100 years of the Dow, How will it repeat this time?? It's not a matter of if.... It's when... how far... and for how long..? If history repeats I believe we are at a MAJOR inflection point in the coming 1-3 month period
Judging from the history shown above we can either: a) Take some pain now, which will be bad... but we will recover it all in 10-12 years and have a longer term bull market for another 18-20 years b) Delay taking pain.. rally hard for another 2 years and set ourselves up for an even bigger crash which will likely take 25 years to re-coup the losses from and then only rally for another 11 years above that level
History shows this pattern over and over, Japan experienced it and still has not reached the all time highs.... China is experiencing a major correction now after going vertical last year for no real reason... Oil, Gold, Silver and Copper experienced it in recent years and are all retracing now - the nature of markets do not change, as herd mentality does not change
Later this month the Fed may make the first rate hike in over 6-7 years, even a slight change will inherently change the markets assumptions around risk and reward - hopefully allowing for more normal pricing of risk and policies that are far more sustainable long term...
If they try to carry the bandwagon on and refuse to let the market correct... I think eventually the flood gates of the market will eventually burst on their own weight and be far more damaging to the markets and confidence and take us far longer to recover from
Looking at the 1929 and 1972 peaks, the point is clear... vertical inclines equals vertical declines.... ....and vertical declines take 2.5x longer to recover from in the future... We do indeed live in interesting times!!
Don't trade on this as it is only my macro belief, and shorter term my trading strategies are very very different, while currently short US indices I am actually looking to buy a few worldwide indices a little lower so please do not make the mistake of confusing bias with strategy and ALWAYS FOLLOW YOUR OWN TRADING PLAN - not mine...
Any comments or thoughts feel free to add them below, someone asked for my view on the Dow on Friday so here is my macro view...
Comments
Killy_Mel
⋅
Buffet says that in 100 years dow will be around 2 million...) if it repeats the approximately same growth
dionvuletich
⋅
Key difference between previous major bull market rallies... 1929 and 1972 had significant drops and then sharp rallies that were stalled and worked through for 6 to 7 years of sideways action - that building process was necessary to build the base for the next large multi year bull market
Looking at the current market now - there has been no such process and we have seen nothing but V reversals and sharp inclines/ declines which makes me believe the current rally is unsustainable and is not the start of a large bull market but still a rally within a large corrective pattern
Time will tell but my view is that this bull market is over or dangerously extended and more likely to falter than continue as the fundamentals are not supporting ongoing growth and the punch bowl is about to be removed by the Fed