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Joseph,

I've thought some more about Joe Coleman's point and about my own use of the term "bubble."

In 1720, when the South Seas Bubble burst, the market crash that followed took the average stock down 98%. In 2000, when the mania peaked and the most frothy of stocks crashed, the average stock did not crash. That is a significant difference and as I said before I attribute it to the fact that the underlying mania was (and still is) being fed by the authorities as no previous bubble's mania has ever been.

I do expect all hell to break loose when the credit bubble bursts and I think what the average stock will see at that time will be a sort of delayed reaction compared to what the average stock saw in 1720.

I don't know whether that means I'm in the camp that believes there was and still is a stock market bubble, or in the camp that believes there was a stock market bubble and there is still a big part of it left, or what, and I don't think it really matters that much. My view is clear enough: we have seen and are still seeing the greatest mania, the greatest hubris, and the greatest denial in a very, very long time, perhaps in all of history; it's not over yet; and when it is, it ain't gonna be pretty.

Regards,

Bill

Joseph Barbuto <> wrote:

Bill, be patient if you look at all bubbles there are based on one thing, fundamentals.

Valuation defines risk, it has nothing to do with timing, this market will do in time what is always has done proved the majority wrong.

Let the bulls give you all the reasons for this market, manias and bubbles will end as the always do, back to long term valuations based on real earnings, book value. There has no exception on record. why would anyone invest with those odds are beyond me. Joseph B

----- Original Message -----

From: William Tamblyn

To:

Sent: Tuesday, January 27, 2004 1:30 PM

Subject: [Longwaves Forum]Re: The Tale of Two Times

Joe,

The credit bubble will I think end in a crash - including a stock market crash.

Regarding the stock market of the late 90s to present, Joe Ehardt says it was only a few stocks that were in bubbles, he says they crashed, he says the bear market that resulted is over.

I disagree. I think the mania, the hubris, and the denial that were behind the bubble in the few stocks Joe talks about are still alive and well. I think the vast majority of stocks are still grossly over-valued. I think when the credit bubble bursts it will very likely mark the end of that mania. And there's going to be hell to pay at that point IMO - for almost all stocks.

I doubt the average stock will drop 98% over a two-year period as it did following the 1720 bubble peak, but I think it will drop long and hard. I think it is at least as likely as not that there will not be much of a stock market at all by the end of the next Longwave.

So what camp does that put me in? The camp that believes there was and still is a stock market bubble? I'm not sure. But it is my view that mania is still with us - and will be until the credit bubble bursts.

Regards,

Bill

Joe Coleman <> wrote:

Bill, by definition, bubbles do end in such manner. Your argument is classic non-sequiter logic. If one posits we are in a bubble, and all previous bubbles have burst with significant consequences for all those in the bubble, does it not follow this bubble will do so as well.

Joe Coleman

----- Original Message -----

From: William Tamblyn

To:

Sent: Tuesday, January 27, 2004 12:26 PM

Subject: [Longwaves Forum]Re: The Tale of Two Times

Joe,

I don't agree that all bubbles must end in crashes just because all past bubbles have ended in crashes. The present mania is being fed by the authorities as no previous bubble has ever been. They have managed to keep total credit growing, they have managed to keep unemployment from soaring, and they have managed not only to keep stock prices from collapsing but to get quite a strong market bounce. Some think they can continue to pull this off indefinitely. I am not among them.

Regards,

Bill

Joseph Ehardt <> wrote:

Hello Bill,

Bubbles end in crashes, both being of relatively short duration and excessive in nature. Millennial or centurial period declines of civilizations are gradual by comparison. The case for the latter kind of decline is much stronger than the first.

Joe

----- Original Message -----

From: William Tamblyn

To:

Sent: Tuesday, January 27, 2004 4:00 AM

Subject: [Longwaves Forum]Re: The Tale of Two Times

Joe,

It is my view that the market mania that ended (or at least appears at this point to have ended) in 2000 is not merely one degree larger than the one that ended in 1929 but at least two. In other words, at least one degree larger than the one that ended in 1720.

An immediate crash is not necessarily the result of such a gigantic top, and the bottom of the gigantic down-wave that follows such a top does not necessarily come within a matter of years. Think of the decline from the Golden Age of Rome to the depths of the Dark Ages, Joe. If I'm right the present decline will be at least that large in degree and could be at least that long in duration.

Regards,

Bill

Joseph Ehardt <> wrote:

I recall during discussions in CY 2000 that Superbears were making two claims. One was that the peak in that "bubble" reflected, in Elliott Wave terms, a market top that was one degree larger than 1929. IOW, a more severe crash than 1929 was to be its hallmark. Second was that the decline in the 1929-32 market would be the minimalist model or profile for the decline in the current market.

As I worked contemporaneously on my own technical studies, it became my conclusion was that the peak in the current era market was one degree smaller rather than larger, which meant that the market would not immediately trace out the utter destruction in valuation associated with 1929-32.

In the attached charts, the peaks in the DJIA in these two time periods have been synchronized to occur at the same point in the chart.

I wonder -- almost 1,000 days later, did the market confirm the contention of the Superbears or did it lend considerable credibility to the alternative analysis?

Joe

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> ATTACHMENT part 2 image/gif name=Comparison of Two 2000-Day Periods in DJIA.gif