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H.J. Huneycutt » Comments » AZO

  • 2009 Depression Will Be Nothing Like 1929 [View article]
    Good article.

    Another thing people continually fail to point out about the '29 Depression is that stocks were priced using near-absurdist valuation techniques. In essence, the '29 Depression was like combining this crash, with the Tech Crash earlier this decade, but then valuing *ALL* stocks on the same absurdist lines as the tech stocks. Stocks prices were certainly bloated in '07, but I don't think things got nearly absurd as in the '29 Crash (outside the Housing market and a few select industries).

    Another thing to consider, the '29 Crash happened before the SEC Acts of 1933 and '34, which required publicly-traded companies to file financial statements with a statement of opinion from a public auditor available for public viewing. Many companies in 1929 were operating on the "Hey ... Trust Us!" system of financial reporting. Many hedge funds and private investment firms are still operating under that system (which is we end up with the Madoff scandal, amongst others), but publicly-traded companies are not.

    I think by any reasonable measure, the market is cheap right now. But it will keep getting dragged down further so long as there aren't enough buyers. And there won't be enough buyers until fear and uncertainty are eliminated.
    Mar 07 13:52 pm |Rating: +4 -1 |Link to Comment
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