The stock market is currently at record levels. The average cyclical bull market over the past century has been just over 3 years. The current bull market is now over 7 years. Sounds a little long in the tooth. Unless, of course, this time is different.
The median stock is now more overvalued than any time in history, using multiple valuation methods that have been accurate over the last century. Some people say having all markets reach new highs is bullish, and yuuge gains are ahead. I think this quote will apply once again:
“Those who do not remember the past are condemned to repeat it.” – George Santayana
1929
2000
2007
For some perspective on the post-financial crisis rally, today’s chart illustrates how much of the downturn that occurred as a result of the financial crisis has been retraced by each of the five major stock market indexes. For example, the Dow peaked at 14,164.53 back in October 9, 2007 and troughed at 6,547.05 back on March 9, 2009. The most recent close for the Dow is 18,552.02 — it has retraced 157.6% of its financial crisis bear market decline. As today’s chart illustrates, each of these five major stock market indices have retraced over 150% of their financial crisis decline. However, it is the tech-laden Nasdaq that leads the pack with a retracement of 249% — impressive considering the severity of the financial crisis bear market.
Between Japan and Europe, they are buying what $150B a month? Besides the central banks and big companies buying back their own stock, there’s nothing supporting this market. That said, I’d be damn surprised if that changes before the election. If Hillary wins, the central banks will keep an easy money policy. If Trump wins, they will likely pull the rug out from under the market. What’s fucking awesome is that Trump knows all this and has already called them out on it with his warning to get out of the market.
CEOs are selling their own companies stock; and companies buying their own stock is down; but the Fed is buying so it could continue as long as they do that and no disaster strikes like some expect after the “Currency Reset” on 30Sept2016. But one day, it all unravels like in 1929 and 2008. Uriah Akinmoju said that God told him that when he Dow closes at 17,958.26, the economy will be down hill from there; David Wilkerson said God showed him that the Dollar will appear to be gaining strength just before the crash. I keep that in mind. When G.O.D. speaks, everybody listens.
I will give you one piece of advice. Get out of all stocks and bonds before Oct 1. Probably even best before Sept 4th, and the G20 meeting. The shit will begin to hit the fan then.
1929 was the end of a bull market move, followed by a major correction which became known as the Great Depression. 2000 was the end of an even greater bull market move that launched from the ashes of the Great Depression. 2007 was an intermediate high in the ongoing correction to the bull market move that ended in 2000. Go back and look — there was a low in 2002, a high in 2007, and a final low in 2009. This was a classic correction sequence in total. Only the end wave of this move was given a name — the Great Recession.
In retrospect, it appears that another long bull market move started in March, 2009. Just like in the 1940’s, it has taken a long time to gain momentum, and has been scarcely recognizable. However, the up trend has been confirmed by the recent market highs, most notably and importantly in the NASDAQ this time. This set of new highs is confirmation of a beginning move, not an ending move. It is most analogous to the price action in the 1940’s and 1950’s.
Wave theory tells us that this move will probably be only a mere echo of the previous bull move from 1938-1939 to 2000 in economic terms and impact (not necessarily true for market prices)– but it will still be real, long-lasting and meaningful nevertheless. Most interestingly, wave theory tells us that this is some sort of ending move to a larger sequence — either the extension of the ongoing big bull, or the start of a huge bear. The market will eventually tell us which, but probably not for a few decades.
Once upon a time an investor had choices. You could dabble in the market hoping you had picked a ‘winner’ but if were conservative you could buy a safe bond or even an FDIC insured CD that paid 4 or 5%. If you didn’t mind tying your money up and were thinking long term a rental property could make sense. Not anymore.
Bernanke and Yellen have created a Procrustean bed all small investors must lay in. There is no more alpha, no more safe returns as everything is correlated to a bunch of gibberish spewing from the mouths of a few dozen professors of economics. Bad news is ‘transitory’ but the ‘fundamentals’ are looking good but never so good as to remove the ‘temporary emergency measures’ they initiated 8 years ago.
Like a driver stuck in a ditch they keep spinning the cars wheels and refuse to get out of the car and let someone else drive for fear they will be exposed as the idiots they are.
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I have trouble categorizing thing in nominal dollar term. I like to see thing as it relates to inflation between then and now. That gives me a real insight into change.
TC is right in that the markets are juiced to reflect higher nominal dollar amounts. The FED may not be allowed to buy Stocks, but the ‘President’s Working Group on Financial Markets’ sure can and the FED sure has enough proxies in Japan and Europe to buy stocks to the FED’s heart content.
Free money borrowed by corporations in their stock buybacks helps boost the market, too.
Look, it is still a supply and demand stock market. For stock prices to advance, someone is buying– less than those selling. Hedge funds maybe pressured with low interest rate to seek returns in the stock market, hoping to sell to a greater fool at a profit. But, is it just a nominal increase rather than a real inflation adjusted increase? A profit that you have to pay taxes on maybe no profit at all.
Yes, we do have inflation and it is most evident in financial assets.
“The only winning move is not to play.”
Most people don’t understand a very simple concept, that there are two different dollars. The real dollar and the fake dollar (FRN, Federal Reserve Note).
Save your money in real dollars. I could be an ass and not explain what a real dollar is, and I won’t. Ask the first president George Washington. Thankfully, he left us a law that explains it. The Coinage Act of 1792.
Nothing structural was fixed in ’08. If anything it was made worse. Papered over with shit and vomit, then the banksters went on their way in their never ending quest for MOAR!
The monetary system is structurally fatally flawed. The simplest way to articulate this flaw is: If a unit of money is a credit then it is also a unit of debt. Debt accrues interest. From where does the “money” come from to pay the interest accrued on the original amount? It too must be borrowed into existence under the same conditions. Thus the positive feedback loop ponzie scheme is born.
There is another way. Article 1 section 8 clause 5 and 2 spells this out. However Congress needs to grow a set and take back its power from the banksters. I’m not holding my breath.
the corporate snake has no bound
“we are the poison, that feeds the snake, that kills us”
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