“When there is a boom and everyone is scrambling for common stocks, take all your stocks and sell them. Put the proceeds in the bank [T-bills]. No doubt, the stocks you sold will go higher. Pay no attention to this—just wait for the recession which will come sooner or later. When it gets bad enough to arouse the politicians to make speeches, take your money out of the bank [T-bills] and buy back the stocks. No doubt the stocks will go still lower. Again pay no attention. Wait for the next boom. Continue to repeat this operation as long as you live, and you’ll have the pleasure of dying rich.” –Fred Schwed, Jr., (1940) Where Are the Customers’ Yachts?
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Cory's Chart Corner
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Canadian dollar = lower highs and lower lows, (negative trend continues). http://t.co/kJ8VIfW7LJ 15 hours ago
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Ohh Copper ya ole grump! http://t.co/15ry1UeuCS 15 hours ago
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As mkt's nervously await Bernanke's decision to (+ /-) from a failed policy...the business cycle continues. http://t.co/J1HXeU05s5 15 hours ago
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Really, this is not true, unless your criteria is to make the central banks prevent bear markets forever.
The banks have “successfully” prevented a bear market from happening for 4 years (2009-2013). The fact that they’ve had to degrade the long-term prospects of the economy further, by making more bubbles, doesn’t mask the fact that stock prices have been successfully manipulated upwards.
We live in unprecedented times. Central banks have unprecedented power and technology available to them to achieve their goals. That doesn’t mean they’re doing the world a service. But if their goal is to move stock prices upwards, with no regards for the consequences, they can do that for unlimited periods of time.
Now if you want to talk *real* stock prices, adjusted for actual inflation (as opposed to published statistical inflation), then I agree.
Cyclical bear markets are recurring roughly every 4 years through market history. The fact that the market has rallied off the 2009 bottom for 4 years is typical and does not mean the Fed prevented a bear market. It does mean we are once again about due for the next one. And this time, because the Fed has financially prolapsed itself over the past 4 years during the “recovery” phase, the policy bullets heading into this next cyclical contraction phase are more limited than ever before.