Doomed to Repeat History?

William O’Neil, in his excellent book “How to Make Money in Stocks”, has a chapter on the media, news, and market psychology. In this section he has taken the charts of the Dow Industrials from 1921 through 1942, and overlayed on this a chart of the NASDAQ Composite from February 1992 through March 2009, and indexed the data so that the charts both start at 100:


What is remarkable about this chart is that the two time periods are almost exact duplicates. O’Neil used the NASDAQ for comparison with the 1929 era as it trades more volume now than the NYSE and represents more entrepreneurial companies. The reason history repeats in this amazing manner is that the markets are made up of millions of people acting almost 100% on human emotions.

You can see two important history lessons from just looking at the above chart:

1. This isn’t 1929 right now in October, 2009 – its  Oct 1939.

2. The market (according to history) is not going to be very exciting for a long time – denoting a very sluggish economic recovery that may last years.

So if history really does repeat itself, then what was happening in 1939?  Hitler kept saying he was only interested in peace. By 1938, Britain and France negotiated with Hitler and tried to appease him by making concessions. Britain thought they had a peace agreement with Hitler. Crowds cheered. But in Parliament, Churchill said “We’ve suffered a defeat”. No one believed Churchill. In 1939, World War II began and within just two weeks, Germany rolled right through France.

Today, Iran is a sponsor of terrorist organizations. It will have nuclear weapons very soon, and already has the missiles to deliver nuclear warheads. Even though, just like Hitler, it keeps saying it only wants peace.

We should never underestimate partisan blindness in Washington or in the mainstream media where, “If the Bush Administration did it, it must be wrong”. The Bush Administration kept us safe from additional attacks for over seven years. Too many people refuse to acknowledge that such benefits have costs, even if that means having no more secrecy when making international phone calls, being delayed at airports, and so on.

There are a growing number of threats that can destroy us.  The Roman Empire lasted a lot longer than the United States, yet it too was destroyed. Millions of lives were blighted for centuries after, because the barbarians who destroyed Rome, much like the fanatic Islamic fundamentalists of Iran, Al-Quaida and the Taliban,  were incapable of replacing it with anything at all comparable.

Once suicidal fanatics have nuclear bombs, that is the point of no return. Israel completely understands this. Unfortunately, the Liberal President and Congress now in office do not. in The Media Elite, Rothman and Richter interviewed 240 top journalists and staffers at the New York Times, the Wall Street Journal, Washington Post and the news departments of four major TV networks. 85% of these top journalists were found to be Liberal and voted Democratic in all of the last major elections.

Emmy Award winner Bernard Goldberg spent almost 30 years with CBS News. His book Bias shows in detail how network television has provided one-sided news with little balance or fairness. This kind of bias in the media jeopardizes freedom. It completely misrepresents the de facto equality of left vs right in the general population. Some of my Liberal friends mock FOX News as being “right wing”. The fact is, FOX is closer to the center than all the other networks. They’re all so far left, it makes FOX “look like” it’s right wing. But frankly, I’m not a fan of any network news organization and that includes FOX News.

There are no concessions we can make that will buy off these hatred-filled terrorists. Obama’s apologetic, self-humiliating policy of appeasement does not work. What these maniacs want is our being brought down in humiliation. This kind of hatred is not familiar to most Americans  but what happened on 9/11 should give us a clue – and a very clear warning. Iran and North Korea, along with various terrorist groups, represent a clear and present danger to world peace and stability that hasn’t been seen since Nazi Germany 70 years ago. If we do not defeat them we will suffer dire consequences, and  it will only be because we cannot learn the lessons of history and do not realize how absolutely grave the threat really is.

I sure hope President Obama is not remembered in history for being the guy who allowed Iran and North Korea to threaten and blackmail the free world with weapons of mass destruction; who allowed the Taliban and Al Queda to be emboldened by our pitiful weakness in Afghanistan. But currently, things aren’t looking very promising. The next election is simply too far away for me.