March 2nd, 2008

Schwartz of NYTimes Agrees

I didn’t pick up today’s NYTimes Business Section yesterday before I wrote 1973 and 2001 Market Crashes and Today’s S&P 500 Index. But it’s good knowing that you’re in good company even if the news isn’t what you’d like to hear.

Today’s Market Maker column by Nelson Schwartz entitled “A Rerun, Maybe, but of What Show?” leads off with a shadow of my post yesterday:

“Is it 1989 all over again? Or 2001? Or, for those old enough to remember, a replay of 1973-74?”

And then the quotes that support my contention for the past several weeks, every since my February 15 post, “10-20 days to a stock market crash“:

“Mr. Wien [of Pequot Capital] sees similarities between now and 1973-74….”We could easily see another 10 percentage drop for the S&P…it’s right to be cautious.”

Mr. Levkovich, of Citigroup:

“has crunched the numbers from several volatile periods on Wall Street ….’I would probably go with the 2001-2 scenario….Now we have a credit and housing bubble deflating; then it was a tech bubble.'”

Many are willing to go further out on the limb and predict that after any decline, the recovery will be swift and sharp with major earnings jumps. As reported in the Times article,

“First Call reporting that analysts now foresee an 18.6 percent jump in earnings in the third quarter, and a hard-to-image surge of 51.9 percent in the fourth quarter. That kind of recovery seems a long way off right now. But in the unlikely event that it does come to pass, the turnaround of 2008 will go into the reocrd books as another period that Wall Streeters will take about for years to come.”

They didn’t come to me about this call about a decline …. perhaps they’ll call me when I write that my Market Timing Indicator (MTI) signals that it’s safe to buy stocks again.

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