Repeated Central Bank interventions between 2008 and 2014 interrupted the natural mean reversion needed to bring financial asset prices back in line with the economic fundamentals possible now after global consumers blew up on credit. Interruption is not the same thing as avoidance.
The secular bear that began in 2000 was temporarily sedated by every financial gimmick in the book, including suspending financial crime prosecution, and fair market accounting rules. But in the end, there is only one way to finally end a secular bear and that is through price declines to single digit valuations that crush the unprepared, and bring sober investment back in vogue. Participants may think they got away with defying the natural law of market cycles, but amid a plethora of garish metrics today, including a Shiller PE of 26–3 times the average found at the start of secular bulls-– the secular bear of our generation remains alive and more menacing than ever.
After a scary swoon in the middle of the month, stocks rallied strongly into the end of October, with the Dow and S&P 500 hitting new record highs on Friday. But the mid month slide did some major technical damage to the market, according to Thomas Kee, president & CEO of Stock Traders Daily, who has a very, very bearish long-term view. Here is a direct video link.
