Will the market come back slowly, moderately or quickly?

[floridasandy]

i don't see how it will be able to go up quickly and sustain a high level when there are so many fundamental problems that are not being addressed right now.

[Nepenthe]

Originally Posted by angelrio101111

...we must all stop what we are doing...shopping, driving, working...only for one week...and we will see how fast these problems will get solved...

So the solution is for everyone to stop working? You first.

[NVDave]

Originally Posted by Kooter

Poll question: When the market finally turns around - will it come back slowly, moderately or quickly?

What everyone has to realize, in every sector, is that what we're seeing now is a huge de-leveraging. Vast quantities of borrowed money that have been used to inflate the valuations of real estate, stocks, bonds and commodities is being withdrawn from the markets... and this money will not re-appear.

Consider this: the five investment banks (Goldman, Merrill, Morgan, Lehman, Bear) are gone. Forever. Their business model is no longer functional.

Therefore, their 40:1 leverage in certain assets, the money they used to lend to hedge fund customers that was used as leverage - is withdrawn from the markets now (which is causing the crash) and won't be reappearing in the future.

Hedge funds are closing left and right as investors clamor for redemption of their investment. There will be hedge funds left when this is all over, but their footprint in the market is going to be significantly reduced - because there won't be any investment bank to loan them the money to lever up. Much of the gains of hedge funds in the last eight years has been a result of leverage, not intrinsic gains from methodology, so unless the hedge fund managers get very smart going forward, the returns to the limited partners are going to be rather low, which might cause the LP's to take their money to someone/something else to manage it at less than 2-and-20.

Therefore, the return to a sustainable Dow of 14,000 will take a long, long time. Look at the 1970's for an example of a market that can go sideways for a long time...

[floridasandy]

big government is not the answer to our economic troubles:
By increasing the base money supply in the interbank market, guaranteeing financial institutions' liabilities or nationalizing the banking industry, governments suppress the free-market forces which could move the system back towards equilibrium.

There should be little doubt that, after decades of government sponsored credit and money-supply expansion, such a correction would be economically painful, accompanied by further bank failures and output and employment losses.

However, it is hard to see how fighting the symptoms of the unfolding monetary fiasco could solve its underlying cause. Starting the printing presses wouldn't solve the debt crisis either. Hyperinflation would cause economic and political damage to the greatest possible extent.

To qualify as a remedy to present ills, government action needs to be constrained to a far-reaching reform of the monetary systems, which, if implemented properly, would neither cause deflation nor inflation. Markets need to be liberalized to the greatest extent to allow prices to adjust back to equilibrium.

A return to sound money is needed. This would, as outlined by many Austrian economists, require putting an end to government's monopoly over monetary affairs. The power for determining the quantity and quality of money must be returned to free-market forces. Money in the hands of the government and its central bank would sooner or later become the ruin of the free societal order.

[Pilgrim21784]

Settle in for several years of bad news, the general market will probably do zip for 5-7 years. Individual stocks will offer opportunities for profit but generally things are going to be disappointing for a while This is normal.. dollar cost average your buys, take care of your tribe and be happy.