For Bears, Patience is Key
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Another painful day for bears as the stock market rose to new highs in this intermediate term move. While the fundamentals of the economy are still deteriorating, the market trades on emotion in the short-term, and can therefore do some crazy things. Here’s the updated chart comparing the 1930 rally off the crash of 1929, and the current rally.
I believe we are still in a secular bear market. Turns occur when the public is convinced stocks can only go up and up. Turns occur when people start talking about “normalized” earnings, as opposed to real earnings. Normalized earnings assume that markets are mean reverting, which has proven to be false over and over again. Think Long Term Capital Management. As a nation, we’ve binged on a seemingly never-ending supply of credit, and now the piper must be paid.
Fasten your seat belts, I get the feeling things are about to get very interesting.
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Is 2009 A Repeat of 1930? Why Depressions May Rhyme
(Blogging the Commodity Bull Market, 8/23/09)
Echoes of 1930 - Do Depressions Rhyme?
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News From The Great Depression
(Wealth Daily, 7/23/09)
