heard it all before

For those who are scared of a crash...

Everytime we have a little pullback I hear the same people saying that its the end of the world etc etc -
The media gets on board because it makes for a good story and the market gets oversold.

Then there are those who talk of an 87 or tech-wreck style crash and this is pure ignorance. 87 was a false panic magnified by the fact that the worlds systems couldn't cope - it was short lived and the market was back above pre-crash levels within 2 years.

The tech boom and bust was built on nothing but hot air and was just a freak event.

The only 'real' crash was that of '29... But if you do your research you'll find that it was caused by a couple of key events back to back.. Firstly was the rail boom in the USA from mid to late 19th century and lasting until the 20's and then overlapping that good old Mr Ford decided to create another boom when the model T came out and 'changed the world' and basically started the 'production line' type of manufacturing that we know today. Add to this the marketing of telephone, radio etc and you can see how 'excited' the market would have become...

Then there's today..

Commentators are saying the worlds credit markets are in bad shape - fair call.. debt levels are high but they are high for a reason - underlying assets are fundamentally fairly valued and debt markets are there to create liquidity to purchase assets.. some may argue this but historically almost all asset classes are at or near fair value unlike 29 or 87 when they were grossly inflated by as much as 200%.

We also have the so called 'resources boom' but unlike those other boom/busts of 29, 87 and 2000 the value of resource stocks can be fairly simply calculated using commodity prices and forecasts - this was NOT the case in those other 'booms'.. eg How do you price an internet company?? With great difficulty and uncertainty... esource based companies - a lot easier and hence the market is less inclined to massively overinflate stock prices.. look at earning ratios - they are nowhere even close to historically high levels.

Now, having said all that, it wouldn't surprise me to see world markets showing volatility for another 6-8 weeks with no clear direction one way or another.

Cash is still king for the moment but I think theres now some very cashed up investors with their finger on the buy trigger... short covering must also come into play at these levels and those who correctly picked this correction must now be looking to take profits.

Make no mistake - bargains are beginning to pop up all over the market and it's just a matter of time before the herd turns... don't make the mistake of so many others in years gone by and sell right at the bottom...