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in some detail using techniques and labels from "The Fine Art of Propaganda" circa 1937.

The periods could not be more different. In 1982 we were breaking the back
of a major stop-go economic inflation cycle that had brought stock values
very low over a prolonged period.


how low? no quantification. this is a glittering generality.

We were viewed as weak in international
affairs as evidenced by the Iran hostage crisis.


by whom? this is the name calling technique of propagandists

We had suffered from increasing government intervention into the economy and expensive social
programs introduced by both Republican and Democratic presidents.


who suffered, in what way? this is a use of transfer, and card stacking.

Carter's appointment of Volcker to head the Fed and then Pres. Reagan's election changed all that.

clear use of transfer, reagan-volcker implied "good" but now gone from scene so things must be "bad" now.

We were entering a period of much lower inflation and
faster economic growth prospects once the adjustment was out of the way


hindsight is always 20-20, isn't it.

and doing so from a very depressed level of stock prices.

how depressed? no quantification. another glittering generality.

Relative to that the introduction of index futures was a small factor.

again no quantification. all of the above is a use of card stacking leading up to this interim statement

In contrast, we have now
had a long period of economic growth that was about as good as it gets.


quantify "long". "as good as it gets" is a "plain folks technique" also known as cliche technique.

That had the effect of creating some excess and very optimistic valuation of stock prices to reflect that envirnoment.

no quantification. glittering generality, "excess" can be considered name calling

We have had a short period of
adjustment as we worked off some of that excess and confronted some new
problems in the environment.


no quantification for "short" or "excess", glittering generality.

Stock prices have given up a substantial
portion of that excess valuation.


no quantification for "substantial" "excess" "valuation", glittering generality.

By many standards they are not viewed as
cheap, whereas in 1982 they were clearly cheap with any sort of decent
economic growth prospects.


bandwagon type statement "by many standards" implies "everyone agrees" with propagandist

In short, the basic dynamics are quite different.

no quantification, glittering generality, "in short" implies that the reader need not bother with facts or not capable of understanding them. who needs facts? not the propagandist!

This may turn out to be a good time to buy, or it might not,

making a prediction but not making a prediction so original question - "good time to buy?" not answered. redirect like the hustler on the street with the 3 cups.

but the introduction of new futures instruments will at most play a small part in determining the magnitude of stock price changes in the overall market.

concluding with a testimonial/prediction but no method proposed to assess the effect or how to verify the result of prediction at t+?.

<..>

the previous example is not meant to embarass anyone, but is intended simply as a teaching exercise. just ask my kids, i say dumb things all of the time. the point is that the reply posted to a question regarding ind'l stock futures and their effects on the market was pure propaganda from someone who is very bearish on the equity market. when you first read it did you find yourself nodding your head and subconsciously agreeing that the future is likely to be bearish? NOTA BENE: the writer actually did not make a prediction of market direction, but you are left with one anyway. that is a key method of propaganda. when you read it at first it seems logical enough, but then when you take it apart you realize it has no substance. that's the way propaganda works. these days we are surrounded by propaganda. caveat emptor.

tr
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Wow, I fell for the propaganda hook line & sinker, but didn't feel moved to act on it. Now I realize how it was coloring my perceptions.

Thanks for the exercise.
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when you first read it did you find yourself nodding your head and subconsciously agreeing that the future is likely to be bearish?

When I first read it, I actually stopped during the initial question, and wondered, did "the Index guys" really "forever change the market place"? I looked forward to discussion about that question, and to a comparison of the effect of individual stock futures with the effect of previous product innovations.

When the answer (1) didn't address whether the index guys really did forever change the marketplace, and (2) focused on how bad the market is rather than discussing the single-stock futures product at all, the piece lost credibility with me.

As is often the case with publicly-available "analysis", the piece raised more questions in my mind than it purported to answer. Quite in line with my cynical nature. Thanks for the breakdown, solasis - it was enlightening and can be applied to pretty much any article that you see these days.

dan
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