.March 10th 1989 - March 11th, 2009..SP500 Index (top):
149.64%..Japan's Nikkei Index (bottom)
-76.73%..even if we lost all of that 149% gain tomorrow, at least we had periods of false hope & optimism...while not always rational, clearly that is part of being American and hopefully this attribute will pull us out of this mess.
...excerpts from DEAN WITTER's memo to his firm...
May 6th, 1932
A very interesting book could be written on mass psychology and the effect thereof. That everyone is influenced more or less by the opinion of others is obvious. There was no reason for the unwarranted heights which the market reached in 1929 except universal over-optimism - there is no excuse for the present market value of good bonds and stocks today except undue pessimism. In 1929 no pessimistic comment could survive. Today an expression of confidence in the future of the country is unpopular. Strangely, the peaks of 1929 and the low quotations of today are both due to the same cause, which is lack of intelligent and sound analysis. It is strange that such divergent conditions should come within such a short period and should be due to such identical factors...
There are only two premises which are tenable as to the future. Either we are going to have chaos or else recovery. The former theory is foolish. If chaos ensues nothing will maintain value, neither bonds nor stocks nor bank deposits nor gold will remain valuable. Real estate will be a worthless asset because titles will be insecure. No policy can be based upon this impossible contingency. Policy must therefore be predicated upon theory of recovery. The present is not the first depression; it may be the worst, but just as surely as conditions have righted themselves in the past and have gradually been readjusted to normal so this will again occur. The only uncertainty is when it will occur...
Does anyone think that present prices will continue when confidence has been fully restored? Such bargains exist only because of terror and distress. When the future is assured the dollar will long since have ceased to have its present buying power...
It requires courage to be optimistic as to the future of the country when nearly everyone is pessimistic. It is, however, cowardly to assume that the future of the country is in peril.
No sucessful policy can be established upon this unsound theory. It is easy to run with the crowd. The path of least resistance is to join in the wailings that are now so popular. The constructive policy, however, is to maintain your courage and your optimism, to have faith in the ultimate future of your country and to proclaim your faith and to recommend the purchase of good bonds and good stocks, which are inordinately depreciated...
~ Dean Witter, 1932