I take an extended holiday leave, and look what happens…
… the market more than bounced back from Friday’s horrific decline: The Dow recovers upwards of 10% (900+ish points) and the Nikkei posting a staggering single day gain of over 14%.
Is this a dead cat bounce, or the beginning of general hyper-volatility exacerbated in no small way by the market’s lack of confidence in either party or in either party’s candidate?
I think this is one big dead kitty with several more bounces left to it before it settles to the pavement… and though I regret not having been in with my “truck” to load up on value stocks, patience and forebearance may make better watchwords for these days.
Parsing through my wife’s copy of Dr. Takahiko SOEJIMA’s 【副島・隆彦】 latest book, 恐慌前夜 アメリカと心中する日本経済 or Romanised as Kikyō Zenya Amerika Shinjyū Nihon Keizai (I would roughly transliterate this title in English as “The Panic Before the Nightfall: The Double Suicide of the American and Japanese Economies”) 1 provides an interesting outside perspective.
Granted, Dr. Soejima is a bit of a doomer, and seems to think that the market will crumple significantly after the New Year… but given his track record of predictions regarding the economy (being markedly wrong only once during his long career) he might bear some listening to. In his latest book, he indicates that the Dow could crater as low as the 3,000s, and that the dollar will undergo a near-Weimar hyperinflation and devaluation to around 30 yen per dollar (the yen has traded around the 105-115 yen to the dollar average range over the past decade).
That’s pretty drastic… even in my worst case scenarios, I find it somewhat incredible that the market would break through the 1998 level supports (I believe that we will fall below the 2003 support for certain by the new year).
However, following the near-double digit volatility in the markets and the certainly double-digit swings in the Nikkei and Hang Seng indices, this gives me great pause… and leaves me wondering how or if these wonky markets will stabilise.
Considering that this bear market is just getting warmed up, and with volatility like this, the next 18-24 months could prove to be one heckuva rollercoaster ride.
 Published in Sept. of 2008 by Shōdensha. ISBN: 978-4396613143 in Japanese language only. This title does not seem to be circulated on either Amazon.com or its Japanese-language site as of October.