Y2K and the Collapse of the Stock Market

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Hi, gang. I've been seeing fewer stock market posts, and I've wondered if the resident doomers are becoming more bullish.

FWIW, I believe that we are witnessing the biggest, grandest and most awesome bull run in the history of the world. Can you deny what is happening in the global financial markets? The mania is FEVERISH!

Alan Greenspan is continously injecting liquidity in order to prevent any potential Y2K fears from imploding the financial world, and the extremely adroit investors know his tricks. They buy and sell and make much money. However, the rest of the investing herd just follows along with *moos* and *grunts* of satisfaction. Whatever they read and hear that is positive is good enough. Yes. Buy on the dips and hold on to that rocket ship to the moon and beyond! YESSS!!

Mars is the next investment frontier. Monitor the Engine Room, Scotty, because we are entering Warp Factor Y2K! YeeeeeeHahhh!

But you know this mania cannot last. Such inflationary growth is IMPOSSIBLE to sustain. Those who possess common sense know this, but do those of lesser understanding perceive the warning signs?

The value of the Euro is pathetic, and the Japanese Yen is gaining strength. The dollar will become weaker and weaker in proportion to the amount of liquidity which Greenspan offers. But they lap it up like ants on spilled honey.

Who still believes that the stock market will crash BEFORE Y2K?

Who still believes that the stock market will crash AFTER Y2K?

Please support your responses with common sense because I am open to more learning.

I have appreciated all of your responses.

May God bless you.

Dino the Saur

-- dinosaur (dinosaur@williams-net.com), December 04, 1999


Financial Markets will be toast!!! Probably for months>

-- Frodo Baggins (Alex5@localnet.com), December 04, 1999.

For those people who do not have enough ready cash and are depending on dumping a few stocks in order to have some, it is speculated that this will occur in the last week of the month, keeping it in the market as long as possible. However, anyone can see how this would make the market crazy. A crash could be possible at this point, or certainly after the panic sets in. Actually, there are so many factors that make it tenuous that anything could send it plummeting. Personally, I can see it happening before 2000. My husband and I pulled out a long time ago. I want all my eggs in MY basket, not someone else's....

-- Kenin Marble (kenin17@yahoo.com), December 04, 1999.

Dino, it has been one of the greatest bull runs of all time. It has been rewarding for many, including me. I never thought that Y2K would spook the markets leading up to the rollover. The market "players" are following the trend - its been up since August 1982. Certain people including myself beleive that perceptions will after change 1/1 and so then will the trend.

I hope to summon the nerve to create an index based straddle - simultaneously buying a put and call - in late December. The market will either surge ahead in a relief rally or dive in panic.

-- gary (a@a.com), December 04, 1999.

Dino, it has been one of the greatest bull runs of all time and rewarding for many, including me. I never thought that Y2K would spook the markets leading up to the rollover. The market "players" are following the trend - its been up since August 1982. Certain people including myself beleive that perceptions will change after 1/1 and so then too the trend.

I hope to summon the nerve to create an index based straddle - simultaneously buying a put and call - in late December. The market will either surge ahead in a relief rally or dive in panic.

-- gary (a@a.com), December 04, 1999.


In a pessimistic doomer mode, I believe that once the orchestrated global collapse occurs, the masses will panic. There will be millions of deaths and cries for order and desperate pleas for a REAL leader.

The mainframe of the New World Order will entail many changes, a complete paradigm shift of economic realty. Events which you have not expected will reach fruition. Many will be surprised at the changes of world events.

People will pray for a leader who can save them from their problems. And from this complex scenario will arise a new leader, a genius who has all of the solutions, a man who will bring *peace*. This will be the anti-christ. He will possess dark understandings of the supernatural realm and will be able to anticipate plots against him. He will obtain adulation from the masses. They will worship his genius and will accept his mark. With his mark they can buy and sell and prosper and party on. Those who won't accept his mark will become his enemies, and they will be destroyed!

Y2K is just the first domino. The subsequent cascading problems will only help the goal of his scheme. His nefarious plans are very deep and arcane. We do not know them - yet...

I expect the pollyannas to believe every stinking lie he spouts.

