Those who don’t learn from history are doomed to repeat it, that’s how the old cliché goes. As the major stock indexes continue their march higher, some find that these iconic words of caution are particularly relevant in our current environment. The argument can be made that the fundamentals unfolding presently are uncannily similar to those of October 2007 when the market topped out and went on to plunge 50%.
From Minyanville: October 2007 Shows Us How This Rally Ends
“I reexamined the bubble peak of October 2007 and “surprise, surprise” — it’s déjà vu all over again. If you recall, in October 2007 the US dollar was tanking and oil was ripping higher. The talk was about how the dollar had nowhere to go but down.
Sound familiar? It should because the dollar is tanking again and the talk is how the whole world is turning away from the dollar as the world’s reserve currency. Gold today is also making new highs just like it was back in October 2007, on the back of a weaker dollar.
The stock market in October 2007 was making new highs as the dollar tanked. It feels like déjà vu to me because today we have the dollar tanking, oil and gold breaking out, and stocks making new yearly highs.”
I posted these thoughts not to scare anyone, but to remind us not to be complacent. It’s perfectly fine to enjoy the fruits of the recent rally; however, with each upward tick of the Dow and S&P 500, I see more and more people who seem to be forgetting the lessons 08/09 should have instilled in them. Remember to stay humble… for if you don’t, the market will do it for you.
Nice find. Its funny, I was actually just reading an article comparing the parallels of 1929 and today. http://finance.yahoo.com/news/1929-And-Today-Sobering-etfguide-2101131945.html?x=0
Some intriguing stuff. You know my opinion on the doom-sayers; they can predict the apocalypse, and if they’re right, they’re right, if they’re wrong, everythings ok anyway. Plus I hate to draw too many similarities between the past and present, as you can always find some similarities between any periods and draw completely different conclusions on whats going to happen in the future.
But this all has my attention; I’ve sold some positions and am at about 20% cash. Im thinking of moving towards 30-40% now after considering these two articles.
Yeah nothing will ever line up 100% to the past but it’s still important not to forget the lessons history has taught us. I’m about 20% cash too. Sold my position in AAPL a little early, but I’d rather be too early than too late. If we take another downturn I want to be positioned with ample cash on the sidelines to take advantage.