The discussion about p/e ratios and other valuation ratios derived from Company-issued GAAP accounting financials is idiotic. It means relief for the poor and the jobless, recovery of the economy back to normal and reform of the financial system to avoid depression. As 1929 began, the Fed began to directly pressure member banks to stop increasing their loans to brokers. In a recent video, Hyman not only reveals the secret Wall Street calendar, he also shows how his Crash Alert System works so that anybody can follow in his footsteps ( click here to watch it now ). With this, we will always buy something during a market correction or crash and at least make a decent profit. He points to one extremely tiny market which is indeed nearing the top of a bubble, and he projects that this particular drop-in-the-bucket Chinese Shanghai market is going to collapse the whole system.
Their move led to a slight increase in stock price on Saturday, October 26. But over the weekend many investors lost faith in the stocks and decided to sell their shares. Over the next month the market continued to decline sharply, however, the market would not bottom out until July 1932, when the Dow hit 41 from a high of 381 in 1929. The fact that the market is not cheap does not mean that it has to fall further. The days and months that followed had brief periods where the market rose during trading. I would not classify this as a crash as its considered mild compared to a real crash. Following this turmoil, a brief recession ensued which sent dividends into a minor retreat with no significant erosion of stock prices. Three phrases—Black Thursday, Black Monday/Tuesday are used to describe this collapse of stock values. If we saw what was coming and we did not warn the people, their blood would be on our hands.
If we had bought first at 30% drop which is $6.41 and second at 50% drop which is $4.75, the average price will be around $5.58. The stock recovered from the low of $4 plus to $7 plus in just 3 months. The market is becoming flooded with stocks, and yet people feel that the values of stocks will continue to rise.
With such a relationship, expected returns of respondents in November 2008 should be more than five percentage points lower than expected returns of respondents two or three months earlier. The second question is whether the link between the stock market indices and expectations broke after the crash. See below for behaviour at previous major market peaks and troughs (yield curve is on the left, S&P500 is on the right). The good thing about these automated trading systems is that while you can sleep, jog and do whatever you want, the trading system does not sleep and constantly monitors the market. A well-respected financial expert that correctly predicted the last two stock market crashes is now warning that we are right on the verge of the next one.
No, before a synchronized world stock market crash and recession can happen, the big markets in the US and EU as well as the rest of the world will have to become far, far more highly valued than they are now. The conventional assumption that stock markets behave according to a random Gaussian or normal distribution is incorrect. A long bull market can also get longer, and we do not know at this point whether we will see a mania phase” first. Update 8: The Dow climbs a little higher into a long sideways trading range, ultimately popping higher still before relentless declines begin around year end, tumbling into a protracted Bear market until a 2018ish bottom.