Posted by
Harvey on Friday, October 10, 2008 3:21:35 PM
Nobody has yet observed or reported that the virtual free fall of the stock market is a sure sign that investors don't like government's intervention into the free market economy. Nor do investors trust, government intervention into private enterprise. It is my opinion, that is why there has not been an up day in the market--maybe one--since the rescue plan was signed into law. Don't expect Congress or the clueless media to notice this. It's too obvious.
Recent market performance also shows that investors have as little confidence in the Federal Government as they do the securities markets.
If you need proof that Congress is occupied by a bunch of nincompoops, just read the headlines of the last couple of weeks.
As an investment professional for 24 years, I saw this market scenario played out several times. In fact the first 18 months of my career--February, 1969, to May, 1970, the market went down, down, down. It recovered. And 17 years later, October 19, 1987, the Dow Jones Industrial Average lost about 22% in a single day, after losing nearly that much in the week prior to October 19. That left the DJIA at around 1,700. It recovered.
The market will recover from this decline also. It will recover because of the laws of economics, not because of grandstanding government interference. The law is supply and demand.
Why is gasoline going down at the pump? Less demand. Consumers didn't need Congress to tell them to drive less (buy less) when prices were high. Common sense told them. You'll be paying less this year for your Christmas presents too, because retailers know they must lower prices to lure cautious buyers into their stores. Their common sense tells them to lower prices, or they will be left with large inventories on which they'll have to pay excise taxes.
So cheer up! We're going to get through this. And . . . if you've been wanting a new HDTV, or a new car, or a new suit, wait around a few weeks and keep watching the ads on TV and in newspapers. There will be bargains galore.
Oh, by-the-way, you can get some really good bargains in the stock market over the next few months too.
But don't expect to hear this on the news. The TV talking heads are too busy yelling, "The sky is falling!" They're too busy quoting finger-pointing idiot Congressmen about how greedy corporate executives caused all this mess. They're both wrong.
What caused this mess is the normal everyday nature of the economy. Excesses are always correct themselves when the weight of the excess get to heavy to tote.
What drives the stock market is fear and greed. Greed drives it up; fear brings in down.
What drives prices is supply and demand. Demand drives prices up; supply drives prices down.
Congress can pass laws until they're exhausted (I can dream, can't I?), and the law of supply and demand will not be repealed.
Do not look to Washington, from where our help will never come! Look to the American free enterprise economy, from which all the material things we have and and all the material things we enjoy have been and always will be created. Until enough pandering pitiful politicians pass enough socialisitc programs to kill it.