I have always been told by my father, who has been in the markets since the early 1950s, that bull markets try to scare you out by running too much and selling off quickly and hard, while bear markets fool you into staying in by easing down and promising recovery. I think both the credit crunch and today's quick slide qualify as bull market activity.

A three-week consolidation, including this week, would be natural as earnings are processed. To me this whole episode looks like the ease, hike, ease, pattern of late 1979 to early 1980, just after the S&P 500 hit a seven year high. This time the hike was in credit and the drop not quit as violent as then. The best thing Greenspan ever said was in 1998, that the solution to moderating and preventing crises is more equity.

David Higgs remarks:

ING Funds has a flier showing overall dividend yields over the past five years of an assortment of countries. New Zealand for the most part had the highest yield in 2006, 4.46%. Compare that to the USA at 1.76%, seems like the guy with the CD in the end wins over the big risk taker, as with the tortoise and hare. But how can a country of sheep farmers continue to be a payer of high dividends year after year?





Speak your mind

2 Comments so far

  1. Peter Russell on October 13, 2007 7:06 pm

    I am new (three years) to trading. I began as a Cramer acolyte, and now have moved to a combination metric (I use momentum charts, volume graphs, and finish by essentially throwing my urine in the air and tasting it.) i have made 22 percent this year, 21 percent the first, but lost two percent in the middle. I believe the urine tasting is the most valuable part of the metric. There is a lot of bullsh!t in writing about speculation. I believe the bullsh!t to be, perhaps, the most essential part of the truth. I love that Niederhoffer fails spectacularly, but then returns to the game, pausing only to lick his wounds. Trading is rapidly becoming my black tar heroin. Ave atque vale, fellow traders. And thank Victor for his public theater of serial victories and defeats. At least he has the balls to be in the arena.

  2. Edward Barkes on October 15, 2007 7:29 am

    Lower valuations and currency risk result in a high yield. It is a high yield not a high payment.


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