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                              July 20, 2007

                     The Terrible Happens
    Should You Panic with Your Investments?
               Excerpts from our forthcoming book on the
                            US Stock Market: 1915-2007.                             

     William Schmidt,     - Tiger Software's Creator
      (C) 2007 William Schmidt, Ph. D.  - All Rights Reserved. 

      No reproductions of this blog or quoting from it
      without explicit written consent by its author is permitted.

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                                             1915 - Sinking of Lusitania.
                                                http://home.pacbell.net/steamer/lusita.htm
                (Editor's note:  This would seem to make as good a movie as the sinking of the Titanic. 
           But like Steinbeck's best novel, "In Dubious Battle", Hollywood does not want to touch the
           issues raised here.)
     
                  Say, for example, you are an investor back in 1915.  The US has stayed neutral
            in the European War, but then the passenger liner Lusitania is sunk by a German
            submarine with the loss of more than 1100 people, including  112 Americans.  Surely,
            this means the US will be thrown into the bloody war.  Should you sell all your stocks.
           
                 Here is the Tiger chart of the year 1915.  Technical analysis usually wins out over
            heeding "raw emotions".  That was as true in 1915 as it is today.  The DJI held at its
            long-term moving averages and rallied with very positive readings from Tiger's volume
            tools.

  
                                                          
                   Japanese Attack on Pearl Harbor - December 7, 1941
                                (See http://www.american.edu/TED/ice/japan-oil.htm)

             The DJI and the US stock market was already in a decline after mid-1941.  In July 1941
        the US had imposed an oil embagro on Japan.   Those who followed international developments
        knew that the US would not be able to escape World War II for very much longer.  Japan's
        imperial ambitions depended upon oil. (The same is still true.  For the US to be the pre-eminent
        power in the world, it needs more and more oil.   Hence, Bush's war on Iraq.)  
             Tiger "Accumulation Index weakened in September 2001, so that its readings were barely
        positive as the DJI came close to tagging the upper band zone we use. The breaking below
        the 125 lows of August were confirmed by Tiger's volume indicators making corresponding new
        lows.


                        Not until the Battle of Midway in May 1943 Did The Market Turn Upwards.              
                The DJI's downtrend-line here was very well-tested. That made its upside violation
                very significant technically.  Note how the Accumulation Index turned positive.
                The tide of war had turned, and with it the US stock market.                                                    


                                      1957 -  'Sputnik" Bear Market 
                 
                  Peerless sytem easily called the top in October 1957, just before the DJIA
          fell 20%.  "Someone always knows."  Use Peerless and buy when others are panicking.

          



                                      1963 - JFK Assassination
            Would you have panicked when President Kennedy was assassinated?  Not a good idea.
     The next day the market was up strongly.  Of course, much of American business was holtile
     to Kennedy.  Still, at first it seemed Oswald was a CIA assassin.

 
                                                  
                                                       9-11-2001 Attack

                       The market was closed for more than a week after the attack of early 9/11/2001.
           The attack took place before the market had opened.   It had closed at 9605.51 the day
           before the attack.  10 days later, on 9/17, it opened down about 600 points and then fell
           another 1000 more beofre reversing intra-day on 9/21.  Our Peerless chart gave a major
           Buy on this day.  The DJI was as oversold as it has been at the bottom of the October 1987
           Crash. The Peerless major Buy B16 on 9/21/01 reversed the major Sell from the beginning
           of the year.