Juggling Dynamite

Good article courtesy of Lance Roberts this morning, in answer to the long-always propaganda suggesting that 2015 was the end of the secular bear that began in 2000 and we are now in the midst of a new secular bull market likely to continue for many more years.  See:  Past is prologue: new secular bull or repeat of the 70’s.

In the top panel Roberts shows the S&P 500 price action from 1963 to 1973 compared with 1997 to present in the bottom panel.

Those banking on a new secular breakout in 1972, were punished brutally for their error. What followed was a third massive decline of -45% for the broad market as shown here.

To wit:

The second breakout in 1972, like the previous, was the setup for the final market dive that reset valuation levels back to historic secular bear market lows. That crash also created the necessary extreme negative in investor psychology. The 1974 bear market low is known as a “black bear market” because investors were so brutally ravaged by the crash they did not return until nearly two decades later.

Asset valuations are more extreme and vulnerable today than at any of the 3 cyclical peaks during the 1966-82 secular bear market.  Structuring our portfolio to minimize losses in the next decline, and maintain liquidity and strength of mind to be one of the few able buyers from panicking sellers, should be the wise person’s raison d’être today.

Wolfstreet.com offers some useful analysis and charts on real economy trends. Editor Wolf Richter did a worthwhile interview on Peak Prosperity this weekend where he explains, among other things, why assets are not more valuable just because prices go up: “You can’t have median homes that require multi-millionaires to live in them, because you know, we just don’t have that many millionaires.”  Also discusses spreading strains in the global banking system and the likelihood of bail-ins from bank equity and bond holders in the next resolution phase. Real world commonsense assessments are helpful.

Wolf Richter joins the podcast this week to discuss the deterioration of the global macro situation, and how he is seeing growing signs of recession breaking out across the economy. Here is a direct video link.

See The economy is cracking under too much debt:

“…one of the biggest mistakes the central banks made during the financial crisis: They stopped the debt from blowing up. So we never had a cleansing.

In a time when journalists have been widely replaced or morphed into on air personalities and ‘news’ outlets are owned by big business, free press is a scarce commodity. Thankfully the internet affords some independent coverage that would not otherwise be available. There is a reason that freedom of the press is listed as a fundamental right in both the US Constitution and the Canadian Charter of Rights and Freedoms. We, the people, need ethical journalism now more than ever, if we have any hope of living in a democracy.

In an exclusive interview, Democracy Now’s Amy Goodman says she’s turning herself to North Dakota authorities to defend the right of journalists to challenge power. Here is a direct video link.