Bear markets are proportional to the size of the bubble that did burst – world has not seen so many bubbles at the same time – what happens to stock market?
Peter Oberois
Mar. 12, 2007

The 1929-33 great depression and stock market collapse that took stocks down by 86% in a short period saw bubbles bursts in real estate and stocks in the twenties. The Japanese bubble in stock market created the bear market and deflation in Japan in late eighties.

In the last two thousand years, several times big markets happened after big bubbles were created. The level of these bubbles determines the size and intensity of the bear market.

The number of bubbles and their intensity that happened between 1997 and 2007 are of unprecedented levels. The bubble started with the Internet dot comes. It spread into microelectronics and other technology sectors. Then came the bubble collapse in 2000. That gave rise to the outsourcing bubble that carried India and China to unimaginable heights. It is ready for a collapse as companies in Euro Zone and US see moderation of profits and world economies experience deflation as well as deep recession.

Then happened the bubble in car selling. No interest loans started at the end of 2001. The bubble in car marketing reached new heights. That eventually collapsed and the Auto manufacturers face now the possibilities of bankruptcy in the long term.

In 2002 started two simultaneous bubbles – real estate and mortgage/personal lending. Both mature in 2006 and collapsed.

In 2004 started the bubble in merger and acquisitions. It is maturing right now and will probably collapse in late 2008 or early 2008.

The bubble in precious metals and commodities are still in formation now. These probably will collapse in 2009. Industrial metal bubble may have started collapsing with copper more than 40% below its highs.

Simply put. The world has not seen so many bubbles in a span of 10 years. The net effect of these bubbles can be extremely catastrophic. The reason is simple. What bubbles created are false perceptions of prosperity in a sector or sectors. The typical ‘highs’ are followed typical ‘hopeless’ syndromes.

The effects of so many bubble bursts can be catastrophic and the world economies can get depressed. The effects on global stock markets are also extreme. The global markets can fall by more than sixty percent over the next ten to fifteen years.

Bear markets are proportional to the size of the bubble that did burst – world has not seen so many bubbles at the same time – what happens to stock market?
Peter Oberois
The number of bubbles and their intensity that happened between 1997 and 2007 are of unprecedented levels. The effects of so many bubble bursts can be catastrophic and the world economies can get depressed.
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Interestingly, as the financial meltdown takes place, it will give rise to another bubble in precious metals and then another bubble burst in the same!
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