The banking crisis could be just the start of our troubles

Downward trends in both the Dow Jones Industrial Average and the Dow Jones Transportation Average show that the banking crisis is just the start of our problems. Market performance could still get much worse.

The "Primary Bear Market" that started in the year 2000 and, in our view never ended, has unquestionably resumed as a result of the reversal of global liquidity. We are now embroiled in potentially the worst credit contraction of any readers' experience and the implications are alarming. Asset prices that specifically benefited from the preceding credit expansion will be the victims and will include most global equity markets, commercial and residential property and collectibles such as fine art and stamp collections. The duration is likely to be at least long enough to test the stock market lows set in March 2003 when the FTSE 100 was at 3278.

This paragraph was first published on 4th December 2007 and has been repeated in each issue since.

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