The Panic Continues ...

The Panic of the Rich continues.

I suspect the common man is panicking, too. Anecdotally, I was speaking to my old insurance agent in NYC, who caters to quite a gilt-edged clientele (much more than me). He told me that stunning numbers of them had, or were, going to all cash and buying fixed rate, life annuities in huge amounts.

Yesterday was no doubt more than tax loss selling, but it's clearly there, too.

From my 100 year wall chart of stock prices and economic indicators, the great bear market of 1973-1975 might be a good model for this bear market. Roughly, the broad averages were down about 45% from the prior year's high. The selling continued into the end of the year, then a powerful rally occurred in 1975.

A friend sent me an interesting histogram showing annual returns of the S&P from 1825 to 2007. The worst year of all was 1931, an outlier with a drop in the range of -50 to -40% Year to date, 2008 falls in this exclusive club.

To me, it seems like the bears and panic-mongers want to push for new lows. Knocking so hard on the support levels for so long usually breaks through. If there are enough of them, they can do it.

Actions

Doing nothing. I can't even re-balance Krypto Fund due to tax loss and fund exchange restrictions. Quite frustrating. I might put more money into my Alpha Fund before year end or in early 2009.

Word of the Day

"Monism" - noun [$10]
Monism means 1. any theory denying the duality of matter and mind; 2. (philosophical & theological) the doctrine that only one supreme exists; 3. a metaphysical system in which reality is viewed as unified whole.
Sentence: A propos the stock markets, one could characterise both pure fundamental and technical analysts and adherents as believers in a form of monism: denying the duality of perception and reality. Today, clearly perception rules, as it does in extremes of fear and greed. But at some time, a panic will burn out as the fuel is consumed. The lurch to reality will then begin.