Jorma Posted July 11, 2003 Report Share Posted July 11, 2003 I remember Black Monday pretty well. I was dabbling in futures at the time. (Small amounts, and ended up losing small amounts) I had some IRA stock funds as well but didnt' touch them. My focus wasn't on stocks, it was on bonds. I didn't trade the S&P futures, the spews as we called them, to much risk. The only thing I thought about stocks was that they were wacky and too high. I think the week before there were three consecutive 70 point DOW up days. Big at the time and silly. Anyway Friday was quite weak along with trends of the dollar cratering and bonds rising sharply. Into the mix, Easy Al was only a few weeks on the job and everyone missed Volker. Perhaps my memory is selective but I almost knew Sunday night that Monday would be bad. In fact I took off work to watch the show. I can't say how or why I knew it now, but down in my gut I just knew.I was much less knowledgeable about the Fed then but at 6AM Eaastern time I started calling my broker to put in an order to buy T Bond calls. I couldn't get thru. (This was the best trade I ever would have made) Bond opened lower. Sometime around noon Al said he would provide liqidity, bonds turned around and have never been as low, you can look it up. Of couirse I should have bought the next day or the next week but didn't. Being a fool and very conservative and a bit stubborn I refused to chase a trade that I wanted to make at the perfect time. I don't recall thinking that the effect on the economy would be all that great. As a matter of fact I have the day after, Tuesday, WSJ sitting right here. One headline was 'A Repeat of 29? Depression in 87 Is Not Expected' I didn't think so either. The stock market wasn't the economy then, by a long shot. Subseqently I have come to appreciate the real significance of that day. As I said bonds were dropping. Al said, let there be liquidity, as much as it takes to stabilize things. And the bond vigilaties retired. They saw it was good. Why wreck the system on some old fashioned principle when you can live good by the printring press, is how I see it now. Al of course never looked back. He 'saved' the system by being easy, and essentially never stopped. Well Kudlow and the Bush's disagree but any look at the long term trends speaks for itself. Some futher notes on that time. I understood much of the stock action was due to the internals of the markets and the so called 'portfolio insurance'. Everyone rushed to the exits, since the portfolio insurance scam had it that managers would buy the insurance after the fire started. On Thursday of that week I think it was, Al or someone put in a big bid on the MMI stock futures, now gone but an index meant to track the DOW as I recall, and that ended the panic. Another lesson learned by the Boyz. There was quite a bit of scuttlebutt about the trade at the time, and few complained, except the shorts. Link to comment Share on other sites More sharing options...
mjkst27 Posted July 11, 2003 Report Share Posted July 11, 2003 what has underpinned all of the market history since 1896 or whatever that we quote so religiously around here is one persistent truth: debt inflation (ignoring the Great Depression of course). The Hypertiger scenario says that debt inflation is a crippled old geezer about to kick the can. The play is very simply whether you agree with this thesis or not. The only way I can see that net global debt has even a prayer of continuing to inflate is if we quickly get to some sort of seamless one-world financial system with a single currency and a Global Central Bank. Certainly this is every collectivist's dream, but it ain't gonna happen soon. In the meantime, we know that debt contractions are self-feeding, self-sustaining, self-reinforcing. Look how hard a time Greenspasm had in getting things back on track (as compared to prior recessions) after the 90-91 recession. That little episode took a lot of firepower to turn around, and that was a little girly-man of a recession compared to the one we got brewing now. Place your bets. Link to comment Share on other sites More sharing options...
mjkst27 Posted July 11, 2003 Report Share Posted July 11, 2003 Subseqently I have come to appreciate the real significance of that day. As I said bonds were dropping. Al said, let there be liquidity, as much as it takes to stabilize things. And the bond vigilaties retired. They saw it was good. Why wreck the system on some old fashioned principle when you can live good by the printring press, is how I see it now. Al of course never looked back. He 'saved' the system by being easy, and essentially never stopped. Well Kudlow and the Bush's disagree but any look at the long term trends speaks for itself. Yup. We're already 16 years into the greatest reflation attempt of all time. Link to comment Share on other sites More sharing options...
Guest libertas Posted July 11, 2003 Report Share Posted July 11, 2003 I made what seemed like quite a bit of money from the 1987 crash. At the time, I was using Marty Zweig's service. He advised the purchase of index puts, which I followed. Nowadays it seems like peanuts, but at the time I rushed out and bought a new car with part of the proceeds so I thought I was hot shit. Crashes like that are unique events, and I am sure Marty didn't expect what actually happened - he thought he was just protecting the model portfolio in a high-risk situation. Marty isn't in the advisory service business anymore, doesn't need the hassle I guess. But I think he would be raising the same red flag. Overvaluation, rising interest rates, huge trade deficit, rising unemployment, political turmoil, how many risk factors do you need? Crashes are low-probability events. But the weather seems right. Link to comment Share on other sites More sharing options...
