| | | | | Saturday, September 5, 2015 | |
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"I Plan to Retire Early! Wow, My Investment Has Tripled!"
Paul Delone in Austin, Texas, was looking for a faster route to retirement...
That's when he discovered an unusual "7-minute habit" he could perform once each week... and bring in a substantial amount of money in the stock market.
It's allowed him to enjoy the chance at 295% on Vodafone... 492% on Apple... 111% on On Assignment... 122% on DeVry... 360% on Alcoa... and dozens more.
When asked about this unusual habit he practices, Paul said, "I plan to use it to retire early! My investment has tripled!"
If you can spare seven minutes like Paul, you can practice this habit for yourself by clicking here.
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Eric Fry, applauding the bull market in stocks, reports...
It's been a great run, dear reader! Blue chip U.S. stocks have tripled from their lows of early 2009. The tech-stock-heavy Nasdaq Composite Index has quadrupled, while many darlings of the stock market have delivered even more dazzling results.
The Nasdaq Biotech Index has soared 500% from its 2009 lows, while the shares of Apple (Nasdaq: AAPL) have rocketed nearly 1,000%. And these spectacular results include the recent sell-off!
There is simply no denying that this bull market has lived a long and productive life. In fact, it ranks as the third-longest bull market in U.S. history - exceeded only by the slightly longer bull market that unfolded from 1949 to 1956 and the mother of all bull markets that spanned 13 years from 1987 to 2000.
So this bull market is fully deserving of accolades and high fives... if not also some sort of "Lifetime Achievement Award."
Not only does it rank as the third-longest running bull market in history, but it also ranks as the third most richly valued bull market in history. As my friends at OfWealth recently observed:
The U.S. stock market remains richly priced by pretty much any measure you care to prefer. We'll remain unexcited by the prospects for U.S. stocks until the S&P 500 falls to a level around 1,250. That's 41% down from the peak, and 35% down from its level at the time of writing.
Why does it need to go so low? Because that's where the U.S. stock market's P/E 10 ratio - also known as the cyclically adjusted P/E (CAPE) or Shiller P/E - would be back to its median level of 16, measured since 1881. Right now the P/E 10 is still at 24.5, which is the third-highest reading in the 134-year history of this valuation gauge.
Therefore, as today's guest columnist states right from the outset, "This bull market may have already ended."
On the other hand, it is entirely possible that this bull market may not have ended. Many intelligent and successful investors believe it is still alive and kicking, and that the recent sell-off is merely a "typical correction" along the way.
Perhaps that's true, but almost nothing about the last six years has been "typical." This bull market has nourished itself on the Federal Reserve's atypical tactics to suppress interest rates.
Out in the lush green pastures of quantitative easing (QE) and zero interest rate policies (ZIRP), this bull has been gorging itself day after day. But now that the green pastures are turning as brown as a California lawn, the bull isn't quite as frisky as he used to be.
Meanwhile, for whatever reason(s), many investors are beginning to favor caution over risk.
That's how bull markets die... typically. They reach a tipping point at which fear overtakes greed - a tipping point at which sellers become more impassioned than buyers.
Today's guest columnist believes that tipping point has arrived.
The Bull Market May Already Have Ended
As expected, Wall Street's shills were out in force all week, as CNBC assured investors that the "U.S. is a place you should be investing." And Bloomberg explained that, "based on history," investors could expect to wait no more than four months until the stock market fully recovers:
The S&P 500 rally that began in March 2009 has been marked by two previous corrections: a 16% sell-off from April to July in 2010, and a 19% slump over seven months a year later. The benchmark recovered within about four months of each. So if history is any guide, the market may not be back at its May peak until late December.
Bull or Bear?
But wait... this assumes we're still in a bull market.
As we've seen, two factors have been paramount in driving the bull market of the last six years: the Fed's zero interest rate policy (ZIRP) and its QE programs.
And neither of those things is working for the U.S. now.
The Fed's QE is on pause. As for ZIRP, it seems to have lost some of its zest.
It's no wonder... As we've pointed out many times, lending money that didn't exist before to people who are already deeply in debt is not a good business model. It doesn't stimulate an economy. And it doesn't make people better off.
All it does is keep the can bouncing down the road.
And with the Fed now running out of ammo, we may no longer be in a bull market. Instead, we may be entering a bear market. If so, you can forget about a recovery in four months. Instead, it may take four years... or 40 years... to reclaim the bull market high set this past May.
Remember, from the bull market high set in 1929, it took until 1954 before the U.S. stock market fully recovered. A quarter of a century, and one world war, later. And in Japan, the Nikkei is still roughly 50% below its bull market high set in 1989.
Corrections in a bull market are one thing. Bear markets are something very different.
Liquidity Dries Up
"Excess liquidity" has floated stocks higher over the last six years, argues our friend and economist Richard Duncan.
Not earnings. Not growth. Not productivity. Not savings. Not investments.
As he puts it, "When liquidity is plentiful, asset prices tend to rise. When it is scarce, asset prices tend to fall."
According to Duncan, a basic "liquidity gauge" for the U.S. is relatively easy to construct. When Washington borrows dollars to fund its budget deficit, it absorbs liquidity. When the Fed creates dollars through QE, it injects liquidity into the financial markets.
In the past, the Fed's central bankers were practically wearing out the pump handles to get more liquidity into the system. During 2013, for example, Washington absorbed $680 billion to fund its budget deficit. And the Fed injected just over $1 trillion through QE. The difference created $320 billion of excess liquidity.
But now Duncan warns that his liquidity gauge for the U.S. is set to turn negative in 2015. Washington will absorb more liquidity than the Fed is set to inject. And he is forecasting a negative reading every year from 2015 to 2020.
As Duncan recently told readers of his Macro Watch advisory, Fed stimulus is "no longer sufficient" to keep the credit bubble inflated. As a result, he warns, the global credit bubble is deflating, and the world is "sliding back into a severe recession."
The can is no longer rolling along. Instead, it has come to a near halt, with central bankers and government policymakers desperate to give it another boot.
Watch out!
Regards,
Bill Bonner
For The Non-Dollar Report
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