Saturday, November 10, 2007

Buy on the Dips?

THINGS BECOME MORE SERIOUS
The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that, there would be still another. In the end, all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains...The bargains then suffered a ruinous fall. Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks, would see their value drop to a third or a fourth of the purchase price in the next twenty-four months. The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable... - John Kenneth Galbraith, The Great Crash 1929





Note that things seemed quite orderly until August 20, 2007.

Prove to me that things aren't getting worse and I'll eat a bug.

See Also:

Treasury Bill Volatility v.3

Disclaimer: I would love to be proven wrong. The bug will be a Black Forest Gummy Bug which I find quite tasty and I'd have a far easier time protecting my life savings.

4 comments:

Anonymous said...

StagMark,

If I was a bug I would be feeling pretty safe!

energyecon

Stagflationary Mark said...

energyecon,

LOL!

kwark said...

StagMark,

The sentence preceding your quote from Galbraith was appropriate too...

"A common feature of all these earlier troubles [1873, 1907, and 1920] was that having happened, they were over. The worst was reasonably recognizable as such."

I wonder if the 1929 events had, as we do now, page after page of "reporting" whose message is either "Things are different now" or, at a minimum, "keep it moving, nothing to see here. . ."

Stagflationary Mark said...

kwark,

I wonder if the 1929 events had, as we do now, page after page of "reporting" whose message is either "Things are different now" or, at a minimum, "keep it moving, nothing to see here. . ."

I don't know. Things are different now! Keep it moving!! Nothing to see here!!! *deep inhale*