Stock declines signal a bear market; here’s what that means

[The Work Outing]

First of all as I said, we rarely buy or sell unless there is a very good reason. My husband approves or initiates every buy and sell.

Every, single transaction - no matter how small - your FA contacts your husband for his approval?

No offense, unless you are multi-millionaires (and you may well be)...
or your FA is a private individual who is not affiliated with a larger firm.
I doubt it.

 

[The Work Outing]

Here is my detailed take on today's action.

Overall Market Comment after today's Fed announcement - my view on it.​

Some questions were answered today. Now they have to be confirmed over the next 2 days.

1) the Fed did what they needed to do to begin to fight inflation but what they did is not going to help the index market for now. At least not until these decisions start to show that they are working.

The rally today did not accomplish anything though it may give some false hopes that a recovery is to occur. That is not likely to be the case. Using the SPX as the main index to watch, the announcement today did not surprise so the bears did not get any "new" ammunition but they are still in control. As such, the rally today is likely to become a retest of the 3838 level, which is the level that generated the signal that the trend had changed to a bear trend. Testing that level is normal and expected. The SPX closed today at 3789 and likely will close higher tomorrow and likely around the 3838 level (another 49 points higher above today's close. Nonetheless, on Friday, it is likely to generate a red day and a close below 3811, would would be a signal that the downtrend continues with the 3500 level as the objective, to be reached over the next 1-3 weeks.

Based on today's news, the likelihood of a bounce from that line occurring has now increased but the market will likely continue lower thereafter if these Fed measures do not work out as the Fed expects them to work out. That will not be known for at least a couple of months.

2) the Fed decision today does put a brake on Gold for the time being but does not give new ammunition to the bears. The chart favors the bulls and now that the 75 point increase in rates is factored in, it is doubtful that Gold will continue lower. As such, Gold is likely to trade between $1810 (or a bit higher) and $1860 for the next few weeks. More chances of a breakout than a breakdown due to the fact that the 75 rate high announced today means that the Fed "is worried" about inflation and that will give the bulls some ammunition. I doubt Gold will show any further weakness below yesterday's low at $1805, at least not until it is seen if the Fed action is working successfully to stop inflation.

3) the action today has now given the traders new ammunition to cherry pick stocks to purchase and stocks to sell given that the index market is not going to do much unexpected action and that means that stocks that have a chart that suggests higher prices will actually get higher prices on their own.

Well said.

Do you do this for a living?
You sound like you do.

And - for once - I think the Fed did the right thing today.
Though...they should have done it months ago instead of keeping their heads in the sand...but whatever.
It's the Fed.

 

[Luckyone]

Well said.

Do you do this for a living?
You sound like you do.

And - for once - I think the Fed did the right thing today.
Though...they should have done it months ago instead of keeping their heads in the sand...but whatever.
It's the Fed.

I do this for a living..........been doing this for 47 years.

Fed is lost right now. They really have no clear idea of what to do. It is worrisome.

 

[Mina]

Come on now.
a) the first sentence you cannot prove.
And b) I could care less if people are 'citing' the NBER number.
Thus it means little to nothing.

Most people call a recession two consecutive quarters of negative GDP growth.
No...I cannot prove it.
But it is common knowledge.

And - once again - the U-3 is a JOKE.
You could have one person working in America. Just one. And if 250 million Americans all wanted jobs, were ready to take a job but had given up looking for a job because there literally were none available?
In the U-3's eyes...the unemployment rate would be 0.0%.
That is RIDICULOUS.
The U-3 is a joke.
And it has been a joke since 1994.

Anyone who uses it in ANY WAY to determine a recession is using highly-flawed data.
And thus, are a waste of time, imo, in that regard.

Now unless you have a link that is unbiased and proves that most of Main Street and Wall Street use the goofy, NBER method rather than the traditional one to determine a recession...we are done here.

Good day.

