The bottom is not even close yet,if anyone believes the 'figures' coming out about the U.S economy they are kidding themselves. Here is part of an article that speaks the truth,a very rare thing in the U.S:
Bottoming process? Based on what? Hopes? Expectations? The incessant need to believe that the 401k simply must come back because it's just not "fair" to have such big losses? There is nothing, I repeat, NOTHING about the market that is even remotely indicative of a bottom. Nothing. Not one thing. Have I made my point?
It's simply unbelievable, illogical and totally absurd. All throughout this bear market these clowns have continued to search for bottoms, to continually contrive "evidence" for the bottom. Why? It's a BEAR market. Why not look for where to sell the damn thing, and not where to buy it?
No matter how far the market falls, the idiocy never ceases. MSNBC dazzled us last week with repeated helpings of brilliant and highly informative quotes like these:
"Many analysts say there's no way to predict when stocks will recover." Duh. So why do they keep getting paid for trying to do just that? Off with their heads, I say.
"'All of the conditions for the end of a bear market and the start of a bull market are in place,' said Johnson. He ticked off market liquidity, low interest rates, a rebounding economy and improving corporate profit picture. 'If you have those conditions, you ordinarily have a bull market.'"
Ordinarily stocks of worthless IT companies don't sell for $300 a share. Ordinarily 20-year old kids with no business experience don't become the heads of multi-million dollar start-ups overnight. Ordinarily the stock market doesn't triple in five years.
So what? Anybody who thinks that conditions are "ordinary" ought to lay off the crack pipe, pull their heads out of their pants and take a good look around. This is no ordinary bear market. This is a long-term secular decline, the inevitable unwinding of a massive financial bubble. Nothing about the bull market was "ordinary". So what sense does it make to expect the bear market to be "ordinary"? The bigger they are the harder they fall and what goes up must come down. You don't get something for nothing.
Take a look at a long-term chart of the S&P 500. Starting around 1995 the market began an almost exponential increase. The slope of the advance turned up sharply. Basically, that was when the absurdity began. That's when buying stocks became a "no-brainer" and many "no-brains" hopped on the bandwagon. Alan Greenspan, while warning of "irrational exuberance" on one hand, used the other hand to inject the nation's credit-addicted veins with plenty more easy money.
The Fed pumped us all up full of credit and money supply. The man known at the time for engineering the greatest economic advance in U.S. history was in fact creating the biggest financial scam and bubble in U.S. history as we're all rapidly realizing.
And now we're supposed to be surprised that the market has fallen back this far when in fact it is still TWICE AS HIGH as it was in 1995? The market is still hugely overpriced and the excess of the latter half of the 1990s is a LONG way from getting washed out. We should be more surprised that the market is as high as it is than we are surprised about how far it has fallen.
Every bubble in history, every single one has returned prices to their pre-bubble levels. From Dutch tulips to all the paper scams the powers-that-be have historically foisted upon the public, every one of them has fallen back from 90-100%. And if you find an example where that didn't happen, you'll undoubtedly find a massive decline on the order of at least 80% nonetheless.
You can't say for sure when the bull market turned into a bubble market. There isn't an exact point. But looking at the charts it's fairly clear that this market took a turn for the loopy somewhere around 1995. According to Jim Puplava, that was about the time that money supply and credit began to grow faster than the economy. In other words, that was about the time when Alan Greenspan began engineering the biggest bubble in U.S. financial history.
What happened back then is all old news. I mention it from time to time to make very clear the point that much of the 1990s stock market advance was in fact a bubble. It was gains created out of thin air. The Fed created money out of thin air and that money went straight into the stock market. It was the old "something for nothing" but like all "something for nothing" scams, the buyers are eventually left holding an empty bag.
Having established the fact that the 1995-2000 advance was indeed a bubble, we can surmise that this bubble will go the way of all bubbles. Given that, it's patently absurd to speculate about a market bottom when the market is still 100% higher than it was when the bubble began.
The Fed has been busily at work trying to forestall the inevitable. Cutting interest rates, manipulating the financial markets, spin-doctoring to no end about why things are just about to get better. But as the stock market, the dollar and gold are all clearly demonstrating, you don't get something for nothing.
YOU CAN'T SOLVE THE PROBLEM WITH THE SAME TOOLS THAT CREATED THE PROBLEM IN THE FIRST PLACE. Let me put it you very simply: You can't lose weight by stuffing yourself with Twinkies and Ho-Hos. And you can't fix a deflating bubble by stuffing it with the same vapid, nutrition-less garbage that created the bubble in the first place.
"Oh but wait! Housing is still strong! Folks won't stop spending because their housing gains offset their market losses!" Yeah. Tell that to housing stocks. Take a look at any handful of home builders. You'll note that most of their stocks have completed tops after extended climbs and have turned lower. Fannie Mae and Freddie Mac broke down big-time in recent weeks. Yeah, yeah, the government housing data still looks great. Then why are the housing stocks tanking?
That's it. The last remaining hope is in the process of topping out. "Defensive" stocks have topped out as well. Take a look at Procter & Gamble. It had a nice run while folks figured that "people gotta' buy soap no matter how bad the economy gets." But suddenly folks are beginning to realize that the traditional "defensive stock" is no such thing in a major, long-term secular bear market.
The tide is rapidly turning away from paper assets as every day more and more people realize that something created from nothing is still pretty much nothing. The move toward gold and other commodities & physical assets is on. The bear market in paper is here, it's big, it's real, and it ain't going away anytime soon.
Yeah, there'll be a rally and it will likely be a big one and they will tell you that it's "The Bottom". There's a reason why bear market rallies are called "Sucker's Rallies". You figure it out...
Mark M. Rostenko Editor The Sovereign Strategist www.sovereignstrategist.com
July 16, 2002
Mark M. Rostenko, a veteran floor trader of Chicago's commodity exchanges, is the editor of The Sovereign Strategist investment newsletter. His views have been featured in Barron's, the Wall Street Journal, the Miami Herald and many other publications. The Sovereign Strategist has achieved an uncannily accurate track record in timing the market's turning points throughout 2001 (and into 2002), helping subscribers to profit from 40-500% on various investment vehicles in 2001.
For more information or to request a free sample of The Sovereign Strategist, please visit www.sovereignstrategist.com
