Stock Market Rallies: Shades of the 1987 Crash.

Reagan didn't care much for deficits either. The stock market felt an enormous surge today, and just like under Reagan, the bull is dancing on thin ice.

On an online MSNBC poll <http://www.msnbc.msn.com/id/7088661/#survey>, people were surveyed with the following question: The Dow Jones industrial average is just shy of 11,000 and at a multi-year high, so where will the stock market go from here?

The choices and results are:

• I'm bullish. The Dow's going above 11,000 and it's staying there. 57%


• This is about as high as we'll get this year. We're going lower. 25%


• I'm staying on the sidelines and holding on to my cash. 16%

Well, this seems to be the same feeling investors and the general population got around 1986 when the stock market started feeling randy. In 1987 though, the stock market crashed, and hard. Black Monday, on October 19, 1987, the Dow Jones Industrial Average lost 22.6% and the Nasdaq Composite lost 11.3%. This was the largest loss in the history of the stock market. This event also set the stage for an impending recession that George H.W. Bush mostly had to deal with.

What were the causes of this stock market crash? Well, take a look at the following possible reasons for the crash, many of these will sound very familiar....

• Rapidly increasing short term US interest rates


• Rapidly increasing long term US interest rates


• Deteriorating US current account deficit


• Escalating US government debt


• Very high price-earnings-ratios


• Very low dividend yields


• Very bullish investor sentiment figures (see above)


• Deteriorating "market breadth"


• U.S. Trade deficits


• Overevaluation of stocks (which starts now)


• An increase in SEC investigations

Still feeling comfortable?

SOURCES:
http://www.sniper.at/stock-market-crash-of-1987.htm
http://hnn.us/articles/895.html
http://www.investopedia.com/features/crashes/crashes6.asp

there would be a plunge in March. Now that March is here, I hoping for another month to pass first.

Speculative frenzy fueled by 0% down loans, interest only payback loans, dozens of credit card apps a day in the mail....the masses have gourged in Bush funny money trying to keeping the illusion intact.

Wait until the hammer drops and they learn they have lost their bankrupcy protection. Wonder if they'll bring back debtors prison.

"But Uncle Alan said to we should get variable rate mortgages"

Bwhahah!

is supported by habit, hot air, and wishful thinking. Neither has much to attract a rational person. P/E ratios are still totally out of whack, indicating the market is massively inflated and overdue for a correction.

My only guess is that funny money is flooding in to buy up all the stock being dumped by corporate insiders so that the DOW will stay steady and lull the rubes into thinking it's 100% safe and a good place for their social security premiums.

The country, as we know, is a superpower with no industrial infrasctructure that is afloat on a sea of debt held by its enemies.

Both are heading for a reckoning. The only question is how long it will take to arrive, and how many of us it will destroy when it gets here.

Greenspan is flooding "liquidity" into the system to keep the market inflated for a few more months while * continues to hammer home his view that Social Security must be "reformed" (not coincidentally also flooding "liquidity" into Wall Street).

If we reach a point, say in June, where it appears that not even flying airliners into the Social Security Administration headquarters can jump-start this dead puppy, THEN the market will suffer a devastating crash.

The aftermath of that will be all the cable news channels, especially CNBC, informing America 24/7 for the next couple of years or until Chimpy finally privatizes SS, whichever comes first, that the "obstructionist" Democrats are to blame for the plunging market.