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?


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