I suppose I cannot prove it in the sense of providing your a comprehensive list of the positions of every such person. What I can do, though, is suggest you read about recessions online. Pretty much regardless of source, you'll see great consistency (among professionals of various sorts, at least) about what the dates of various recent recessions were, and it's pretty much always the NBER dates they're using. It may be a private organization, but for practical purposes, it's broadly treated as an official determination.

Again, Google it yourself if you don't believe me. Try to find ANY link online that gives a specific start date to the Great Recession that DOESN'T say December 2007. Obviously, the quarter doesn't start in December, so all those references to December cannot be referencing the old-fashioned "two consecutive quarters" definition. They're referencing the NBER, explicitly or not.

As for the two-consecutive-quarters definition, that's certainly one you hear occasionally from amateurs, since it was the common definition many decades ago. But, it definitely hasn't been a standard definition used by economists and other pros for a long time.

For example, how many recessions have we had since 1950? If you define it as "two consecutive quarters of negative GDP growth" the answer is: only 4. We had two of them under Eisenhower, one under Bush, and one under Trump. Using that definition, the last time a recession started during a Democratic presidency was way back in 1949!

Even if you tweak that to refer to two consecutive quarters of negative growth of real GDP, that erases some widely-acknowledged recessions. Like in 2001 the economy shrank in first and third quarter, and it's widely acknowledged to be a recession, but there was growth in second quarter, so it doesn't fit the consecutive quarter requirement. Using that definition also erases the 1960 recession (-2.2%, +2.0%, -5.2%).

Anyway, I understand that because a Democrat is president, you are currently committed to the notion that U-3 is a joke. Fine. Use U-6 then. As mentioned, that's down even more sharply on Biden's watch, and is down so far in 2022, too, so there's not yet a sign of a recession in that indicator. Or use the PAYEMS establishment survey, which shows month after month of job creation that is far above average, and vastly above what's needed to provide enough jobs to cover the expansion of the labor force. If labor market weakness is an element of a recession, we don't see that yet. Maybe it's about to show -- the Fed certainly has committed hard to the political cause of cratering the economy before the election. But, so far, they haven't succeeded.

 

[The Work Outing]

I suppose I cannot prove it in the sense of providing your a comprehensive list of the positions of every such person. What I can do, though, is suggest you read about recessions online. Pretty much regardless of source, you'll see great consistency (among professionals of various sorts, at least) about what the dates of various recent recessions were, and it's pretty much always the NBER dates they're using. It may be a private organization, but for practical purposes, it's broadly treated as an official determination.

Again, Google it yourself if you don't believe me. Try to find ANY link online that gives a specific start date to the Great Recession that DOESN'T say December 2007. Obviously, the quarter doesn't start in December, so all those references to December cannot be referencing the old-fashioned "two consecutive quarters" definition. They're referencing the NBER, explicitly or not.

As for the two-consecutive-quarters definition, that's certainly one you hear occasionally from amateurs, since it was the common definition many decades ago. But, it definitely hasn't been a standard definition used by economists and other pros for a long time.

For example, how many recessions have we had since 1950? If you define it as "two consecutive quarters of negative GDP growth" the answer is: only 4. We had two of them under Eisenhower, one under Bush, and one under Trump. Using that definition, the last time a recession started during a Democratic presidency was way back in 1949!

Even if you tweak that to refer to two consecutive quarters of negative growth of real GDP, that erases some widely-acknowledged recessions. Like in 2001 the economy shrank in first and third quarter, and it's widely acknowledged to be a recession, but there was growth in second quarter, so it doesn't fit the consecutive quarter requirement. Using that definition also erases the 1960 recession (-2.2%, +2.0%, -5.2%).

Anyway, I understand that because a Democrat is president, you are currently committed to the notion that U-3 is a joke. Fine. Use U-6 then. As mentioned, that's down even more sharply on Biden's watch, and is down so far in 2022, too, so there's not yet a sign of a recession in that indicator. Or use the PAYEMS establishment survey, which shows month after month of job creation that is far above average, and vastly above what's needed to provide enough jobs to cover the expansion of the labor force. If labor market weakness is an element of a recession, we don't see that yet. Maybe it's about to show -- the Fed certainly has committed hard to the political cause of cratering the economy before the election. But, so far, they haven't succeeded.