-- dinosaur (dinosaur@williams-net.com), December 04, 1999.

Recent relevant articles to ponder from www.gold-eagle.com:

Gold & Stock Market Update (11/29/1999)

Leverage Fuels Stock Market Bubble ... Bubble Fuels Leverage (11/30/1999)

Chains of Paper (12/6/1999)

27 days.

-- Jack (jsprat@eld.~net), December 04, 1999.

People wonder about this month of December. What will happen? Will Japan experience a disasterous earthquake in Tokyo? Will a cyberterrorist bring down the Internet? Will a spy detonate a nuclear bomb in a major American city?

We don't know what will happen in December. I believe there will be some unexpected surprises.

Meanwhile, if you have ANY common sense, then continue your preps and don't stop. Remember, YOU are needed to help those who are too foolish to prepare.

-- dinosaur (dinosaur@williams-net.com), December 04, 1999.


-- hohum (xyz@23.com), December 04, 1999.

Financial planner Stephen Gadsden and I put out our belief Y2K will be the trigger to burst the stock balloon in the book, Krash! How Y2K could sink the stock market (McGraw Hill: available Amazon.com mentioned by Ed elsewhere on this site). It was remarkable that virtually every person who studied Y2K and was knowledgeable about stocks felt Y2K would be bearish: Yardeni, Tony Keyes, Dennis Grabow, James Davidson, Grant Jeffrey, Don McAlvaney, and many more. Another Canadian,Wayne Lang, has written Crash? Boom! Bang!! with a similar premise: the two of us have been on Canadian TV as a duo lately. But the view is very unpopular with the banks and fund companies and of course the expectation that the market would come off in a pre Dec. 31st "psychological sell-off" has so far proved wrong. In our Titanic analogy, it would seem only the arrival of the Jan. 1st iceberg can slow the madness now. And of course, if Y2K is less than a 4, the bull will go on an insane tear upwards. So it all comes down to how serious Y2K really is. If one goes by the 20 "experts" at www.russkelly.com, it's hard to imagine how the overvaluation could bloat even more on the upside. So how expert are Russ's "experts?" It may take a few quarters for earnings to be impacted and start to affect investor psychology. I still hold to the view the risk/reward ratio of staying in the market is askew: too high risk, too little reward at current valuations.

-- Jonathan Chevreau (chevreau@istar.ca), December 04, 1999.

Jonathan, I am an amateur investor, but followed the market a lot and got out over the early summer since I thought panic would ensue at any minute. I thought people would be going nuts by September first. Now, I'm stunned to see what's going on. It's simply crrrazy.

-- Mara (MaraWayne@aol.com), December 05, 1999.

I agree that it is common sense that tells us that the increase in Money supply at the current rate is unsustainable. and I believe this is the key. The definition of inflation has change in the last few year, it used to be inflation was the increase in money supply and its symptoms were prices went up. Today we beleive prices increases are inflation, price decreases are deflation. WRONG...the old definition of inflation still stands and we are in a period of near hyper-inflation with the artificial money being created (fiat money, US dollars backed by nothing but spending)

We will soon see a massive correction: I predict a DOW - PRICE of GOLD convergance at about DOW 3000 price of gold $US 3000.

Y2K will be the trigger, but not Jan 1/2000. It will take at least 2 months for the impact of the mess to really take hold of the financial markets. In fact I predict on Jan 3/00 the Dow will climb 1000 points in a single day. But wait a month and Whamo.

-- Ron Wiebe (ron_wiebe@bc.sympatico.ca), December 05, 1999.


Just another question to throw out at ya. Some people have suggested that there will a a shakeout for the .com companies that do not have large e-commerce sales this holiday seasons. Personally, I think that the mania surrounding internet stocks is bound to cool off, Y2k effects or not, and the potential for many of the .com stocks that have ridiculous market caps to have major price declines is significant. Anyone else see this coming? Just how long can .com companies that have negative earnings on their financial statements continue?

-- haha (haha@haha.com), December 05, 1999.


