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Triple
Waterfalls
We
are living downstream from a financial Triple Waterfall.
Triple Waterfall is the term used by some technical analysts to
describe the chart pattern of a very special kind of boom/bust event.
Triple Waterfalls aren't mere bubbles. They are financial pandemics
that take not months, not years, but decades to run their course.
Nasdaq's
Fall
It took only
a few weeks of the new century before the New Era fantasies collided
with reality. Since then, the stock market and economy have been
badly beaten up. Those injuries came from the collective attempt
of the stock markets and economies of the 1990s to defy one law.
Gravity.
At its peak (March 10, 2000), Nasdaq had a stated price-earnings
ratio of 351 (though when the income statements of companies losing
money were included, with stock option costs, its real level was
more than 500 times earnings).
It was bound to fall of its own weight.
The question was never if but when.
Gravity
finally took charge. Nasdaq's Moon shot had carried it so far from
Earth's pull that when it rolled over and began its descent, it
moved slowly at first. Then, like a doomed space capsule, it accelerated
as it reentered the atmosphere in its plunge toward terra firma.
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"It's
good there have been so few, because they are so catastrophic.
What makes them so lethal is their three-part performance —
three plunges, interrupted by two rallies.
Those rallies are really forms of torture: They tantalize wounded
investors, who still hold on to the belief system that must
ultimately be smashed to smithereens." |
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