Investing General Discussion

Blazin said:

Being tongue in cheek with Gravel, but always a good reminder that it is possible for the market to zig and zag for very long periods and ultimately go nowhere. There are a ton of 20-30% moves up and down during such periods however.

What Gravel is actually talking about is a tight trading range. Which to measure against the past you have to first establish what size range. While our top to bottom range during this bear has actually not been that small. The box I show here is rather tight that we have spent "a lot" of time in.
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ShakyJake said:

I'm wondering if the market has hit somewhat of a bottom since interest rates are starting to come down. Look at the 2Y and 10Y.

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• Less than a year into the dot-com bubble bursting, on Jan. 3, 2001, the Fed began an easing cycle that would see the federal funds rate move from 6.5% to 1.75% in about 11 months. However, it took until Oct. 9, 2002, before the stock market reached its nadir. That's a 645-calendar-day wait from initial decrease to actual bottom.
• As the financial crisis began to take shape, the nation's central bank reduced the federal funds rate from 5.25% to an eventual range of 0%-0.25%. Though this rate-cutting began on Sept. 18, 2007, the stock market didn't bottom out until March 9, 2009, or 538 calendar days later.

Blazin said:

Based on history simple answer is "No". But history only helps us with probabilities it doesn't predict the future. Couple things to consider is that the dynamics of cyclical bear markets are different than secular bear markets. We most often think of secular bear markets when we are putting on a bear party hats. If the larger bull trend that began with the 2013 breakout ending a 13yr secular bear market, is still intact then we don't need to see swings in sentiment as severe. Expansion cycles tend to last a pretty long time (1944-1966) (1982-2000) (2013-?) . My very zoomed out base case is that we are still in a secular bull market until price action tells us otherwise. Cyclical bears being just outsized corrections that will range more in the 20-30% peak to trough vs 50%+ stuff of secular bears.

There is no doubt a secular bear will come but you have to be careful not to spend the better part of your investment career seeing it around every corner. When it's here you'll know because the technicals will make it clear. I have posts of old laying out demographic issues that tend to drive these very large trends. A primary reason to believe that we aren't yet entering a secular bear is that millenials are still in throws of new household creation and have not yet reached their peak earnings.

To me the Jeremy grantham wet dream stuff is more likely to arrive late this decade or early next. THere are societal tension issues that will likely correspond with this, hitting more a zenith. We are close enough now that it's not a big stretch to see how that develop. FOr people who have turned over their brains over to social media outrage machine believe it's already here and the boogaloo is just around the corner, they are just amplifying something real that is growing. Makes them early but probably not wrong from a generational perspective.

These major trends are world changing when they come, Microsoft and apple may not even exist coming out of the next secular bear market. Things take time and where many go wrong is their impatience. The now always seems the most important forever at the zenith.

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