RtS -
It is wrong to dismiss the arguments for a secular bear - we are overdo for one and it is not logical to believe that the largest financial instrument inflationary bubble can be resolved with a 3000 point correction. But the problem with Maudlin is his lack of rigor.
His a priori:
"For new readers, let me once again make an important point: there is no long-term connection between the growth of the stock market and the growth of the economy."
The facts back him up - selectively - but then he states
"Secular bear market cycles are characterized by more frequent and more serious recessions than their bullish cousins. With each recession, investors become more disillusioned and more conservative. They become less willing to project earnings growth into the far future. By the end of the cycle, rather than looking out ten years, they are barely willing to look out ten months."
And
"Typically, the bull cycles are driven by some innovation like railroads, electricity, computers, etc. which foster great optimism. "This time," investors think, "things are truly different." A period of growth and seeming stability becomes the order of the day. Normally sane men project this economic climate into the far future. Business builds too much capacity, then prices and profits drop, employment sags, and it takes a decade or two to work through the excesses of the boom. But those excesses always get worked through. There is no new bull market until the excesses are dealt with. When that happens, the base is formed for a new cycle that we call a secular bull market."
Makes reading the rest pointless - to me at least. |
