Sunday, September 21, 2008

Food for thought

For those pronouncing that the bear market is over, the bottom has been reached, etc etc...a possible red flag for you to consider.

I have read that the two day rally in the US in the last week has been the sharpest since...1929. And what happened in the aftermath of that? The US ended in a depression and the markets fell a further 80%. It took the Dow more than 20 years to reclaim it's previous high.

For a more modern take, look at Japan. In the late 1980's and early 1990's, the Nikkei was about the 40,000 level. As of now, it is still just below 12,000. And that is after interest rates were dropped to zero.

These are unprecendented times, what with the intervention in the markets by the various Governments and Authorities. If you ARE thinking of piling in and going long, obey your stops and observe your risk management.

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