Waiting game: A plunge is inevitable (Barf Alert)

MSN Money ^ | 10-23-2006 | Bill Fleckenstein

[MooseMan]

Let's begin with a multitrillion-dollar question: Will this rally of the past 2 1/2 months be defined, in retrospect, as the ending blowoff to the rally of the past few years (fueled by what the housing bubble did for the economy)? Or, will it -- for reasons unknown to me -- signal the start of some new leg higher? That silence you hear is the "answer" to this question.

Last week, I anticipated a huge reversal -- admittedly, a low-probability event -- as both Wednesday and Thursday saw disappointing tech news trumped by soft-landing/Dow 12,000 euphoria. Furthermore, critical revelations surfaced on Thursday regarding loan losses at several institutions involved in the "housing ATM" finance business. In my daily column, I described the situation as follows:

"The stage is set for some real fireworks, especially since this has been such a straight-up, bulletproof rampage for the last 2 1/2 months. In fact, given how we've powered through the large pre-announcement season into an earnings season that I expect to be pregnant with disappointment ... (we're) more ripe for reversal than at any point in time since the fall of 2000." 11,999 points on the Wall

[brewerbill]

How did you manage that? The Dow went from around 3500 to 10600. That's roughly 15% per year for 8 years. If we'd kept growing at that rate the Dow would now be over 20,000. Instead, it's averaged under 3% per year. And the NASDAQ still isn't back even with the 2800 it was in Jan 2001.

Besides, what does the President have to do with the stock market?

[LibLieSlayer]

"And the NASDAQ still isn't back even with the 2800 it was in Jan 2001."


Yes, and we have no tech bubble, no worthless companies making 18 year-olds overnight Billionaires, and once again the markets are propelled by profits and market positions.

Sorry, no one will buy into 'toon's faux economy. My assets have quadrupled since President Bush came into office. I struggled during 'toons debacle.

LLS

[brewerbill]

I don't know which is more impressive:
1) quadrupling your assets when the markets go up only 12% or
2) losing money when the stock market goes up 300%.

Congrats on your new-found investment savvy. Perhaps you'll share some stock tips with us some day.

[LibLieSlayer]

You act like my situation is unusual. It is not. I don't even know where to begin. Find a trusworthy financial advisor with a company such as Merril Lynch, buy the right stocks and funds, find investments that pay dividends, buy quality and don't sell on a downturn.

LLS