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Clickity-clickity-clickity-clickity-clickity-clickity-clickity…….SOWHOOOOOOOSH!

Roller CoasterWhen I look at the graph you’re about to see, I can’t help but think back to my last roller-coaster ride. I can literally hear the “clickity-clickity” of the ratchet mechanism slapping beneath the cars, preventing us from slipping backwards as we’re propelled relentlessly forward in a steep and seemingly unstoppable ascent. I remember thinking that even time seemed to hang in the balance as I anticipate the excitement that surely lies ahead.

Through my colorful imagination, I can literally still feel the jarring push of the cold machinery against my back, along with the heavy, lifeless thunks and vibrations jolting up through the thinly-padded steel seat.

Today, I can’t help but feel a bit of the same familiar “butterflies” in the pit of my stomach as I ponder the possibilities on this graph – along with the heavy implications the down-side may hold for all of us. Perhaps you’ll share my sentiments.

This is a graph of the sharp “bear market rally” that occurred in 1929-1930 overlain with the current stock market rally that began in early March, 2009. Of course, all credit goes to www.papereconomy.com for the creation of the graph and making it available on their site. Click the graph for a clear, full-size view.

Bounce Graph
As alert passengers strapped securely into our vehicle knowing that the arrival of the future is unstoppable, many of us sense that things are about to change in a VERY, VERY DRAMATIC MANOR.

In any battle against gravity – whether physical or financial – we know that up merely precedes down as immutable cycles play themselves out in realtime. We just cannot know EXACTLY WHEN the driving forces will reverse and the new trajectory will begin. Change is life’s only certainty. Certainty of degree or timing is not often a part of that.

As I said above, no one knows precisely when a top will be reached but to be safe, be sure your belts are snugged, your belongings are secured, and PREPARE YOURSELF for whatever lies ahead.

ONLY A FOOL would ever risk more than he can afford to lose. Within your own portfolio, be absolutely sure you know where that limit is.

2 Comments on “Clickity-clickity-clickity-clickity-clickity-clickity-clickity…….SOWHOOOOOOOSH!”

  1. #1 Fred
    on Aug 10th, 2009 at 2:42 pm

    The comparison to the 1970s, when adjusted for inflation, has been much more accurate. Based on the 1970s pattern, the Dow is going to 11,000 in 2010 before it starts grinding down for the next 5 years.
    http://home.earthlink.net/~intelligentbear/com-dj-infl.htm

  2. #2 David
    on Aug 10th, 2009 at 5:58 pm

    Hi Fred,

    Thanks for your input and, of course, you know I am a huge fan of your work. I’m happy you’ve included a link to your website so my readers can easily find their way there.

    We’ll see if either of these historical patterns happen to repeat but let me just add that I view market prediction as merely a “sport” that can, at best, help people develop a generalized frame of reference for what might happen in the future.

    Personally, I much prefer trend-following as a means to managing, protecting, and growing investment accounts. Acting on set-ups, technical patterns, and predictions is always risky and the markets love to use them to take peoples’ money away from them on a regular basis.

    I hope EVERYONE who reads these comments takes the time to click through and visit your eye-opening website!

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