Fukui-san Posted July 11, 2003 Report Share Posted July 11, 2003 Since "Asian Exotica" are such a popular topic of speculation here, I thought I'd provide a video of Ningbo, a city near Shanghai. Population 6 million. Representative of coastal China. Ningbo, China Video Requires MS MediaPlayer. It's a big file - requires highspeed internet download. And yes, there's even some "Asian Exotica" for the wannabe "Rice Daddys" on the board. I'm downloading it now- even with a HS connection, it looks like it's gonna take about 2 hours to DL. Anyone else experiencing the same? Concerning China itself, everything I've read says that they have severe structural and infrastructure problems. Pollution is rampant, human waste disposal is at best medieval, and living conditions near major industrial centers are horrific. It's no wonder that most of the new strains of disease seem to originate there. Is this pretty much a fair assumption? Other people's septic tanks are always seem dirtier, don't they. Recall "killer fogs" in Victorian London. Did you ever drive through Bethlehem, Pennsylvania or Gary, Indiana back when the steel foundries were going full blast? Going further back, think of "Hell's Kitchen" in New York. And then there's "the river that caught fire . . . twice". Cuyahoga River Fire Switching countries, Osaka in the 70's was an industrial hell-hole. Now I can see egrets and herons fishing in the rivers. "they have severe structural and infrastructure problems. Pollution is rampant, human waste disposal is at best medieval, and living conditions near major industrial centers are horrific" You mean LA? The pattern in societies seems to be 1) industrialize whatever the cost and 2) clean up the mess when we can affort to do so. Link to comment Share on other sites More sharing options...
RockLedge Posted July 11, 2003 Report Share Posted July 11, 2003 What did I do wrong? The biggest error was expecting lightning to strike twice. The 1987 crash was an historic event, equaled only by the 1929 crash. "Historic events" don't repeat for our convenience, so that those who missed it the first time can get a prompt second crack at it. Machine thanks for sharing that... But doesn't that work both ways... back to back bubbles? Link to comment Share on other sites More sharing options...
reck Posted July 12, 2003 Report Share Posted July 12, 2003 tend to think we will be very sorry for shipping our manufacturing jobs overseas. Link to comment Share on other sites More sharing options...
CMGI_FAN Posted July 12, 2003 Report Share Posted July 12, 2003 Since "Asian Exotica" are such a popular topic of speculation here, I thought I'd provide a ?video of Ningbo, a city near Shanghai. Population 6 million. Representative of coastal China. Ningbo, China Video Requires MS MediaPlayer. It's a big file - requires highspeed internet download. And yes, there's even some "Asian Exotica" for the wannabe "Rice Daddys" on the board. I'm downloading it now- even with a HS connection, it looks like it's gonna take about 2 hours to DL. Anyone else experiencing the same? Concerning China itself, everything I've read says that they have severe structural and infrastructure problems. Pollution is rampant, human waste disposal is at best medieval, and living conditions near major industrial centers are horrific. It's no wonder that most of the new strains of disease seem to originate there. Is this pretty much a fair assumption? Other people's septic tanks are always seem dirtier, don't they. Recall "killer fogs" in Victorian London. Did you ever drive through Bethlehem, Pennsylvania or Gary, Indiana back when the steel foundries were going full blast? Going further back, think of "Hell's Kitchen" in New York. And then there's "the river that caught fire . . . twice". Cuyahoga River Fire Switching countries, Osaka in the 70's was an industrial hell-hole. Now I can see egrets and herons fishing in the rivers. "they have severe structural and infrastructure problems. Pollution is rampant, human waste disposal is at best medieval, and living conditions near major industrial centers are horrific" You mean LA? The pattern in societies seems to be 1) industrialize whatever the cost and 2) clean up the mess when we can affort to do so. Call me a "suburban bumpkin". Yes, I know we went through the same pollution phases before we mended our ways, and I know other countries have undone their prior damage. But I was talking about China, and in no way meant it to be derogatory, but was searching for the answer as to what I believed was in fact the truth. Please correct me if I'm wrong, but aren't they in a an earlier phase of our environmental evolution, only on a much grander scale given the population there? Link to comment Share on other sites More sharing options...
