The end of the crash is nigh (but not the bear market).
22 Oct 2008 9: 59 pm | Filed under: TEOTWAWKI, bear markets, collapse, crash, depression, technicalsIf this is ‘29, we’ll dip down to new lows in the next few days (tomorrow?) and then rally for five months before getting back to business for two more years of a crushing bear market. The analogous endpoint would be summer 2010 and Dow 1400.
We should be so lucky this time, since we have no productive industry anymore and debt levels are off the charts. That includes the government, so the end game here is either a Treasury and entitlement default or currency failure (de facto default). This is French Revolution stuff.
Right now, prepare for a return to the panic conditions that we saw breifly at the open on Black Friday, October 10. This time everyone will throw in the towel. Dow 7000 will feel like the bottom has fallen out. Then you go long.
- Tags: 1929, black friday, crash, currency failure, depression
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Bjorn
October 25th, 2008 at 3:25 pm
Hi Mike,
I want to check to make sure I’m reading you correcty.
You are looking at DOW 7000 as an interim bottom, and you will consider going long at that point, at least for a while. Is that about right?
I was thinking of getting into some inverse etf’s next week (only because I can understand them more easily, and I’m hoping things are not so bad yet that the Funds themselves will be going broke), but if things might go into an exended rally at DOW 7000, this might not be the best time for me to enter into inverse ETF’s.
Theoretically speaking, if you were not shorting anything right now, would you tend to wait until after a significant rally, or would you still see the present moment as a decent time to go short, say with inverse ETF’s? (I realize that you were getting out of ETF’s due to a lack of disclosure. LEAPS sound good, but I’m still trying to figure them out, so ETF’s might be the next best bet, I was thinking.
Mike
October 25th, 2008 at 4:24 pm
I really don’t like those ETFs anymore, b/c of the counterparty issues and the daily compounding that eats away or destroys returns if the market goes your way in a zig-zag instead of a straight line.
Anyway, if I were not short at all at this moment I wouldn’t step in until after an apparent bottom and countertrend rally. I like lay-ups. I plan to scale back into a stronger short position starting at just under 20% above the low, wherever it may be, and I will be prepared to add to that position if the market goes still higher — a 30% rally would not surprise me.
Bjorn
October 25th, 2008 at 7:25 pm
Thanks Mike, I really appreciate your comments.