2 leg down to be devastating, page-14

Amazing how with world productivity at an all time high and GWP (Gross world product) rising 5% per annum that Martis can seriously believe there is going to be a "meltdown".

The fall so far is an overreaction due to panic selling and PE ratios that were 14.6 prior to the fall are now around 13.

At PE of 13 stocks are clearly undervalued by around 10-15% - coincidently about the amount they have fallen.

If the sub-prime fiasco was something able to be easily quantified and came out at even 5 times the size of problem it actually is (say $US400-500 billion) this would still justify at most a 5% drop on the DOW alone and shouldn't have a great effect on other world markets.

Because it is not easy to accurately quantify the fear factor creeps in and is responsible for the size of the fall. IMO an average 6% fall on total world markets (total world market capitalisation fall of over $US30 TRILLION dollars) is a 100-500 times overreaction to what is really only a small percentage of yank low income earners having problems paying their mortgages, and a few lenders of these dodgy mortgages having to pull in their belts. As this group account for a minimal amount of US domestic consumption there should be little effect on consumer demand (as evident in US consumer spending figures) and hence no major flow-on effect for China and Japan.

The market will bounce back after a tentative few months and by next January will be above levels prior to the correction.

IMO there will be a bit of a surge on Monday, maybe up 2-3%, hiccough on Tuseday, maybe -1%, then a slow climb with intermittent spikes up and down within this trend.

My views seem to be roughly in line with most market forecasters in the media, and in keeping with general comments from international central banks.

Who of importance is backing up your doomsday predictions Martis?