On
the 12th of last March, I think a thought seemed to float through suggesting
that there just might be a possibility of a rather significant pullback of all
of the major stock exchanges in this world that could (how has that been for
hedging so far?) reach catastrophic proportions when the [Dow Jones Industrial Average] reaches 15,238.00. Now, I do
not think that it will be quite as bad as it was in [1929], but it will
certainly be bad enough for those caught in vulnerable financial situations.
No,
I cannot say that I was given that from our Heavenly Father, but aside from the
specific starting point, we are ripe for a major fall. For as it was with real estate during the
height of the [subprime loan orgy], so has it been with at least the American
stock exchanges for the last couple of years.
Okay,
there are some major differences. For
during the subprime loan orgy, large financial institutions were either
offering or guaranteeing very large mortgages on such select properties as
Mississippi swampland, with the only “improvements” being what was left of trailer
houses deposited by [Hurricane Camille] almost 40 years earlier. Whereas, what has been going on with the
stock exchanges involves large financial institutions directly participating in
the trading of grossly overpriced stocks.
For what does it matter if the Dow Jones Industrial Average keeps
skyrocketing when the economic future of this country looks so very
bright—despite how bad it looks for almost everywhere else?
Yeah,
yeah, yeah, many (if not most) of the highly respected stock analysts keep
insisting that many stocks are actually grossly underpriced in respect to their
[Price/Earnings Ratio] and the prices of comparable stocks in the past, but
just who are trading these stocks?
In
far too many cases these days, the vast majority of stock trading is being done
by institutions using [high frequency trading] computer programs, with algorithms
that are set to make huge trades at a fraction of a millionth of a second when
a stock price reaches a certain point, which may be as little as a penny up or
down. Hey, if you can sell a million
shares of something at $346.34 a share after you have bought those million
shares a second or so before at $346.33 a share, you have just made a cool
$10,000.00 in a second or so, and those transactions go on several times a
minute all day long!
Alas,
some may say that I am being plumb unpatriotic.
For they want to believe that the reason why our stock exchanges appear
to be doing so well is because of all of the confidence there is in this
country being all that it can be for years upon years to come, but all it would
take would be North Korea landing a nuclear-tipped missile in downtown Tokyo or
Seoul for economic chaos to break out all over.
No,
it would not take anything that drastic.
For when [The Fed] loses the will to keep pumping billions into the
American economy through [Quantitative Easing], the rich boys and girls are
going to take their stock market profits and lock the doors to their mansions
behind them as quickly as they can.
Hey,
it may even be something as simple as a bunch of big shots waking up one
morning and wondering what they have been thinking the last couple of years. Thankfully,
there are not nearly as many little people invested in stocks now as in days
past, but the repercussions from the crashing stock prices will still be heavily
felt far and wide.
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