Very likely, IMO. However, I think the massive interventions have boosted nominal prices (at the expense of inflation) to the point that your "B" in a lot of places looks more like a fifth wave top for the whole secular bull.
Bubbles grow until they don't, and then they don't reflate. And as far as I can tell, real estate bubbles are about the biggest you can get. They're the single biggest asset held by the majority of the population. We can try to foster a green building bubble, or an alt energy bubble, or a biotech bubble, but I can't imagine any that would rise to a level high enough to support the creation of credit witnessed in the past decade for real estate.
We can argue about whether it has a deflationary or inflationary resolution, but it really doesn't matter to an objective stock participant. Stock bulls would lag in real terms either way. And the dirty little secret of the "flat" market of 1965-82 was that long-term short-and-hold made a killing over the period. Short sellers earn nearly 2X the risk-free interest rate even if stocks just go sideways. It doesn't hurt to be short a market that only "keeps up" with inflation, either.
While I'd prefer to see a booming economy with tons of new business formation and technological innovation leading a global push into alternative energy and lifespan-extending biotech, I can earn just as much money if we have a bunch of self-serving parasites running the U.S. into the ground.
To an objective, unbiased market participant, it just doesn't matter either way. Of course, those are very hard to find.
`BC |