Hypertiger Posted July 12, 2003 Report Share Posted July 12, 2003 Machine i guess if you had economagic in 87 you would have made a million... Look what happened in 87 also fed funds started dropping in 89 when real estate cratered...Rates in 89 were 10% and now they are 1% at that rate rates would be in the negitves next year... Look what happened in 95 to velocity...An historic event took place... Look at this one what happened in 95? ooops... Look what else happened in 95... Multiple walls of debt were created to fill the holes... As soon as real estate begins to collapse fed funds goes down...Has been since 89... Rasing rates in the current low velocity environment is instant doomsday...sorry... If they don't drop mortgage rates soon it's all over... I suspect they will do something to drop them...because if they don't it will be over... The stock market is driven by desperate people who think having to working for a living is doomsday so the market blowing up in their face is discounted because as long as there is a market they have a chance to escape their obligations to contribute anything to society... I will have the last laugh I always do...I've told people for years what's going to happen I've even done jail time resisting the system...everyone would like me to die in a fit of agony while they giggle and urinate on me in response to my, with my last dying breath, request for water... Ain't going to happen... why am I poor? Because lies and delusion are what makes money... No one can either handle the truth much less pay for it... My dad said I should go to school to get some credentals to back up my knowledge... There is no place in the world for my knowledge except here...everyone else is too busy racing as fast as they can to the cliff edge... In 7-11 months the point at which closing your eyes and jumping will be reached... for the red line to keep moving up the blue line which is federal funds has to keep going down... 1809 basis points have been spent and there is 100 left... Prime rates? How far can they go down? Until banks are being lit by candles? Bankers have to eat...0 prime rate = 0 prime rib... Here's another... those people looking for work are formerly high paid middle class types and their wages have ceased to exist they are gone... Getting close to the alltime record set in the 80's... 1971 was the start of the floating exchange rate debt backed by debt fractional reserve banking system...Looking at this chart I'm lead to believe this is a real good sign... What do I have to wait for? There is more than enough evidence and 1000's of years of banking history to tell me what the future is going to be like... The future is gone... it doesn't exist. the old "We'll survive, life will go on" BS won't cut it... But like I said as long as there is a market you will have a chance... When the debt deflationary death spiral runs out of basis point induced moronic consumer wall of debt explosions...Nothing will stop it... We haven't even begun to go down...We haven't seen anything yet... I just figure 7-11 months until we start to go down is all... Don't worry I'll change my tune as soon as I get more info... If rates across the spectrum don't start to drop significantly it will be over very quick. Link to comment Share on other sites More sharing options...
DrStool Posted July 12, 2003 Author Report Share Posted July 12, 2003 You got my attention. Link to comment Share on other sites More sharing options...
DrStool Posted July 12, 2003 Author Report Share Posted July 12, 2003 Your Weak End Anals Market Wrapdown Friday Nite Quickie Edition is loaded. Link to comment Share on other sites More sharing options...
Pee Brain Posted July 12, 2003 Report Share Posted July 12, 2003 i spit in Wimpy's direction... he has declared war on savings, thrift, prudence and common sense. we are approcahing a time when people will buy bricks (insert your favorite commodity) instead of holding USD. i saw it in mexico, which also had a weakening currency. the killer will be when just one country or group (OPEC?) refuses to accept USD for their products or commerce. free trade is causing deflation; not only of prices, but also wages. a part of what is happening is a natural result of free trade. the BIG issue is debt, because a debtor does NOT control his own destiny, he is dependent upon lenders. debt is exploding rather than contracting. sheeple have utilized lower rates to expand their debt, rather than simply lower debt service. govts have done the same. the US is like blanche in "a streetcar named desire" - dependent upon the kindness of strangers. OPEC will not continue to accept a depreciating currency for their depleting asset. china's confetti is tied to uncle buck becuase its serves their needs for the time being. at some point someone calls BS and then its game over. step outta the matrix. want a guaranteed 5% yield risk free - pay the friggin mortgage off. i dont think this all slides into a blackhole - but it will end very badly for the unprepared and those poor over-leveraged souls. BTW, i was in canton in the 1980's and it looked like a low-grade tijuana. i assume its much better now, but id have never considered living there, even if they were accepting PeeBs. Link to comment Share on other sites More sharing options...
BAREister Posted July 12, 2003 Report Share Posted July 12, 2003 Doc, our children and grandchildren may be being robbed of their futures; we, however, are TRADING them. Mr TwoScrewsLoose: Lightning can and DOES strike twice in the same place. There was a tree on HRFF's family FURm that got clobbered several X. It stood out in the open on a hill. And HRFF knew a Professor at the U of M Skool of Lawr who professed to have been hit by lightning SNOT once, SNOT twice, but THRICE. So many here have succumbed to the reflation paradigm that they think great shorting opportunities are still FUR distant in the future. The BARE posits they are wrong. Link to comment Share on other sites More sharing options...
Guest Posted July 12, 2003 Report Share Posted July 12, 2003 So more and more consumers simply default on their massive unsecured credit card debt. What happens then? Who is holding that debt? The credit card companies? Or have they securitized it and sold it off to state pension funds or other investors? Also, more laid-off homeowners default on their mortgages and walk away, move in with relatives. What happens then? The banks get stuck with the houses? Or CMO investors lose their money? Link to comment Share on other sites More sharing options...
brian4 Posted July 12, 2003 Report Share Posted July 12, 2003 On a quiet Friday afternoon in the sum, sum, summertime the Masters of Deceit led by Jeffrey I Melt-up were felled by their own light sabre! Go to reuters.com and read- G.E. cuts top end of 2003 earnings story is out of the bag at 5.00 EST. "Simply unattainable say Jeffrey" trade safe! Link to comment Share on other sites More sharing options...
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