having read some of the shiite .., page-17

CK

A very good post, for once.

I quess you seek some entertainment on HC, so you goad and respond to a variety of posts. Surely this is a waste of time.

History has shown that you will be proven right in the long run by just holding quality shares. However, many investors (me included) are leveraged so for us its essential to take pre-emptive action to protect against a significant market downturn.

In relation to the extent of the downturn, it will only be known after the event. A correction can be overcome by most leveraged investors, but a longer term downturn would badly hurt us.

The US DOW Jones is up by a factor of 15 since 1982. Has the US economy really grown by that much over 25 years? I doubt it. Its grown on the back of Arthur Laffer's notion that lowering taxation would increase the total tax take. Government's just printed more money and we have all had a party with far greater social welfare and other government expenditure. The inflation has been in the various classes of assets, and general inflation was squeezed by labour programs (in the US its the corss border movement of people), the downward pressure on prices from cheaper imports, and probably by "microeconomic reform" measures.

In the US, Australia (and much of Europe) wealth has been "created" via various engineered financial instruments and monetising social capital (eg sale of telcos, power stations, and other infrastructure). I am not sure how much of this is real added wealth. In the US and Australia banks/financial intermediaries and insurance companies represent over 40% (according to what I can recall) of market capitalisation. The whole economic system floats on consumerism and easy credit. A significant contraction in liquidity, which nw appears to be in train, must impact on the real economy (just as the reverse previously occurred) and on the sharemarket.

Hence many of us are taking evasive action.

I am sure you will not need it, so I will not say "good luck".

Loki