Procrastinet

Free Fallin'

filed under: Stuff to worry about

I have a long history of attempting to prevent disaster by pre-emptively panicking about it. Click the heading "Stuff to worry about" above for many examples (no bird flu pandemic yet, right? You're welcome).

So here goes again: as the Dow and the S&P 500 set new record lows every day (we're back to 1997! To 1993! To 1932!) I read at Minyanville that the extremely bright Kevin Depew thinks that we've got a long way down before we can expect a bottom, because the entire psychology of the market (and by extension the country) has to shift before we can start to put things back together.

Key graf:

...going back to the early 1980s, as social mood began to shift from negative to positive, it became necessary to view long periods of benign economic conditions as the norm, and short periods of negative economic conditions as cyclical interruptions in the primary positive trend. That must be reversed now.

We are going to be experiencing long periods of harsh economic conditions interrupted by far more brief periods of improving conditions. Adjusting to this will be difficult. Many false starts in the form of brief economic bright spots will appear, but the inevitable return to the primary negative trend will crush any brief bursts of optimism until all reasonable people conclude there is no point in embracing optimism because things are only going to get worse. And at that point, we will have reached the bottom.

Read the whole thing here, though it turns into "technical analysis" which I think is the modern day equivalent of reading auguries in entrails.

Posted by rjt at March 6, 2009 01:30 PM