As I have already stated...I despise both parties.
What I feel about the economy has NOTHING to do with who is in the frigging WH.

Got it yet?

 

[Callen]

Every, single transaction - no matter how small - your FA contacts your husband for his approval?

No offense, unless you are multi-millionaires (and you may well be)...
or your FA is a private individual who is not affiliated with a larger firm.
I doubt it.

Every single trade, no exceptions. Not only that but we get an email advice of every trade when it is made and then a add confirmation. Our FA is with Edward Jones.

 

[The Work Outing]

I do this for a living..........been doing this for 47 years.

Fed is lost right now. They really have no clear idea of what to do. It is worrisome.

IMO, the Fed was lost the day Helicopter Ben decided they were 'all in' at propping up the equity markets.

I believe that America's economy is doomed to mediocrity so long as either: a)the Fed keeps it's 'full employment' mandate...which gives them almost unlimited, economic power;
Or b) the WH/Congress appoints only Hawks to the the Fed BoG's.
The odds or either happening remotely soon seem slim to none.

 

[Mina]

I have no idea why you are talking to me about this as I despise both the Reps and the Dems.
And I am not a communist or socialist or Libertarian.
I despise ALL political parties (that I am aware of).

I think Trump is a manchild and Biden was useless even before he started going senile.
And I think every POTUS since at least JFK were failures as POTUS's.
Though Clinton and Bush Senior were not too bad...but still not good enough.


As for measuring unemployment?
I am not gaga about any of them (that I am aware of).
But if I had to choose one - I would choose the employment to population ratio.
It is not perfect.
But it is straightforward and difficult to mess up (like Congress/the bls has messed up the U-3).

Employment–population ratio

www.bls.gov

Good day.

The employment-population ratio is a good measure. It's up dramatically on Biden's watch: 2.6 points, so far. The modern historical average is 59.2%, and right now it's 60.1%, so it's also quite high in historical terms. In fact, in all of American history, it didn't break above 60.1% in even a single month before the mid-1980's. So far, the employment-population ratio isn't showing signs of labor market weakness. It's at the highest point it's been in this business cycle.

One consideration with the employment-population ratio, though, is that it's sensitive to age demographics. It was quite high in the 1980's and 1990's, even during periods with high unemployment (and signs of weak labor conditions in terms of falling incomes and rising poverty), because the Baby Boomers were in their peak working years (too old for college, mostly too old for having babies, but too young to retire). When a gigantic generation is nearly all looking to hold down a job, you get high employment-population ratio. In the 1960's and 1970's, by comparison, some Boomers were too young to work, some were in college, and some were off raising babies, and these days a lot of Boomers are retired.

 

[Luckyone]

I see.
Just remember please, every time you sell a stock - you have to pay tax on the gains.
If your FA (financial advisor) is buying and selling dozens of stocks a month?
All she is doing is costing you greater tax liabilities and raising her companies commission fees.

Not entirely true. When you buy and sell repeatedly, you will have losses that can be used to lower the taxes paid on the profits. A good trader in the market can make 5-10 times more than a buy and hold investor and that makes up for whatever taxes you make on the short-term profits. Then the caveat to all of this is "you have to be a good trader".

FYI, back in 1984 I met a legendary trader who bought a seat on the Chicago Board of Trade and started with $25,000 and in two years he made $200 million. No buy and hold investor can EVER hope (not even a miracle occur) to make that kind of profit.

You see, most large investment firms do not actually manage, individual portfolios.
They toss them into a big 'pile' with all their other, managed portfolios.
Some of them will be 'high risk'.
Some will be 'low risk'.
And so on.
But all of them in each 'pile' will probably have the exact, same breakdown of stocks and bonds.
They give you the impression that the portfolio is designed for your 'investment needs'.
But it's just BS.
They find out your level of risk tolerance and toss your portfolio in with all the other ones in that risk tolerance group.

