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Reader Comments on
The Bull Market is Dead!
Long Live the Bull Market!


M.A. Nystrom, M.B.A.
Man on the street in (the Republic of) China
February 1, 2005


1. Thank You

Thanks to everyone who took the time to read my article last week, and especially those who emailed me with interesting questions and comments. They stimulate my brain and keep me on my toes (and then there are those that keep my head from getting too big, too!). If you wrote me an email and I didn't respond, please accept my apologies. I guarantee you that I read and pondered it, and if it was really interesting or had a really good question, then it will likely become fodder for future articles, so stay tuned and keep the email coming. I'll keep reading them, but if I responded to every one I wouldn't have time for anything else :).

If you haven't read the original article, take a gander at it over here: The Bull Market is Dead!

Now, onto the comments. Since nobody knew their comments would be published (including me), I'm shielding all identities out of basic respect. Unless you have a website, and then I assume you want the link posted. As everything in life, this website is a grand experiment that is unfolding in real time. If you like it, let me know :).

2. The Comments

Michael,
Have you ever read any of those summaries of the end of the Roman Empire and how it looks like the US today? I thought of that again when I read your article. Looking at the pics of some of the Asian cities, esp China, and then you look at the Rust Belt where I live, really makes one think. Much of our country looks like it is dying. Have you even driven through places like Youngstown, Cleveland or Detroit? Also, look at the people. Not to comment on any one individual, but overweight, frumpy, dumbass slobs is what we've become, and the whole world is laughing at us.

For some time I've wondered if we (Americans/Westerners) are really that much "better" than foreigners to be able to justify our high standard of living. Yes, we do work more hours than much of the world, but do we really have the productivity? I seriously doubt most of the productivity numbers coming out of the government. It seems like much of our gains are built on outsourcing. If you consider that there are, geez, 2 billion people, give or take a few hundred million, between China and India alone that want to enjoy our standard of living, that seems like an insurmountable competitive situation. Not until there is some degree of parity are they going to give up, if ever, largely because there are just so many damn people that are sitting on the bench waiting for their turn in the economic game. In our country it seems that there are fewer and fewer people who are contributing to our economy.

A worry I have is that we will get to the point where we outsource SO much stuff, especially things like electronic components, chips, software, even complete systems, that we are completely vulnerable to the whims of foreign governments. Could we get into a war with China when they build 1/2 of our stuff, or at least major components? I think not.

So, thanks for the article and I'm looking forward to more.

- D

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Mr. Nystrom,
Americans of 2005 are somewhat like the Europeans of 1905. This century will belong to Asia, just like the last one did to North Americans - birthrates and demography favour economic growth (and wars) in Asia over the next 100yrs and lack of growth (and thankfully war) in North America. Our resourcesare what the Asians need - hope they don't invade us!

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- FM

Michael,
There is little doubt that the US economy is very weak and is being driven primarily by unsustaible asset (housing) growth. The US economy has huge debts in relation to assets, something in the region of $10trillion debts to $7trillion assets. It is also borrowing slightly over 80% of the world's surplus savings to fund this. In addition the CPI is being cooked and it is probably at least 4% and probably closer to 6%. However, the US is not the only country to cook the books!

Yes it is more than likely that there will in the next 1-4 years be a major recession or depression. However, the way you have expressed it is over the top. We cannot say for certain that it will happen, but it probably will. It will also effect the whole world, including China.

My most serious concern of your article relates to China. You are in Taiwan, which is not yet China. Taiwan has been a major economic powerhouse for years, China is only now coming into the world. The massive growth in China is a consequence of its investment in production, something like 43% of all investment is in capital goods. This is unprecedented and unsustainable. As one writer said, how many cement factories do you need? There are huge bad loans in China, something in the region of $500billion. There is also raging inflation and a bank lending rate which is below inflation. This is leading to huge building projects and yet more bad debt as people are basically borrowing money for nothing (exactly as in the USA). In addition the country has to find approximately 14m new jobs a year. A huge task. There have already been many riots because of this.

In conclusion China will be the number one superpower and sooner than people think. Before this happens there will probably be a very sudden and very painful economic correction in China. I suspect that this will coincide with the ending of the American dream and the creation of a new world order. These are both exciting and dangerous times.

-MB

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Sir,
Your comments about how self-absorbed Americans are… is especially noteworthy. I had a professor who was a devotee of the Italian mathematician/historian Vico. Vico claimed history ran like a descending/ascending spiral, not exactly repeating itself. But it did exhibit the characteristic of “pulses” of power, concentrated [1930s until now] and then “blown apart”…ready to be re-concentrated.

