The real trouble with this world of ours is not that it is an unreasonable world, nor even that it is a reasonable one. The commonest kind of trouble is that it is nearly reasonable, but not quite. Life is not an illogicality; yet it is a trap for logicians. It looks just a little more mathematical and regular than it is; its exactitude is obvious, but its inexactitude is hidden; its wildness lies in wait.
—G. K. Chesterton
–You lied, she tells me.
–Did not, I say.
–Did So–You said Billy was coming to play.”
–He’s coming, dang it! He just hasn’t gotten here yet.
Little sisters can be so tiresome. Less so, now that I’ve grown up, are readers that grouse about me predicting a catastrophe that never seems to come. Said catastrophe, a bear market of Grand Supercycle degree, is an event that will follow a Grand Supercycle bull Market that began in 1784, and is tracing out the fifth and final wave. It is the timing of the top that creates the uncertainty. Tops can and do take their sweet time coming to conclusion. The certainty is that, when the characteristics of a top are present, a severe crash is going to be the outcome.
On March 6, 2014, I wrote:
On a sunny day, the snowpack on a mountainside presents a picture of stability. But, beneath that serene white blanket, minute cracks are forming to weaken it. The longer it remains on the mountain, the more ubiquitous the cracks under the surface, until the snowpack reaches critical state. When this happens, scientists can predict that an avalanche will occur. They just can’t predict when the last snowflake will float down from a cloud to precipitate it.
The ubiquity of fissures in the global financial system first reached critical state in 2000. Repeated efforts by the Fed to prevent a washout to cleanse the system held the market up until 2007. The 54% crash into the lows of ’09 caused central bankers around the world to undertake a massive bailout, but nothing substantive has been done to fix things. Truth is, the only real fix is a Jubilee-like flattening of most of the unpayable debt that is choking off global economic growth. Leviticus 25-26 is good read here.
The recovery since March of ’09 has been weak, and now, even before the U. S. stock market has made its final top, the economic data is rolling over. Locally, what looks like a healthy crowd of tourists in town is deceptive. They are not spending money, my merchant neighbor tells me. It’s a very small sample, but I don’t have to look far to find corroborating evidence.
The key is to be prepared. The market studies I employ have given several forecasts that have led to partial playouts of the no-place-to-hide-from calamity that is in the works. The topping pattern once again looks to be in its late stages. I think we should expect this one to be the one that leads to an epic collapse in the value of all assets other than cash.
After the top is in, sometime this year, buy-and-hold will cease to be a viable investment strategy for decades to come. My hope is that my friends and family will not be unprepared.