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Strategies & Market Trends : Longer-Term Market Trends
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To: AllansAlias who wrote (1978)11/8/2008 1:43:38 PM
From: Perspective  Read Replies (2) of 3209
 
Staring at these some more:



I am reminded that 1966-82 was a DEVASTATING bear in real terms, on par with the 1929-42 experience. The only difference in nominal terms was inflation. Since we have not had a similar inflation to the 1970s, I would venture that we are still nowhere near done with this bubble. Also, I continue to believe that the story of whether the ultimate top was 2000 or 2007 is a matter of debate. The secular bull TL was breached only one year ago.

One of two outcomes are likely:

1. The Fed "succeeds" in fighting deflation, resulting in massive inflation. The bear wraps up as more sideways action in nominal terms through the 2014 cycle lows.

2. The Fed can't beat the shadow banking system failure, and deflation continues. The next leg of the bear runs even deeper over the next several years, looking more like 1929-32 on the historical charts.

We can only slop around for the next several years if inflation is busy chewing up the value of the currency. If inflation does not surge, then we go down further in nominal terms over the next few years. The pain is the same either way. It gets over faster without inflation, but it probably unfolds more quickly. The inflationary route, if it should come to pass, takes longer but is more stealthy.

`BC
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