This will be the shortest post ever……….a trading friend of mine just wrote me and shared this interesting article called The 64-Month Bubble Pattern. It matches almost exactly the thoughts I was offering in my Six Six Six post from last night. The funny thing is that I didn’t set out writing the post with a conclusion already in mind. I was merely curious, and I counted out the months and was a bit shocked to find such a similarity. Anyway, check out the aforementioned article, since it’s a pretty cool correlate to my own (independent! honestly!) thinking.
Well, today the S&P 500 finally did it: it pushed past 2,000, and it nailed a point value precisely three times – yep, 200% higher – than the March 2009 bottom.
The ascent since March 2009 has been pretty much straight-up. I was looking at the long term monthly history of the index, and the only other occurence I see of this kind of behavior in the nearly 100 years I looked at was in the last six years of the prior century.
Simply stated, the almost-straight-up bull run in the past ran from December 1994 to March 2000. That’s less than six years (64 months, to be exact). The almost-straight-up market we’re currently in has been raging for……….65 months. How about that! Here’s the chart (which, as always, you can click for a bigger version). I’ve also tinted a couple of mildly-interesting parallels along the way.
The obvious conclusion? Buy everything you can! Yellen’s got your back!
No, don’t worry, this is going to be another one of those “the indexes look just like the Norwegian Salmon Futures from 1587-1591!” type posts – - it’s a different kind of analog.
It occurred to me this morning the perfect representation of this equity market: the T-1000 robot from Terminator 2. Most of you have seen the movie, and as you’ll recall, no matter what damage is done to the robot, it simply heals itself, whether the assault is performed by shotgun blast, handgun bullets, or liquid nitrogen.
As the Wikipedia entry describes it, “The T-1000 is effectively impervious to mechanical damage, such as being dismembered, riddled with bullets, or attacked with explosive devices. Wounds close almost immediately, and any detached parts simply flow back into the T-1000′s body.”
And that, my friends is what we’ve got on our hands, because the threat of rising interest rates (as exhibited by yesterday’s Fed minutes) was like a series of bullets being fired at the market, which was, for about five minutes, slightly beaten down. But the liquid metal healed up the wounds, and the T-1000 (embodied by Yellen) was as good as new, ready for more action and more lifetime highs. The same goes for what happened this morning (a swift dip that lasted, oh, about 3 minutes).
The weary pledge, trotted out by everyone from Cramer on down (or up……..) is that “this will end badly someday.” As I’ve stated before, I think this is simply a verbal insurance policy on the part of pundits to make sure that, in the year 2398, or whenever it is, when things do end badly, they’ve got a clip they can play to say that they “warned” us. As with the T-1000, however, the “bad” ending will have to come in the form of something so destructive and overwhelming, that even liquid metal can’t put itself back together again. Hasta la vista, baby!
One of the earliest chapters in my Panic, Prosperity, and Progress book is about the South Sea Bubble. I know I’m not the first chap to compare the insane Bitcoin bubble (which is rapidly deflating) with South Sea, but I am truly struck by the similarities. Here’s what happened with South Sea, four centuries ago………(the notations about Newton relate to Sir Isaac Newton’s own investing losses with this “security”:). I’ve put an arrow approximating where I think we are right now with respect to the Bitcoin analog……… (more…)