Absolutely true!

Then, on top of the fees they charge you.
They will try and buy and sell as many stocks as they think they can get away with to raise their commission fees.
Like I said - Royal Bank Wealth Management (don't know what they are called now) even did it.
Every month I got a report from them with dozens of transactions.
Finally, I called them on it and realized what was going on (this is many years ago).

Yes, it is a negative that most people are not aware of.

You are Canadian.
Surely you know that Canadian banks make their money off of charging all kinds of little fees TO DEATH.

Unless you are a millionaire OR you have a private broker?
I STRONGLY urge you and your husband to closely examine - every month - each and every transaction that your financial advisor is making for you.

Great piece of advice.

And please forget the 'warm and fuzzy feeling' your FA gives you.
That is what they are supposed to do.
They are closer to salespeople than actual, financial experts.

Been there and "done" that.

 

[The Work Outing]

Every single trade, no exceptions. Not only that but we get an email advice of every trade when it is made and then a add confirmation. Our FA is with Edward Jones.

Cool.
You must be wealthy or your FA is a personal friend.
Otherwise, I doubt it.

Anyway, hope things work out for you.

BTW - I still think your stocks/cash and cash equivalents ratio sucks for an economy that is teetering on a recession with inflation at a 40+ year high.
But whatever.

Take care.

 

[Luckyone]

IMO, the Fed was lost the day Helicopter Ben decided they were 'all in' at propping up the equity markets.

I believe that America's economy is doomed to mediocrity so long as either: a)the Fed keeps it's 'full employment' mandate...which gives them almost unlimited, economic power;
Or b) the WH/Congress appoints only Hawks to the the Fed BoG's.
The odds or either happening remotely soon seem slim to none.

Powell is average. He is more of a follower of the established than a brain like Volker. That man made things happen, not just follow the established.

Within the next 2 years, Americans are going to be very unhappy with Powell. He will get fired at some point during this time.

 

[The Work Outing]

Not entirely true. When you buy and sell repeatedly, you will have losses that can be used to lower the taxes paid on the profits. A good trader in the market can make 5-10 times more than a buy and hold investor and that makes up for whatever taxes you make on the short-term profits. Then the caveat to all of this is "you have to be a good trader".

Good point - I forgot about 'capital losses'.
But I was referring to a computerized set of trades made for - apparently - no other reason then to benefit the firm.
But you are right.

FYI, back in 1984 I met a legendary trader who bought a seat on the Chicago Board of Trade and started with $25,000 and in two years he made $200 million. No buy and hold investor can EVER hope (not even a miracle occur) to make that kind of profit.


Absolutely true!


Yes, it is a negative that most people are not aware of.


Great piece of advice.


Been there and "done" that.

Thanks!

Do you write a blog or something?
I would like to read it.
You seem to have a balanced view of the markets.
A rare thing these days...sadly.

 

[Mina]

As I have already stated...I despise both parties.
What I feel about the economy has NOTHING to do with who is in the frigging WH.

Got it yet?

Yes, I understand; there are a lot of people who adopt that "plague on both your houses" stance. It's a way to feel too cool for the fray, and so it becomes part of people's identity. I suppose I've got a bit of that, too, since I proudly point out that I've never been registered with any party. I vote based on the facts, as best I can. But, even from that independent stance, I can see how a bunch of other "I despise both parties" types have a chronic tendency to repeat right-wing talking points right on schedule (e.g., harping on supposed technical problems with U-3 when that's helpful for dismissing a strong Democratic economy, but somehow never making those same points when a Republican is president). Maybe you're different. Maybe if I went back and checked the forum's archives from 2019 I'd find you responding to threads about the strong labor market with similar points about U-3. Is that the case?

 

[The Work Outing]

Powell is average. He is more of a follower of the established than a brain like Volker. That man made things happen, not just follow the established.