Frightening thought for stockholders if both would converge around 3,000. Talk about a whole lot of luxury residences and automobiles hitting the market all at once! And if this were to happen, many people would learn the truth behind the statement "work till you drop dead" as their nest eggs would be pulverized by a calamitous stock market decline. Do I want it to happen? No. But I can see that it's a possibility.

-- X (X@X.com), December 05, 1999.

X, You bet, And we havent even mentioned public debt. The massive inflation that is actually out there has been financed/fueled by public and private debt. It has felt good borrowing money at 7% and getting 25% in the market for the last 5 years. It hasnt mattered that wages havent kept up (interpreted as no inflation). The amount of artificial wealth (paper wealth) is unthinkable, wait till we all want to spend it!

Im convinced that hard assets (real estate, gold, oil etc. will be the place to be when the symptom of inflation kicks in. :o)

-- Ron Wiebe (ron_wiebe@bc.sympatico.ca), December 05, 1999.


I couldnt agree more...Death by dot coms is inevitable.

"only the strongest survive" only holds true when there are barriers (like capital and ease to market) in place. Assume you were in the desert and you came across a lemonade stand. I bet the propriator could get a few bucks out of you for a nice cool drink, I'd even say you might be happy to pay $10.

Now if there were two or three lemonade stands I am sure you would not need to pay $10 (assuming the 3 owners were not in collution), you might end up paying $1.99 or less. right

Now what price do you think you would pay if there were 10,000 lemonade stands and you were the only customer? I bet you'd get a glass of cool lemonade for the pretty near the raw material cost of lemons.

The internet has/will change the retail world, but it wont be proffitable for anyone selling lemonade (or books for that matter) Its only a matter of time for the market to realize none of these guys is differenciated enough to sustain any perminant market position. The earnings arnt there and never will be.

Sell now!

-- Ron Wiebe (ron_wiebe@bc.sympatico.ca), December 05, 1999.


Couldn't agree with you more on the hard assets as a store of value. A lot of asians found that truth when the asian currency crisis hit. Methinks that reality will soon intrude with a frightening effect. I don't want the party to end, but the effects of the huge increases in consumer debt, government debt and the money supply will be felt in due time.

-- X (X@X.com), December 05, 1999.

Y2K; For me it means Your Too Kool, nothing will happen, dont you read MAD magazine? I cant wait to laugh at you guys....all the way to the bank!

-- Kool (kool.Kool@planet.com), December 05, 1999.


I read a bumper sticker the other day that I really thought could be applied to Y2K, and now I think it could be my answer to your cocky statement.

"If you dont believe there is a GOD....You'd better be right"; If you dont believe there will be disruptions and have not prepared for Y2K...you'd better be right!

and Your too Kool could turn into Man I'm COLD.

Good luck in the markets,

-- Ron Wiebe (ron_wiebe@bc.sympatico.ca), December 05, 1999.

Personally I hope Kool is right. But statements backed by nothing factual aren't very persuasive.

-- X (X@X.com), December 05, 1999.

Here's a link to a good stock market link from 11/29..


-- TA (
sea_spur@yahoo.com), December 05, 1999.

Well I do know this:

1) experts who have been following the markets for years are still not very good at predicting it.

2) Doomers have been wrong in 100% of their predictions about stock market behavior with regard to Y2k effects, so

3) whatever Doomers recommend with regard to the stock market; it's a good idea to do the exact opposite, because they know exactly ZERO, as proven by past results.

-- Chicken Little (panic@forthebirds.net), December 05, 1999.

Well Chicken:

How about the money supply and its relation to the stock market? Since you're implying that you know more than a lot of people when it comes to the stock market, then why don't you provide convincing evidence to support your remarks that the doomers are wrong in the long term?

What about the current S & P 500 multiples vs. historical S & P 500 averages? Doesn't this bother you?

And what about the average dividend yield? Doesn't this bother you?

And what about the A-D ratio? Do you really think that the market is healthy given the recent A-D ratio?

Bottom line Chicken, I don't expect YOU to be able to intelligently expound on these questions. You don't (and never have) strike me as someone who can discuss issues like these with a lot of intelligence. Perhaps I'm wrong.

I'm waiting for an intelligent answer. And this question is directed to Chicken Little, not to others.

-- X (X@X.com), December 05, 1999.


