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January 22, 2008

Why should you not be surprised about a severe equities bear market?


"In the face of markets collapsing around the world, a fearful Fed jumped the gun and dropped rates .75 points to 3.5% this morning just before the US market opened. It was a case of -- 'The hell with inflation, save the nation!'

Bush will go along with many of the goofy Dem anti-recession programs. After all, Bush doesn't want to be the first president since Richard Nixon to have two recessions on his watch.

Bloomberg -- 'More than half of the world's biggest stock indexes fell into a bear market as mounting concern about a U.S. recession dragged down banking and retail shares across Asia, Europe and Latin America. The MSCI World Index's 3 percent decline yesterday, the steepest since 2002, left benchmarks in France, Mexico, Italy and 35 other countries at least 20 percent below their recent highs. Declines today turned Indonesia, India, the Philippines, Taiwan and Thailand into bear markets as well.'

Russell Comment --I've never subscribed to the '20 percent rule' regarding that definition of a bear market. Actually, my subscribers knew it was a bear market on November 21 when the Dow Theory first signaled that a primary bear market was in progress. I suggested that the 'preferred' position was cash and gold. That's still my stance with the exception of those who are in serious long-term compounding programs.

Since the first of this year, this bear market has wiped out five trillion dollars in world equity values. Over the last 24 hours, over $350 billion in values has been erased from the US market. That's more than twice the $150 billion being proposed by the various rescue plans.  This bear market is proving to be an expensive beast. But that shouldn't surprise anyone. After all, this bear may be correcting or at least partly-correcting a mighty 20-year old bull market."

*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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