Within the next 2 years, Americans are going to be very unhappy with Powell. He will get fired at some point during this time.

I never thought of that.
Powell actually being fired.

And I agree.
Powell - since inflation started up - has had that 'deer in the headlights' look.

BTW - what is your opinion as to why inflation has (finally) started to rise?
And how do you see it playing out?

 

[The Work Outing]

Yes, I understand; there are a lot of people who adopt that "plague on both your houses" stance. It's a way to feel too cool for the fray, and so it becomes part of people's identity. I suppose I've got a bit of that, too, since I proudly point out that I've never been registered with any party. I vote based on the facts, as best I can. But, even from that independent stance, I can see how a bunch of other "I despise both parties" types have a chronic tendency to repeat right-wing talking points right on schedule (e.g., harping on supposed technical problems with U-3 when that's helpful for dismissing a strong Democratic economy, but somehow never making those same points when a Republican is president). Maybe you're different. Maybe if I went back and checked the forum's archives from 2019 I'd find you responding to threads about the strong labor market with similar points about U-3. Is that the case?

Well, I have only been here a *few months*.
But if you go to this site - you will see other posts I have made...if you are curious.

Sandisk

www.usmessageboard.com

I have completely given up on government being anything but useless for the foreseeable future...no matter which party is in 'charge'.
But no - I am not an anarchist, either.

 

[The Work Outing]

Our FA is not a personal friend. We have never had a social encounter with her...oops I lied about 5 years ago she had an open house with wine. We are in a very secure financial position. I am not worried in the least.

Okay.

But I will say:
1) NEVER trust ANYONE in the business world.
Some of the richest and brightest people in America trusted Bernie Madoff with their assets.
2) make sure your husband checks EVERY, SINGLE transaction that your FA makes.
No exceptions.
DO NOT take her word for anything.

Good 'luck'.

 

[rhinefire]

I blame it on the decline of the be population,

 

[Mina]

Well, I have only been here a *few months*.
But if you go to this site - you will see other posts I have made...if you are curious.

Sandisk

www.usmessageboard.com

I have completely given up on government being anything but useless for the foreseeable future...no matter which party is in 'charge'.
But no - I am not an anarchist, either.

I see "the government is useless" as a testable hypothesis. For example, if it didn't much matter what happened with government, then we'd expect years with Democratic presidents and years with Republican presidents to have more or less the same average change in the poverty rate. Is that the case?

First, consider an alternate question. Does it matter if it's an even or an odd year, in terms of what the change in the poverty rate is? I hypothesize that it doesn't -- that the data should be pretty randomly distributed across even and odd years, such that over enough years (like the 62 years the Census has tracked poverty), the randomness will more or less even out, and we'll see almost the same change in the even years and the odd ones.

Turns out that's correct. The poverty rate has fallen 0.2 points, average in odd years, and 0.2 points in even years, as well. If we go out another decimal point, we see a small difference (0.21 versus 0.16), but within what we'd expect with just random variation over that sample size (i.e., the difference is not "statistically significant").

So, if it doesn't matter whether it was a Democratic president or a Republican one, we should see something similar: a statistically insignificant difference between the two. Is that what we see?

Turns out: no. During years with a Democratic president, the poverty rates falls an average of 0.44 points, whereas in years with a Republican president is RISES an average of 0.04 points. These are very big differences.

To put it in perspective, if we'd stuck to the Republican average for the whole time since 1959, then by 2020, the poverty rate would have been 24.6%, instead of 11.4%. If we'd stuck to the Democratic average that whole time, we'd have eliminated all poverty.

So, I simply can't take the view that "the government is useless no matter which party is in charge." I see a pattern of dramatic improvement under Democratic leadership and slow worsening under Republican leadership. The numbers tell me it actually matters a whole lot.

 

[Callen]

Okay.

But I will say:
1) NEVER trust ANYONE in the business world.
Some of the richest and brightest people in America trusted Bernie Madoff with their assets.
2) make sure your husband checks EVERY, SINGLE transaction that your FA makes.
No exceptions.
DO NOT take her word for anything.

