Great Depression Online Archive Issue:

Don't Do It

Great Depression Online
Long Beach, CA
October 23, 2009

Inside This Issue You Will Discover…

*** Police and Thieves
*** Giving Way to Delusions
*** Don’t Do It
*** And More

Police and Thieves

It’s a shame how our fellow man doesn’t learn from his mistakes.  It’s as if he’s drawn to delinquency and dereliction like a small child to hot stove…he always wants to touch it – even if it burns him.

Albert Einstein once remarked, “The definition of insanity is doing the same thing over and over again and expecting different results.”

For most of us, we’re merely doomed from the beginning…we’re insane, we just don’t know it.  Take one nutty 41-year-old man in Germany.  On Tuesday, he was due to face questioning at the police station over a theft he’d allegedly committed.

~~~~~~What You Must Know~~~~~~

Nikolai Dmitriyevich Kondratiev was an economist who was in the wrong place at the wrong time.  Caught up by Bolshevism in Russia, he undertook a grand study of capitalist economic cycles.  Alas, his research seems to have taken him exactly where Stalin didn’t want him to go.  He was executed by a firing squad in Stalin’s Great Purge of 1938.  But before going to his grave, Kondratiev published a number of essays explaining the inescapable patterns of capitalist economies.  Discover how you can turn Kondratiev’s work into the biggest profit windfall in three generations. 

What You Must Know

~~~~~~~~~~~~~~~~~~~~~~~~~

He was, no doubt, traversing his way to his scheduled police station appointment with the best of intentions, when, if you can believe it, he made a quick detour to commit a robbery.

“It was a case of ‘just nipping out to do a bit of thieving before being interrogated for shoplifting,’ police in the western region of Lippe said Tuesday,” and reported Reuters.

“Officers were following up a supermarket robbery in the town of Blomberg with detailed descriptions of two thieves and their getaway car when they had to return to the police station.

“To their amazement, they said they discovered a man at the reception waiting to be interrogated for shoplifting who looked suspiciously like one of the pair wanted for the morning raid.”

And wouldn’t you know it…

“Outside they found his accomplice sitting with the stolen goods in a car with the matching number plate.”

Giving Way to Delusions

Here at the GDO we disparage robbery and theft.  Instead, we respect public and private property for all their usufructs.  Plus there are so many honest ways to make money, why bother with crime?

Still, we highlight the story of the shoplifter addict for a good chuckle and, more importantly, for instruction…

The stock market, in a general sense, is nothing more than a reading of the collective opinion of man.  Is he driven by greed or motivated by fear?  The stock market will tell you the answer.

But as the stock market pushes to the extreme in one direction or the other, man’s perceptions give way to delusions.  What’s more, the further a trend moves into outer space, the more the delusions become self-reinforcing. 

Like the delusions of a stock market bubble…the higher prices go the more people want to buy them.  Then, when there’s a market crash, the masses liquidate their holdings for a small fraction of what they bought them for…it makes no sense.  Yet over and over again investors make this same mistake.

Don’t Do It

If there was ever a time to not make the mistakes of the past, now is it.  But to remember what mistake not to repeat, one must look back a long, long time.

“When was the last time asset allocation did not really provide the diversification and protection it was supposed to?” asked a story on yahoo finance.

“When was the last time, a ten year investment in the stock market delivered negative returns?

“Investors that care to harken back 80 years will find that the 1929 - 1932 era is the only period of time that compares to today.  In fact, the parallels between now and then are bountiful and scary.

“Following the initial 48 percent decline in 1929, the Dow Jones rallied 48 percent within a period of six months.  This rally was powerful and retraced 52 percent of the Dow points lost in the initial decline.  Even though the market was far from its previous highs, investors had once again gotten excited about owning stocks and felt confident that the market would continue to move higher.

“On March 25, 1930, just a few weeks before the waterfall decline resumed, the New York Times reported that ‘Wall Street was in a cheerful frame of mind as a result of numerous vague reports of improvement in business and industry.’

“Once the bear market resumed, it erased another 86 percent of the Dow’s value.”

We believe the stock market will reverse to the downside.  Maybe not tomorrow, or the next day…but soon.  Of course we don’t know any more than the next guy.  We have no prophetic vision of the future. 

Still, we believe the stock market will drop if for not other reason than that after a bear market rally, that’s precisely what the stock market does…it drops.  So with whatever willpower you can muster…deny your natural penchant for delinquency and dereliction…

Buying stocks right now is insane: Don’t do it.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  Fortunately for those with the foresight and guts to take matters into their own hands, they’ll turn this debt induced economic crisis into the biggest profit windfall in three generations.  While the economy sails over Niagara Falls, you’ll be sitting safely on the shore above. 

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