Tuesday, August 9, 2011

Equities 2011: More Like 1987 than 2008 (or is it 1903? 1998? 1873 was pretty bad...)

We're using 1998 as our template but in the end this is just chatter, the rule yesterday was "He who panics first, panics best".

From MarketBeat:
Some of your best-known stock-market talking heads have decided this morning that the 2011 market crash, and let’s just go ahead and call it that, feels a lot more like 1987 than 2008.
The ubiquitous Doug Kass of Seabreeze Partners Management, in a note this morning, writes:
In an early-morning email exchange with Jim “El Capitan” Cramer, Jim reminded me that the price behavior of the U.S. stock market over the past week most resembles the October 1987 crash, a period of incomprehensible and unpredictable price action that did not necessarily reflect the economic fundamentals.
And for all we know, based on the magnitude of the price drop in the last week, we might have already fully experienced 2011′s version of the October 1987 crash. My guess — and I think Jim might agree to some degree — is that most of the downside could already be behind us.
What about the comparison to 2008?...MORE
Being old I always assume it is my right to give history lessons:

  • Nineteen and aught-three sonny boy. Like 1907 it was a Rich mans panic. Like now, the public wasn’t involved. And also like now it was the damn machines. The ticker tape allowed folks who were off the floor to panic along with the guys on the floor.

    “…This so-called Rich Man’s Panic was over by late August, and J. P. Morgan’s return from his annual European art-collecting expedition helped restore confidence. By October, prices were on the way up.

    The Rich Man’s Panic was merely a brief interlude in the bull market, but it was of great significance. The upper class, the insiders, suffered in 1903, not the small investors.

    Early in the year the latter went on a “buyers’ strike,” having decided that prices were too high. They sold in the early spring — along with the astute managers of the Standard Oil Empire — while Gates and most professionals bought. It was the first example of the new power of the small investor, a power which would not be fully recognized by the usually sensitive Wall Streeters for another generation….” -Robert Sobel “The Big Board, History of the New York Stock Market,”

    And then the wheel of fortune turns and the individual gets crushed by the pool operators in 28-29. Memories fade, Mother Merrill brings Wall Street to Main Street in the 40′s and 50′s…

    Saaayyy… a pattern is beginning to emerge here.