Good 'luck'.

Why are you ignoring what I said? My husband is very much involved in the minutia. We are more than comfortable with the money we have made while using her as an FA. She, I conjunction with my husband has ensured us a very comfortable retirement and a very healthy inheritance for our children...although their inheritance was not our focus.

 

[Outlook]

Well, the good thing is that so far there's no sign of a recession.

Your first sentence is such a lie it makes the rest of your post unreadable.

PERIODS OF HIGH INFLATION often precede periods of recession.
How is that for a "sign of a recession".

 

[Luckyone]

I never thought of that.
Powell actually being fired.

And I agree.
Powell - since inflation started up - has had that 'deer in the headlights' look.

BTW - what is your opinion as to why inflation has (finally) started to rise?
And how do you see it playing out?

Tough to say but I do not believe inflation will go down to the levels Powell mentioned. By the same token, even if it does, we are likely to have stagflation which can be worse.

As to why inflation got a hold on the economy, it is without a doubt the stimulus program that was put together to help combat the pandemic. Too much money was printed to cover the stimulus and you cannot put that much money into the economy and not suffer inflation, especially since the Fed did not address it at the right time because they feared causing a downturn in the economy during the pandemic.

It really is no one's fault. The pandemic was a unique situation that no one had any previously established guidelines on what to do. On top of that, Global Warming and the push to green energy coupled with Putin invading Ukraine and Russia being a world power in oil caused a one-time situation that was impossible to address with any degree of competence or certainty.

One of those things that happen in life that cannot be blamed directly on anyone or anything. Like the old adage of "when it rains, it pours".

 

[Mina]

Your first sentence is such a lie it makes the rest of your post unreadable.

PERIODS OF HIGH INFLATION often precede periods of recession.
How is that for a "sign of a recession".

Sometimes periods of high inflation precede a recession, since the Fed responds to them by hiking rates to try to chill the economy. It's not terribly consistent, though. For example, in the early 1950s, the inflation rate spiked -- all the way to 9.6% for the 12 months ending April 1951 (we've had 8.5% in the last 12 months), and there was no recession for a couple years after that (the next recession started in July of 1953, by which point inflation had been quite low for a while -- just 0.4% for the 12 months leading up to that. Similarly, by September 1978, we'd had 12 months of inflation at the same level as the last 12 months, yet a recession didn't show up until January of 1980, a year and a half later. I think a lot of it comes down to what the Fed decides. Does it want us to have a recession? If so, then sooner or later we'll get one, because they can keep choking off money supply until they get their wish. The latest gigantic rate hike says the Fed really wants to kill the economy before the next election, so a recession may well be coming. But, for now, we still have strong job creation.

 

[Outlook]

Sometimes periods of high inflation precede a recession, since the Fed responds to them by hiking rates to try to chill the economy. It's not terribly consistent, though. For example, in the early 1950s, the inflation rate spiked -- all the way to 9.6% for the 12 months ending April 1951 (we've had 8.5% in the last 12 months), and there was no recession for a couple years after that (the next recession started in July of 1953, by which point inflation had been quite low for a while -- just 0.4% for the 12 months leading up to that. Similarly, by September 1978, we'd had 12 months of inflation at the same level as the last 12 months, yet a recession didn't show up until January of 1980, a year and a half later. I think a lot of it comes down to what the Fed decides. Does it want us to have a recession? If so, then sooner or later we'll get one, because they can keep choking off money supply until they get their wish. The latest gigantic rate hike says the Fed really wants to kill the economy before the next election, so a recession may well be coming. But, for now, we still have strong job creation.

We are in for a recession whether you want to admit it or not. And Biden caused it. Sorry Putin. Maybe Trump.
The Feds raised rates .75%. That will slow the economy resulting in lost jobs and reduced growth. Companies are already taking action.
With the higher cost of money people will think twice about buying a house, car or appliances. Anything they have to borrow money for.
Companies will also delay expansion or slow down if inventory is high.
When layoffs occur, savings will dwindle. Individual debt will increase.
But the economy is great. So great. Keep telling yourself that. Even CNN and democrat politicians no longer buy that.
Maybe we can still pass build back better. Pump more money into the economy. That should help, right.

