Before I pen one of my infamous rants about just how stupid the current economic and market reality really is, a quick look back on the 20 year run might, just maybe, provide some badly needed perspective on what is going on. Thus this will be a chart heavy commentary with no real predictions other than the obvious.
Twenty years after 9/11 and the great Tech Crash at the turn of the century, here is where the broader market is per the S&P 500:
A quick note:
I have elected to use the ultimate long term 300 day moving average to provide perspective on just how long and far these markets and stocks have run. The reader’s mileage might vary with other averages.
The real bear market hit during the 2007-2010 Great Financial Crisis and was brutal as numerous companies were replaced in this broad index. But the Teddy Bear market of last year during Covidmania scared some of the “new” investing class, but not enough to create a rout. The reality is that the “Fed has our FOMO backs” is still part of the price discovery mentality, hence a real crash like 1987 or 2008 is not possible.
Until it happens.
Gold meanwhile took off on a bull market but is now floundering 20 years later and will make a decisive move soon as the chart demonstrates:
If the gold contract fails to reflect physical reality and move to new, higher prices, this could be a historic deflationary warning sign but the global central banks still hold the final card in this inflation versus deflation debate.
WTI Crude Oil however, has yet to restore its glory days:
The energy complex deserves extra attention because it might well decide if the inflation vs. stagflation vs. deflation debate will be settled in the next 12 months.
Meanwhile, some of the stocks that were “gotta buy” for the rubes in the past twenty years are not doing so well. For example, Citigroup, after a 1 for 10 reverse stock split still hasn’t done anything but tread water since 2008:
The lack of volume and enthusiasm for the Federal Reserve member bank is disturbing, even with most of its shares eliminated over a decade ago.
But what of those central bank member banks who played ball and purchased some of their sick brethren during the great crash? While Goldman and JP Morgan are soaring on the back of the Fedflation, Bank of America got stuck with an albatross called Merrill Lynch which did nothing for the equity valuations of BAC:
If it were not for stock buybacks odds are this would still be a $15 to $25 stock. It would appear that the Bernanke got the best of their CEO in this deal for Merrill.
The other narrative is that long term holding of quality companies will result in great returns. Of course the financial propaganda media highlights the Apples, Teslas, etc. of the world. But what about a good old fashioned American steel giant like US Steel:
Yup, that chart just screams “buy and hold” for retirement.
The reality is that without taking a long term look at the damage done by the Federal Reserve from over 100 years of monetary malfeasance it is difficult to determine what happens next. In my opinion, the Fed is about to be judged and the only way to save the American economy and financial system may well be the designed acquiescence of the U.S. system to merge into a great global Ponzi scheme.