Most of the investors are under panic not because of sudden and unexpected market crash of more than 50%, but due to their portfolio erosion of more than 60-80%. In an average stocks are down 75-90% from their peak. But do we really need to worry? I would say yes for anyone who entered the market only during last 1 year and doesn’t have any other source of income. But those who are young and energetic, who has biggest asset called time in hand need not worry about such market falls.
Just look at the DOW chart from 1928 till 2008; do you know in 1929 there was biggest crash in the US market when DOW was 90% down, it was called greatest depression of all time. Are you able to see 1929 crash in this chart, NO; it is not visible compare to rise during last 10-20 years. Similar crash was in 1987, which is also not visible or noticeable; means all these market turmoil will get over one day and when you look back you will see these crashes were nothing in front of risk you have seen in the recent time.
So, in 2011 when Sensex will be at around 30,000 levels as per HBJ Capital’s estimates; you will find 50-60% correction in 2008 is nothing in front of rise in the market. Not to forget that, the more the market will fall, the more it will rise because prosperity is always hidden under destruction. So, be happy, enjoy your life and keep investing systematically in 10in3 stocks only for massive wealth unlocking in your life.
Will The DOW Lose 80% Of Its Value?
This Stock Market Crash Is Of Biblical Proportions
Please take a look at the above graph. This is a graph of the DOW Jones Industrial Average from October 1928 to the present. .
- Can you see the stock market crash of 1929? - On this graph it really can't be seen. That means, compared to the scale of events currently, it was trivial.
- Can you see the stock market crash of 1981? - At the time, it was considered to be a very serious stock market crash. But, compared to 2008, this stock market crash is barely visible. The recession that followed was terrible. Mortgage interest rates shot to 23% and houses dropped 55% in value.
- Can you see the stock market crash of 1987? - Again, at the time, this stock market crash was considered to be a very serious stock market crash. The recession that followed this crash was crippling. But, again, compared to 2008, this stock market crash was puny. In 1990, Japan's stock market crashed and never recovered.
- Can you see the stock market crash of 2000? - This was a terrible stock market crash, and most of the people lost one-third of her retirement savings in this crash. The NASDAQ index (high tech stocks) never recovered from this crash, and permanently lost 50% of its value. This is the first stock market crash that is clearly visible on this historical graph of the DOW Jones Industrial Average.
Deregulation Of The US Stock Market Since 1987
The above graph of the DOW Jones Industrial Average is colored green and red. The green part of the graph, I believe, is the "real" value of the DOW Jones Industrial Index. This represents what the value of the DOW would have been were it not for speculation. The red part of the graph, I believe, is the falsely inflated value of the DOW due to speculation (and fraud).
For decades since 1928, the DOW slowly increased in value until 1987. Then, it suddenly went ballistic after 1987. What happened in 1987? President Ronald Reagan in August 1987 appointed Alan Greenspan to be Chairman of the Federal Reserve. Greenspan held this appointment until 2006. As Chairman of the Federal Reserve, Greenspan brought about massive deregulation of the financial market. He effectively blocked any attempt by government to check the greed and stupidity of Wall Street.
Since 1987, the DOW (and many other global stock markets) experienced an unprecedented growth fueled by rampant speculation and insane borrowing. American became the world's greatest debtor nation. In 2008 that stock market bubble burst. Many nations are now discovering that their banks were massively lending money that they didn't have. One by one, nations are running out of foreign currency to pay for their imports.
Iceland has gone bankrupt, and Pakistan will lack foreign funds to pay for their food imports in December. Greenspan convinced consecutive American Presidents that the US could spend its way out of debt. The US national debt now stands at between 10 and 53 trillion dollars (depending on whether you factor in Social Security, Medicare and Medicaid into the government debt). Many US government economists predict that the US will be bankrupt within the next 10 years.
This is a financial disaster of biblical proportions. It started with Greenspan, and it came to fruition under President Bush.In the next few years, the average citizen will suffer terribly while the rich and powerful will walk away from this unscathed (thanks to our government bailouts for big business and banks).
Our Prediction:-
- Japan is the world's second largest economy. In 1990 its banks failed and its stock market crashed. Subsequently Japan's stock market lost 80% of its 1990 value, and has never recovered. I believe USA will follow exactly in the footsteps of Japan.
- But, when US will go deep into recession, global money will look for growth and it is India/China is the place where growth is. So, get ready for fresh round of money flow again in India. Have confidence in our own country and own ability. India is one of the best place today to be in and to invest in.
- Sandeep Jain
1 comments:
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