StockFetcher Forums · General Discussion · Give Us Just a Little More... By Alan Hall<< >>Post Follow-up
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msg #47621
Ignore TheRumpledOne
10/24/2006 10:55:10 PM

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Give Us Just a Little More... By Alan Hall

The Dow 36,000 and Dow 100,000 authors are back in the news. They say their ideas are still valid, even though their books are for sale on Amazon for one cent (literally). The chief investment officer of a New York investment firm says, “These guys come out of the woodwork when society is foaming at the mouth and receptive to these things.''

The word “illusion” derives from the Latin word meaning, “the action of mocking,” an apt term for investors' blithe flirtation with financial risk-taking. An individual can see the scary data, but groups will not; they take cues from each other rather than from evidence. Nevertheless, here is more of it.

Total credit market debt as a percentage of GDP was 270% at the 2000 market top. Today, it is 320%.
The Dow Jones Industrials measured against anything but inflated U.S. dollars is nowhere near a record.
DJI/gold and DJI/CRB commodities weekly charts show a huge bear market, with the index near eight-year lows.
DJI/Stable Currency Benchmark Index looks almost as bad, but is bolstered by inclusion of the U.S. dollar.
The ironic waltz of the “bad” trade deficit rising and falling in lockstep with the “good” stock market, hands the bill for our national splurge to the grandkids.
Stock valuations remain far outside their historic range, and never returned close to it in the last six years.
Real estate is deflating as consumers borrow against houses, stocks, and credit cards to pay monthly bills, even as health care and college education costs rise.
The U.S. savings rate is nil. 46 million are without health insurance.
Income for middle class families has remained flat since 2001. Two incomes are no longer enough for many.

All the above is visible, but through the lens of socionomics, the turbulent picture of a historic peak in social mood becomes clearer.

Congress suffers a 12% approval rating, the lowest in 14 years.
The SEC expands credit and leverage, by relaxing depression-era margin-trading rules -- in force for 70 years.
Wealth concentration reaches historic extremes.
Both houses of Congress and the President vote for the Military Commissions Act, which restricts the right to an attorney, suspends the writ of habeas corpus, and voids parts of the Geneva Conventions for anyone designated as a detainee. The legalese is dauntingly hypnotic and contributes to the calm with which we watch the rules change.
This month, in the highest (bearish) reading in its history, Investor’s Intelligence’s Daily Sentiment Index polled 91.2% bulls. That leaves half as many bears as the most optimistic point of the 1990s. As this month’s Elliott Wave Theorist says, “Correctly interpreted, traders optimism is double what it was then.”

This market environment shouts, “Historical anomaly!” A whole thesaurus of words fails to describe the degree of investor optimism. The financial and social scene begins to resemble a skit I saw in “Robin Williams Live on Broadway,” depicting a hilarious, endless, agonizing Viagra orgasm.

StockFetcher Forums · General Discussion · Give Us Just a Little More... By Alan Hall<< >>Post Follow-up

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