I want all of my clients to read this short article, and as you read, ask yourself these questions: How many times does the author contradict himself? What is the author trying to communicate – if anything?
This may be the worst example of the media puking out data I’ve seen all year. We learn exactly nothing of value. The author can’t seem to decide what he thinks the real benefit of this article is going to be. If we are prone to worry about such things, then we have here a pile of data to wring our hands over.
This is how I think the article took shape:
First, the guy found a graph out of the archives that sort of resembles our current market performance. (Really the only similarity is the length of the up-trend – but hey, close enough.)
Second, with the help of an industry expert, he poses the problem: The Bull Market in the 80s lasted 1311 trading days. Our current bull run is 37 days from having lasted the exact same amount of trading days. AMAZING!
Third, he makes a few disclaimers about how patterns rarely repeat themselves and similarities of this nature are normally just considered “market oddities.” (Really? Then why the article?)
Fourth, he claims that “investors” (naming none) are taking this one seriously. And that we won’t have to wait long to find out if there is something behind this one because if history repeats itself, the impending doom is only 37 more trading days away. (Market your calendars and save yourself!)
Finally, the author himself makes the article and the scary graph that inspired it irrelevant:
“That’s not to say a crash is inevitable. Paulsen says that a 10% correction would be more likely than a full blown crash. And stocks might even rise first. And the market is famous for not following any patterns at all.
‘Don’t worry much, however, about another major style 1987 collapse. History doesn’t usually fully repeat,’ Paulsen wrote in his note to clients.
A couple of take-home points:
- For anyone who still doubts that the financial news media is not interested in helping you invest, but instead is simply interested in the click of your mouse, look no further! This guy had absolutely nothing of value to say. And investors who might make a decision based on the article, thinking they are listening to experts, will be destroying both their wealth and their peace of mind in the process.
- The take-home message about what happened in the 1980s and in the early 1970’s and in 2008/09 is this: Market crashes of various sizes from slight corrections to full-blown bear markets, can happen at any time. The market is no respecter of investors. You cannot predict the next one. And just because we still remember 2008 like it was yesterday doesn’t mean it can’t happen again.
The question is really – are you ready in advance? Whether you are my client now or not, if you are even the slightest bit concerned that you or your portfolio may not be optimized to take advantage of the next bear market, make plans to attend on April 22.