the end of the bull run for rms, page-52

Hi David
For some reason I feel a need to rebuff some of your posts.

I have crunched a lot of number and looked at the market reaction.
The market mainly is reacting to political communiqués. So which number did you crunch exactly?

1. When the asx was at 5000 I believed the market was overvalued, the pe ratios were high considering that world was still in a lot of debt.
PE ratios are almost at historical lows. It is fear of the future not past performance that is undermining the markets.
The Western world has phenomenal debtsmany of which are esstially unpayable. These debts will be a global issue for decades to come. The idea that the world still has a lot of debt is so evident that its not worth mentioning.

Australia realestate is more expensive than hongkong and newyork. Households are smothered with debt. The level of debt means that house hold disposable income is tied up and causing the economy to slow. This will effect profits and cause a market correction. I thought the market should be around 4200 but did predict a crash to 3600 as the worst case.
Spelling: real estate not realestate, Hong Kong not hongkong & New York not newyork
The phrase, Households are smothered with debt, is unusual. In practical terms what does it mean?

2 When the market did crash metals followed. I found that odd because the high metal prices are due to a devalued usd so technically speaking they are already cheap although they looked high.
I view the metal prices falling an indicator of very bad economic conditions.
The USD did not devalue during the recent period when the market fell, the USD was regarded by the market as a safe haven and rose.

3 The market response to Greece defalting is amazing. In the bigger picture Greece didnt seem more than a cold.
personally I was not at all amazed by the prospect of Greece defaulting. A limited default has been a realistic option for several months. Greeces debts are not small. The world does not only fear a Greek default, the world is afraid that a default by Greece will set off an uncontrollable chain reaction of defaults and insolvencies elsewhere.

4 Europe is in debt 100% of GDP and has a service sector that which is 70% of its economy. I cant see how Europe will get out of debt.
I am not sure that these statistics are correct. What are your sources?

5 Greece is buying gold which indicates they must lack confidence in the euro.
Some Greek people are buying gold but the Greek Government is not.

6 The us has around 5 tillion more losses to come out of the banking sector. Manny of the loans over the last 10yrs are invalid due to robo signing, at the very least 10%.
Spelling: trillion not tillion, Many not Manny.

7 The 3.5 trillion USD proposed to bail out Europe will need to be paid back. It will signiciantly devalue the euro and could spark a currency war.
I think it is far too soon to assume that there will be a 3.5 trillion USD bail out of Europe. As far as I can tell there are huge political and legal obstacles that would need to be overcome in order for this type of program to be implemented at all. The Euro has held its value against the GBP pretty well over the last three months and is higher against the AUD. If any package is implemented that provides debt relief to Europe, the Euro will most likely rise not fall. This entire situation seems irresolvable to me without all of the parties experiencing a lot of financial pain.

When there is sentiment the market will crash every thing falls at lightening speed including gold.
This sentence makes no sense to me. There is always sentiment in the market.

K