Weekend July 10 2022
Jason Zweig write the column Intelligent Investor for the WSJ. His July 8 column attempted to debunk some yths like there is capitulation at the bottom.This means there has to be a selling climax. In fact in 1973-74 the selling continued for two years.
Only about 5% of households held stocks at the DDec 1974 low versus 27% today.
And he naysayers claim stocks have to get chearp, they sure do, read my reply.
Mr. Zweig
from your column
Retail investors have to capitulate. Financial professionals love to argue that bear markets hit bottom when individual investors give up on stocks in a crescendo or “capitulation” of panic selling.
Only trouble is, that isn’t what happened in 1932, 1974, 1982 or 2002, among many examples. Bear markets sometimes end in a selling frenzy, but they often end in an indifferent stupor.
I was there at ground zero form April 1973 to Fall 1974. I had graduated from Ross Perot's dupont glore forgan training school, a solid six months in Los Angeles. No 19974 did not end in capitulation it started in 1973 and continued all the way to December 1974 at DJIA 577, I see you neglected to mention that by 1982 it had only manged to regain around 800. And was less than two hundred points above the 1929 high.
we had studied selling mutual funds. But the first call I got was to redeem a man's mutual fund investment. Funny the training school never discussed how to do that!
One secretary in downtown Houston returned my business card saying the boss threatened to fire her if she ever let another broker in his office, now that was the social mood.
as for your comment stocks have to get cheap, they sure do. Your quote, at the low of 2009 socks were 20% cheaper than 1981, well that was really cheap as see above, the percent of households holding stocks in 1981 was 5.89% versus tpday's 27.5%, gee you did not mention that either. the first stage of a bear market is denial, that where 98% of those writing as you are see this now.
there were over 1,000 stock brokers in Houston at the start of 1973 by th end of 1974 about 535. Entire firms like White Weld were gobbled up by wire houses like Merrill Lynch. desperate to stay in business, Perot forced a merger with Walston with the result they both failed together, the offices finally sold piecemeal.
Major indexes have not tested their 200 month MAs since the 2009 ow. That is surely an eventual target, for the DJIA that is 18,135, about half the high of 2021. And that will be for the 20 strongest companies, many others like Bed Bath and Beyond now will probably disappear.
We are a fibonacci 233 years from the founding of America. We are Fib 13 years from 2009. At market tops in Fall 2021 we are a Fib 34 years from the 1987 low. All these Fib anniversaries are arriving in 2021. As Richard Russell used to say there's a hard rain coming.
Social mood is trending negative with murders, war, inflation and deflation world wide. And by the way with the NASD down over 30%. who among those who stayed invested only has a $3,000 loss!
the only control here is to get out and avoid the falling knife, or try HDGE or TBF as stocks fall and eventually rates rise.
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