and decay cycle: 103 + 257.5 = 206 + 154.5 = 359.5 (The first and last day are double counted requiring a subtraction of 1)
Now look what has happened in the re
In Greenspan we trust. Not too sure about his successor though.
Goodness me! Your not suggesting some sort of manipulation are you?
From my vantage point it appears that the Fed's Plunge Protection Team has been putting in lots of overtime.
Are those helicopters I see on the horizon loaded with $100 dollar bills?
Ken Harris
real good write and right
the market is playing games
aka manipulation
a con on longs
give it time
and the early shorts will get squeezed, and anyone who wants to, will be long and wrong
then the dow will steam into, the deep south
http://www.shortorlong.com/
understanding markets
a speculator WAITS Till he KNOWS he is right, and a gambler guesses
one must have a plan with fixed rules & patience, & DISCIPLINE, to be able to implement ones plan
almost everybody knows next to nothing about the mysteries of money
so what to do? Learn, what not to do, then work on, what you need to do
From:
Duncan Robertson
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