Monday 8 February 2010

The end is not nigh?

Journalist, author and personal investor Charles Hugh Smith does some technical analysis on the Dow Jones that suggests the market bottom may be years away, perhaps in 2020-2022.

For some time, I've suggested that we are in a period analogous not to the 1930s but the 1970s, and there was a long (16 years) decline in the Dow, in real terms, between 1966 and 1982. It then took another 17 or 18 years to the market peak of end 1999.

That's not to say that the current decline will follow the same sort of timetable, or even the same trajectory. The human mind is good at seeing patterns, even where (like the canals of Mars) they don't exist; and the human wallet is vulnerable to being thrown at such patterns.

However, part of my reason for recommencing my financial services brokerage now is that I believe we have some years of (on average) decline, during which I can be gradually building my clientele and preparing to help them take advantage of a real long-term upswing later. Meantime, I want to help them avoid losing money in the "sucker rallies" of a secular bear market.

Day traders and other gamblers, good luck; I'm sitting out, for now.

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