Great Ponzi.com

2008-07-25

Bottom fishing banks


When talking about bottom fishing banks, let's also not forgot the big picture economic environment. This is very important to the whole "buy low" scheme.

The biggest bull market in history was 1982-2000. Buying financial assets worked during that period, because everything was strong and the broad market trended up. So buying banks in the 90s recession, or buying crashing stocks in 1987, turned out to be intensely profitable Indeed, buying anything on a dip worked.

Those who worked in the industry remember these days. It is the only kind of market anyone in the industry remembers. Brokers all spent their working lives during an extremely strong secular bull market, it paints their whole world.

The way I see it, buying crashing banks in the 90s (this was the first quarter of the big 18 year bull market) is very different from buying crashing banks in 2008, since the strong American bull market is over. There hasn't been strong American large cap bull market for years.

The premise for my reasoning is that 1982-2000 was a special, very strong bull market and that it is now over. If you disagree and think that primary bull market is still on, then you will see things differently.

- Perpetual Bull