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We NEED a Bear Market NOW |
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Dear Reader, |
The bear is the great fee-fi-fo-fum of the stock market. |
The merest whisper of "bear market" is sufficient to send investors under the bed. |
To many a bear market represents a sort of moral failing, an unholy deviation from the proper order. |
Thus you do not find the ursine bear guarding the approach to Wall Street. You find instead the bovine bull. |
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Yet bear markets are as natural — and as necessary — as death itself. |
They are "creative destruction" made manifest. |
What is more, the stock market is ripe for one… and a steep one at that. |
The History of Bear Markets |
Since 1929 the S&P 500 has endured 27 bear markets. |
Their average duration has been one and one-half years. Their median price loss has been 34%. |
The grizzly rampages every seven years — on average. |
Yet the long-term average frequency between bear markets is three and one-half years. |
When did the last bear market descend upon the stock market? |
The answer is January, 2022 — nearly four years past. |
Thus the stock market, as historical frequency has it, is overripe. The grizzly's appearance is due. |
Not only is it due. It would prove healthful. |
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The President's Financial Disclosures Revealed A Gold Secret on Page 57. I'm Sharing It Until December 10th
| My rich dad always said, "The rich leave clues." The biggest clue is on page 57 of the President's financial disclosures. It's how patriotic Americans are profiting from the gold boom without buying gold, and making up to $52,000 a year. After December 10th, this secret will be worthless. The time to act is now. | |
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Why Bear Markets Are Healthy |
Mr. Lance Roberts is Chief Investment Strategist for Real Investment Advisors. |
Here he likens the cleansing effect of bear markets to wildfires: |
Sometimes destruction is a "healthy" thing, and there are many examples we can look to, such as "wildfires." |
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Like a bear market, wildfires are a natural part of the environmental cycle. They are nature's way of clearing out the dead litter on forest floors, allowing essential nutrients to return to the soil. As the soil enriches, it enables a new, healthy beginning for plants and animals… |
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Yes, bear markets have terrible short-term impacts, but they also allow the system to reset for healthier growth in the future. |
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Yet the Federal Reserve did not permit it. It did not permit the system to reset for healthier future growth following the fiery financial events of 2008-09. |
The Fed Enabled "Zombies" to Survive |
Interest rates would have likely gone spiraling following the financial crisis. |
Higher interest rates would have encouraged savings… and gradually rebuilt the capital stock. |
From this capital stock the green shoots of future growth would have come thrusting. |
Yet rather than permit the cleansing fire to clear away the underbrush… the Federal Reserve intervened to save the underbrush, the deadwood. |
A 2022 Goldman Sachs inquiry concluded that perhaps 13% of United States corporations may be "zombies." |
That is, they strain to satisfy their debt obligations. They can only endure under lenient borrowing conditions. |
Thus they are zombies… inhabiting a twilit torpor between life and death. |
I have not seen updated percentages, though I have searched. Yet I hazard they run to approximate totals. |
How many future redwoods never came into being because these zombies robbed their nutrients? |
We will never know the answer. The Federal Reserve did not permit the market cycle to run its course. |
We've Only Experienced Half the Market Cycle |
Continues Mr. Roberts: |
Throughout history, bull market cycles are only one-half of the 'full market' cycle. This is because during every 'bull market' cycle the markets and economy build up excesses that are then 'reverted' during the following 'bear market.' |
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In other words, just as wildfires restore the balance to the forest, a bear market reverses the buildup of excesses from the previous bull market phase. When valuations accelerate unchecked, speculative excess proliferates. |
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The fellow cites valuations. |
Mr. Robert Shiller's famous CAPE ratio for the S&P 500 soars at 40.01 — a near-record. |
A ratio of, as history runs, 16 is about par. |
Stocks were only pricier prior to the hell storm of 2000. That is, stocks are very nearly the costliest ever, second only to dot-com delirium. |
Not even the peak roars of the roaring 1920s approached today's extravagances. CAPE came in at 32.56 before the Crash of '29. |
Again… today the CAPE ratio runs to 40.01. |
Dot.Com, Part II? |
Alas, there has been no recent bear market to recalibrate the settings. Mr. Roberts: |
In the late 1990s, for example, the valuations of technology companies bore little relation to their actual profits, and leverage accumulated in non-bank financial sectors. Without a meaningful contraction, the excesses cumulated and amplified. |
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A proper bear market forces participants to re‑evaluate assumptions, rein in leverage, and ultimately restore alignment between price and fundamentals. It is no coincidence that the most significant financial calamities have followed periods of weak or absent corrections. |
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The Dot‑com Crash (2000‑2002) and the Global Financial Crisis (2007‑2009) both came after long expansion phases with little meaningful reset. The crisis that followed those periods was far more damaging than the corrections themselves. |
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However, that is why a bear market can be beneficial. |
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We NEED a Bear Market ASAP |
In brief conclusion: |
Bear markets serve as a form of market hygiene. They remove the buildup of risk, correct structural mispricings, and pave the way for healthier expansions. |
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In this way, they reduce the chances of a runaway boom and subsequent catastrophic bust. As noted above, the problem with letting expansions run unchecked is that risk accumulates, leverage becomes excessive, valuations become detached from earnings, and investor psychology becomes euphoric. |
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We can see this now, given the amount of leverage and speculation currently in the market. |
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With each euphoric day that passes without the bear's appearance… my step lightens… and my pulse accelerates. |
"The mills of the gods grind slowly," as said the ancient Greek Sextus Empiricus… |
"But they grind exceedingly fine." |
How fine they will grind in this particular instance… I do not know. |
Yet all indications suggest a very fine grinding indeed. |
I merely pray the gods are kind. |
Regards, |
Brian Maher |
for Freedom Financial News |
P.S. On December 11th — less than one week from today — you're going to wake up and realize one of two things: |
1: You took action and discovered the secret on page 57 of the President's financial disclosures. |
2: You did nothing, and the opportunity to collect an extra $12,000 to $52,000 a year is probably gone forever. |
Fear of missing out is real. But the fear of being left behind is worse. |
Don't let December 11th be a day of regret. |
I realize that sounds dramatic — perhaps even overly dramatic. |
But I think you'll see what I mean when you check out the details. |
Click here to act before the December 10th deadline. |
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