Dow Jones Industrial Average on its way towards 1000
Alan Hershey
Jun. 12, 2007

Someone shouted at me in the pit – 1000 or 100,000? I smiled and said you will not like it but it is really 1000. How can that happen? How can Dow Jones Industrial Average drop below 10,000?

Wall street is on the high. But actually the economy is on the life support system. The recent bond market crash is the last thing the economy and the stock market wanted. The private equity money and hedge funds have pushed the market as high as possible creating all sorts of divergences. The market has started its decline and will continue to decline for the next ten years. In 1929-33 depression led bear market, Dow fell 86%. The Japanese Nikkei fell also more than 80% during 1987-2007. Japan also faced deflation.

American economy faces deflation. The buying power is getting lowered every day in real terms. The companies do not have much of a pricing power. The business (large and small) is paying millions to lobbyists as politicians to allow of imported cheap labor from developing and other nations. These are all signs of massive stealth deflation. On the surface the whole world is dancing and talking inflation but in reality deflation spreading like a wild fire.

Deflation will take the stock markets down very heavily. When Dow Jones Industrial Average falls below 1,000, should you buy? Wait and see. Keep the money safe in money markets earning some interest.

Dow Jones Industrial Average on its way towards 1000
Alan Hershey
Someone shouted at me in the pit – 1000 or 100,000? I smiled and said you will not like it but it is really 1000. How can that happen? How can Dow Jones Industrial Average drop below 10,000?
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