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25-Sep-2006
Asian Bears, from Victor Niederhoffer

News stories are abound that stocks in Asia fell for a third week, the longest losing stretch in 4 months. "The market has gone from worrying about US inflation to worrying about growth" said Praxair, according to a Bloomberg story. This story has so many hurtful things hidden amongst its agenda that one could write a book about it.

The main thing that one would like to ask is are conditions of lower interest rates based on lower forecasted growth bullish or bearish for stocks? The next thing is, are all moves in the market due to an increase in economic woes or interest rate woes, or are they somewhat random? Have such thoughts been discounted or increased, and if so, do stocks have more or less of a risk premium now? Do such explanations have any predictive power, or do they fit every scenario, and therefore have no way of being differentiated from any other explanation? Does such a backdrop add to the frictional woes that an investor faces, causing them to churn more than one should and increasing the frictional payments made to the market infrastructure and larger players, thereby maintaining the Pareto distribution of wealth for the foreseeable future?

One has not read Barron's since the financial weekly columnist came back, circa the S&P at 1240, 2 months and 7% ago, and said "the only question is whether we are in a secular bear market or a cyclical bear market." Such a description came in conjunction with the lows of July 21 and in conjunction with the spec party. The time has come to prevent people from losing so much more than they have to, by looking again to see why the Abelprecflecks are bearish now. One predicts that it will be a variant of the above.