It was ominous listening to financial expert Kevin DeMerrit of Lear Financial a few weeks ago when he spoke of the inevitable downturn of US financial markets. It wasn t good. Even as he spoke the Dow Jones was reaching past the 9,000 mark, signaling again to most investors that the sky is the limit for US markets, and that in Bill Clinton s economy, there is no such thing as bad news. Yet, at the same time, most Americans were witnessing further downturns in Asian markets and currencies, as large financial institutions in Japan, Indonesia, South Korea and other countries continued to go broke, close down, and lose billions upon billions of dollars.
Most investors here seem oblivious to what is happening in Asia.
If you believe that, then you re either a terminal optimist or you re ignorant of history. Here are some facts as DeMerrit sees them. First of all, in 1929 just weeks before the markets collapsed stocks were trading at eighty-five percent of their value. Today, the Dow is trading at about 120 percent of it s value, which means that it clearly is overvalued and cannot survive trading in stock which is not worth its asking price. Furthermore, today as in 1929 there is an aura of terminal optimism, because virtually no one on Wall Street or in the government agencies which track the country s financial status are admitting the above mentioned facts.