But nothing like that Chinese saying [curse?] about living in ‘interesting times’

- BS

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In my view, China still has a way to go before it cultivates enough domestic consumers to replace the US . Until that time, China is as much at risk of a global sowdown as the rest of of the world. We have been at this point in history many times, and history has shown that we invariably screw it up. Thank you for a very informative article.

-CP

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Just a little comment on your article...While holding true with a lot that I have read I disagree with one point and that is this.. Open communication is a real key to understanding.. my take on the Chinese leadership is that they discourage this in a big way.

My take on their deciding to enter into the business world is that infrastructure of a physical realm can only be relied on if the infrastructure in laws, courts, contracts, and property rights are also being built...Do you think the Chinese infrastructure is being built like we did in the 1760-1800 period of our country. Transparency of the banking system over their seems a little lacking..I.E. Chinese Aviation.These does not absolve America of its problems just pointing some long term problems IMHO of China..

- SLM

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Hi Nystrom,

By coincidence I also just read a very similar article by Dr. Marc Faber at http://www.aireview.com/index.php?act=view&catid=6&id=1233

A couple of thoughts. One, I wonder if this is why the Australian market is performing so well – it’s still climbing to new all time highs. I know it’s not really an Asian style country but it is in the region and perhaps people from the US and other countries are pouring their money there as well as the Asian countries.

Two, I also wonder though if US “investors” will one day wake up as realise this truth that Asia is growing at a rapid rate that there will be an almighty rush to the exists leading to another stock market crash in the US. Or will it be a slow realisation resulting in a slow decline in the US. I think it will be the former because of the speed that information can travel in this high tech era. If the crash scenario does happen then the Australian market should tumble also but provide an excellent opportunity to jump in for the long term given it is part of the Asian region.

-JC

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Nice, I guess but you wax endlessly as so many do about the nothings of change, yeah and I say, SO WHAT ? I can see most all you go on about and I didn't have to leave home, but what you and all your brethren don't do is give me concrete ideas of things I can do now to make my life or my kids life better for that changing tomorrow!

-CM

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Dear Sir,
Please allow me to state what a very regular, normal person like me thinks: There's no such thing as a bull or bear market. It's only the result of what the majority does: more buying caused the bull, more selling the bear. Thus any analysis, any logical reasoning does not stand a chance if it goes against the mainstream. Everything depends on us, the majority of people. Myself, I am a bear, a pessimist that's why I lost a lot by selling my house too early, by shorting stocks for the last 2 years. However now I do recognise the truth: the truth is that what others do, not what the logic call. What are all of us are searching for? Happiness. And what is happiness? What we perceive, and right now, we, Americans perceive happiness as spreading democracy, removing tyrants (was not that our beloved president said? and did not we, the majority voted for him?) so well,THE BULL MARKET is not dead, this is a new era. We, Americans are different, so what people analyse by logic does not apply: WE ARE DIFFERENT.

This is a new era. did you ever see such a big bubble like in 2000 ending with a little pop like it did? Did you know that we have the biggest home ownership rate ever? This is a new era: we are not common people, we are different: we live in this mighty country, we govern the world, we vote for a president who is totally different: the right man for the right time as the people said.

Thank you for listening to a different view.

Sincerely,
A very common, regular person (did you see the Michigan confidence index?) well, that's us.

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Hey,

what's your point of your article?

just random thinking?

you provided no useful information.

-RL

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Hi Mr. Nystrom,

I agree that China is a major factor and may become a superpower in the next 10 years or so, BUT, just as Japan dominated the 1980s and talk was of Japan surpassing the US, China is in an economic bubble (as Japan was in 1989 and the US in 2000) that will burst in the relatively near future, possibly this year.

Once a country is "all over the news" a major top is near, as it was with Japan in 1989 and the US in 2000. China has all kinds of bad loans and major problems that probably will make their bust a severe one. Just as in the stock market, when people become euphoric about a country's economy, the top is near. I guarantee you China isn't immune to economic cycles and their cycle high is probably near and may have already occurred possibly. One has to think in contrarian terms when timing markets wether it's the stock market or an economy.

You don't really think China will keep growing at 10% or whatever their growth rate is for much longer, do you? It is a bubble. A country that size can't growth at that rate for much longer. It's IMPOSSIBLE. I agree that China is and probably will become more of a factor, but they aren't immune to economic cycles any more than Japan or the US is.


Sincerely,

Joe Ferrazzano
http://www.JoeFRocks.com/

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I don't own a TV; haven't had one for ten years. Mostly haven't had one since 1961. Only way to understand what is going on is to not watch that brainwashing. I think it is good to see it in a motel room once every six months just to keep up on what all the sheeple are being told to believe. Looking forward to seeing your info.

Steve Solomon
Ps--see my website - http://www.soilandhealth.org/

3. Like I said, Thanks.

Whatever happens, always remember that the best things, the most important things in life are free.


Turn off the TV and think!









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