As Andrew Tobias keeps pointing out, fundamentals and timing are very different. Sure, by all traditional measures the market is way overheated. Nearly every observer agrees there should be some kind of correction happening. But when?

Let's say the DJIA should be at about 6000 now, to get back into line. But remember Paul Milne declared that if the DJIA fell below 10,250 there was nowhere to go but down. He defined that "resistance level". And the DJIA briefly dipped below 10,000. Had you listened to Milne AND examined the fundamentals, you'd have sold out or sold short. So the DJIA promptly goes back UP 1,000 points! Small consolation that you are right and the market is acting silly.

One thing for sure -- if y2k is affecting the market, it sure isn't doing so in the predicted manner so far.

-- Flint (flintc@mindspring.com), December 05, 1999.

Chicken Little, the KCAL financial adivisor the other day had warned people to be cautious about leaping into that stock market bubble, so you're wrong with the "doomsayer" remarks.

To the rest:

It's not an evil if the dollar weakens. A weak dollar has its blessings.

I think the "doomsayer" predictions were 100% accurate had the Feds not intervened. Every scenario has potential variables and this would be one of them having panned out.

It does look like some companies are going to make it. I do think we are starting to spot a few winners. (Nabisco, Bumble Bee Seafood, AT & T and some Procter Gamble divisions for example.) In addition to that Gary North himself has said he suspects the internet will play a strong part in recovery.

A "doomsayer" scenario could happen on the surface and the stock market could still go strong. People can make fortunes in recessions and depressions. In almost all thus far the people who are hit the hardest in them tend to be the least skilled and educated.

I wouldn't risk a cent on the stock market, but that doesn't mean variables won't save the day and those on it will lose everything. I do think the variable of Fed intervention will be hit against and lose out against the variables of broken code and company failures.

One thing one can never forget is that Alan Greenspan did warn that happy, happy bubble will burst. I do think a significant decline is right around the corner. I'm not coming across anyone of pertinance saying anything but warnings.

-- Paula (chowbabe@pacbell.net), December 05, 1999.

J.M Keynes (who was quite successful in the market) said it best:

"The market can remain irrational longer than you can remain solvent."

-- joe (joe@adeveloper.net), December 05, 1999.

here's my $.02 worth:

I believe that the stock market will suffer after the rollover for the same reason that it has done so well over the last 15 years leading up to it.


The great growth and prosperity our economy has experienced is because of the efficiencies gained from computers in all areas of commerce.

Presently, the market is factoring in a best case scenario for the forseeable future.

I don't think we will see that (best case scenario) next year.

-- Clyde (clydeblalock@hotmail.com), December 05, 1999.


A narrow Y2K rally prior to 1Q 2000 was predicited by the Naval War College as part of their international "Flight to Quality". International Monitoring has agraphic showing a similar move prior to 12/31/1999.

In my less than expert opinion, this is a sucker's rally and makes good cover for big money to line up for the exits (write covered calls, buy puts, sell short, etc) AND keep the average investor fully invested and pat. Wealth flowing from weak hands to strong. The strong hands will trade on up to the second information and let the weak hands' left holding the bag for a long time.

FYI, I am out of stocks at the moment but watching for some key opportunities that are Y2K leaders and have products that will command high value amd growth in second half of 2000.

-- Bill P (porterwn@one.net), December 05, 1999.

Short answer:

Share (not commodity) prices have no direct connection to real events. They are based only on the expectation of where the new money and the money already in the market is going.

As long as money keeps coming in (e.g. pension plans), prices will rise. They will not fall until money comes out. Money won't come out until they fall.

I think it'll crash, but I think it'll go right to the edge.

-- Colin MacDonald (roborogerborg@yahoo.com), December 06, 1999.

I'm still bearish, but then I can afford to be.

I hope I'm wrong because I'd be richer in the long run.

-- nothere nothere (notherethere@hotmail.com), December 06, 1999.

As businesses struggle, employees will have trouble getting paid. They will have no choice but to cash in their stocks to pay their bills. This will cause a slow, steady downward slide.

-- Amy Leone (leoneamy@aol.com), December 06, 1999.

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