My Prediction: Dow Jones bottom at 6,437.
February 23, 2009 at 9:01 pm | Posted in -- Ken's Predictions, Alan Greenspan | Leave a commentGreenspan’s “irrational exuberance” phrase became an instant hit, an icon, perhaps the single most repeated two-word quote of the decade. But the Dow Jones Average laughed in his face. It proceeded to jolt above 7,000 in 1997, then 10,000 in 1999, and finally 14,000 in October 2007. After the 2000-2001 Dot-Com bust, Greenspan himself seemed to forget earlier caution, pumping mass dosses of liquidity into housing and preaching tax cuts and deregulation with abandon– causing him last October to admit “mistakes” that helped spark the recent crisis.
But the irony was this: Greenspan had gotten it right the first time. The stock market in 1996 was a bubble ready to burst, as it was again in 2000, as it was again in 2007. The “exuberance” behind it was, in fact, “irrational.”
Markets have a way of avenging themselves. And if irony is indeed its guiding principle, then this one today is not going to free us from its bear grip until it forces us to relive the lession of December 5, 1996. Only when the Dow Jones Average touches that magic number, 6,437, will the curse be broken. At that point, “irrational exuberance ” officially dies, to be replaced by “irrational pessimism” — time for the bulls to return.
The end is near. Science is science. Greenspan was right. Sorry if this is bad news. Have some coffee.
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