 

[Mina]

We are in for a recession whether you want to admit it or not. And Biden caused it. Sorry Putin. Maybe Trump.
The Feds raised rates .75%. That will slow the economy resulting in lost jobs and reduced growth. Companies are already taking action.
With the higher cost of money people will think twice about buying a house, car or appliances. Anything they have to borrow money for.
Companies will also delay expansion or slow down if inventory is high.
When layoffs occur, savings will dwindle. Individual debt will increase.
But the economy is great. So great. Keep telling yourself that. Even CNN and democrat politicians no longer buy that.
Maybe we can still pass build back better. Pump more money into the economy. That should help, right.

I was told something similar by right wingers at several points through the Obama years: we're in a recession whether you want to admit it or not. They really, really, really wanted a recession to be starting in 2012, particularly. But, as you know, no recession ever started on Obama's watch.... just as none ever started on Clinton's watch, or Johnson's, or Kennedy's. It remains to be seen whether we're in a recession now. What we know is that job creation remained strong last month. With the Fed frantically trying to choke the economy out, that may change in the near future. Time will tell.

As for Build Back Better, yes, that would help. Inflation is too much money chasing too few goods and services. There are two ways to bring it down: reduce the amount of money or increase the amount of goods and services. The Fed is working on reducing the amount of money. Increasing the amount of goods and services would require boosting productivity, which building back better would do. It wouldn't actually create more money. It would simply move money from whatever those treasury-buyers would otherwise have spent it on to whatever the government spends it on.

 

[HangLow]

I agree...and thanks.

My problem was I did not realize the Fed was going to 'run the show' like they did.
I assumed they would not start 'turning Japanese' and have the central bank take over the economy.
And by the time I finally realized what was going on - I had missed a lot of the profits to be had.
My fault.
I had a closed mind.
I refused to consider that the Fed truly was 'all in'.
My bad.
But I learned.

Overall?
The thing about the top and the bottom is the top is fairly, easy to spot...imho.
As long as you have an open mind and see what caused the top in the first place - you can see where the power behind the bull market has ended.

The '07 top was all about housing.
And it was that old Wall Street story - when the shoe shine boy is buying stocks...you know it's time to get out.
Because everyone who can buy stocks - has bought them.
And bull markets only continue so long as new money enters them.
So, in late Summer, 2007, when I heard stories that mortgage firms were desperately looking for ANYONE to get into a house?
I knew the top must be near...so I dumped EVERYTHING.

Like this LOOOOONG, bull market since '09?
It was almost entirely driven by the Fed (and central banks all over the world).
So, it was probably going to keep going until the one thing that would force the Fed out, rose it's ugly head...inflation.
Almost nothing else would stop them.

So, when I saw in the new year that inflation was not 'transitory'.
It was obvious that the Fed would HAVE to stop QE and raise rates.
And that would kill this ridiculous, debt-fueled, stock-buyback, screw-fundamentals party.
At least for now.

(I realize you probably know all this. But this is for anyone who doesn't.)

The thing is though.
Most people still do not understand the Fed and the power it has.
Or that the Fed is running the show.
Too many people still believe that it is Washington that runs the economy.
Or Main Street.
Not this time.

That is probably why - even on this site - SO many people are completely missing what is going on.
They think it is about Trump or Biden or Covid or Ukraine or oil.
No...it is the Federal Reserve.
And since this is the first bull market, almost completely run by the Fed, most people are naturally not seeing it.
Just like I refused to see it back in '09.

So long as the Fed has to fight inflation - the markets will almost certainly go down until they hit bottom.
Or until inflation turns around and the Fed can jump back in and prop up the markets again.

If you got this far...thanks for reading.

Later.

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