OK, I'M READY TO CALL A BOTTOM ON THE DOW...
HERE'S HOW IT WORKS...
IT IS CONVENTIONAL ECONOMIC THEORY THAT ANY MAJOR BUBBLE LOSES ABOUT 90% OF IT'S VALUE TOP TO BOTTOM...
THERE IS PLENTY OF HISTORICAL EVIDENCE FOR THIS...IT'S IN THE TEXTBOOKS ON MAJOR CRASHES...
THAT MEANS THAT IF THE TOP ON THE RECENT DOW WAS ABOUT 14,000....
THAT A 90% LOSS WOULD BE ABOUT 1,400....
NOW I'LL BE GENEROUS...AND ASSUME THAT BERNANKE, PAULSON, ET AL...WILL MITIGATE THIS HISTORICAL NORM SOMEWHAT...WITH THEIR EXTENSIVE KNOWLEDGE OF ECONOMIC HISTORY...AND ACTIONS.
NOT THAT I THINK THE SERIAL BAILOUTS WILL "WORK" ... IN FACT I THINK THE BAILOUTS WILL BE A NET NEGATIVE LONG TERM...AND WILL ASSURE THIS 90% DECLINE...
REMEMBER IT'S NEVER THE CRIME... ITS THE COVER UP... AND THAT IS REALLY ALL THESE BAILOUTS ARE... RIGHT?
SO, I'M PUTTING THE BOTTOM ON THE DOW FOR THIS DECLINE AT 2,000....
THAT MEANS THAT WE HAVE ABOUT 6,000 MORE POINTS TO LOSE...
BUT I WOULD PROBABLY START NIBBLING AT SAY, DOW 5,000...ONLY 3,000 POINTS FROM WHERE WE ARE TODAY...
THESE FIGURES FOR PRIOR MAJOR BUBBLE DECLINES ARE WELL KNOWN IN ECONOMIC TEXTBOOKS... AND THEY DO SEEM EXTREME...
BUT THERE IS A REASON THAT THEY ARE EXTREME...THE MARKET OVERSHOOTS ON THE UP SIDE...AND ON THE DOWN SIDE...
THE UTTER DESPAIR AND GLOOM THAT I SEE ALL OVER THE PLACE NOW...SEEMS TO BE FOLLOWING THE NORMAL PATH FOR POST-BUBBLE SITUATIONS...
DOW 2,000 WILL BE THE BOTTOM....
I HOPE THIS HELPS A LITTLE...AFTER ALL THE MARKET DOES "HATE UNCERTAINTY!"
