Fair dinkum, Looks like something out of my chemistry book....

Fair dinkum,
Looks like something out of my chemistry book. Seriously the people promoting this correction as having the potential to move FROM HERE like 1987 is ridiculous. We have already seen the majority of the downside move IMHO...........it's already dropped 30%
1987 was a situation (esp. for our market) where it was far more overvalued that our market is today and the only reason we saw that sort of panic was due to the futures markets not being controlled limit down and portfolio insurance measures that are now more tightly controlled. The 20% plus down day they had (todays equivalent would be around 1600 pts on the Dow.............NOT going to happen) will probably never happen again.
1929 is an ancient history lesson that should not be repeated. Only those that understand (and I'm not one) the intricacies of the "gold standard" and the lack of ability of the Fed to provide liquidity during down times will understand exactly why the depression was allowed to go on.
Then you have the managed funds/super funds that have to have money in the market etc.......that will provide more support than in the past.
Then you have the interest rate situation currently. In 1987 our interest rates were around double what they are today and hence stock yields were far less attractive. We have a situation here and in the US (based on 03 earnings.........yes I know!!!) where the earnings yield of stocks will be higher than interest rates for the first time since 1982. I'm licking my lips.

So.............yes I hold put warrants on poor stocks so I will survive. But I see this as bargain basement time coming up!! A lot of people I respect are predicting our market to go to half its top (ie around 1750) but I personally can't see it. And those saying the stock market and property will be worth less in 15 years are IMHO speaking rubbish. I'll be gladly proven wrong and will eat my humble pie but (barring further US terrorism etc.........) this sort of selling can only go on for so long. We are in an environment of fear now where people sell irrationally ...........a poll on CBS has over a thirs of the population predicting the DOW to go sub 6500................this is why it won't. At the start of the year a third thought it would end above 10,000. I certainly expect us to be below the peak for a number of years but it's not as bad as a lot here would like to make out.

Good luck.

Ed.

PS Again......for those who quote PE's the market has to revert to........with interest rates at all time lows the SP will NOT NOT NOT revert to a PE of less than 10...as things stand. Nickoo and I disagree here but I am a firm believer that PE's mean nothing without using interest rates as a comparison.