Springheel Jack is one of Slope's most esteemed and valuable participants, particularly since he does a substantial post every weekday morning. He has my gratitude, as he does the vast majority of the community.
I noticed a comment he made recently, and I'd like to share it in its entirety (with a few items emphasized by myself) since I think it's worthy of its own post. Thanks, SHJ, for this, and everything else.
Here's a repost from my reply to Tim's post on the last page. It's sort of a resigned bear's manifesto:
Tim, great post and I know exactly where you're coming from. The last twenty months have been bruising for all those of us who have read enough economic history to expect current policies to end very badly.
Timing as with so many things is the key here. I think the old Dow Theory maxim that the basic trend of the market could not be manipulated has been convincingly disproved since March 2009. It was the first time this maxim has really been tested thoroughly and as it happens, it was wrong.
What we're left with I think is that the market can be supported by the US gvt and the Fed as long as their credibility and credit holds out. That might take a year or two even at current rates of spending and in the meantime we could see some extraordinary and obviously unsustainable things happen, as one can see in any bubble.
Pug thinks that we are starting a new secular bull market and thinks that current imbalances will somehow be sorted out by the market within that secular bull. I disagree though I'm expecting it to be sorted out by the market too, but I'm expecting that to be in the traditional manner that the market deals with any spendthrift borrower, through rising interest rates, tightening of credit and eventually default. When we see that process advance to the stage that the Fed can no longer easily borrow or print huge sums of money, the house of cards that they are building now will collapse and we will see the end of the current secular bear market in the traditional manner with an unmanipulated cyclical bear market and revulsion low.
I was talking to Trader1 yesterday about the view expressed by many slopers that because of market manipulation, technical analysis is now irrelevant. I told him that in my view that was back to front, and that as long as the market is being supported this way, it is economic analysis that is irrelevant, and the only thing likely to guide us through this is technical analysis, which has been working just fine if we tune out the broader economic picture.
Just my 2c as a long time admirer of your work. I'm no less bearish than you in the long term. I'm just further along the road of accepting that this will end when it ends, and in the meantime we should just trade what we see rather than what we expect.
