❤️❤️❤️👏👏👏Love it - and I am a 84 year old CFA who thought that I had seen it all, but this time really is different for multiple reasons. May comment further after I think about this during my marathon training run. If your time frame is long enough, that is if you are investing for the really long run, all the long held principles still apply. Only one caveat, the pace of change has accelerated and therefore uncertainty increased so you have to endure more short term extreme volatility.
Enjoy your day since the Iran War has now concluded. 🙂🙂🙂👋👋👋
KTA - My apologies for putting this here but I want people to read this:
On of two outcomes are "likely" Eminent in the SPX and one of those will impact everything.
1) The SPX will soon make a new ATH and invalidate a Bearish pattern I have been tracking and invalidate this warning.
2) A VERY strong and percipitous decline in the SPX ( and therefore all markets) is right before us.
I have a slight lean to #2.
If this strong and rapid decline takes hold I will have more to say.
Note: on 6/12 after market close I posted a Market Update in the June 12th SpaceX article to watch for a Very Strong Market open on Monday (today 6/15) to complete a pattern I am watching. It's still there on page 2 of that article if you want to read it.
Have a great evening all!
**** 6/20 Update -- this structure is still active ****
The future will eventually humble anyone who lives a long and opinionated ( meant in a value neutral ) life. Why I am so often surprised - positively and negatively. Only look backward to remember your fondest and most treasured moments or so you learn from and don’t repeat your mistakes. Will look at your posts. 👋👋👋
- Trump is not going to allow a market crash to happen before the Midterms and all necessary associated runoffs in the 2 months afterward. He just isn't. He will pull whatever levers are necessary.
- Trump will do what he can to ensure that the big coming AI IPOs are as successful as SpaceX was. That will ensure that the can is kicked at least another year.
- Trump's Iran "deal" is nothing more than a big punt, but he will push the crisis at least after the Midterms (if he is lucky).
- On the other hand, I see plenty of evidence of consumer retrenchment. Particularly, lots of food and drink related businesses in Northern VA (grocery, restaurant, winery, etc..) are continuing to cut opening hours, and the trend seems to be accelerating.
- My guess is recession in 2027, probably after the big AI IPOs have all been consummated.
My only though about that, Andrew, is that if crashes were "Presidentually Avoidable" it seems to me we would never have a full blown crash on any President's watch. It's my belief that Markets move in long and powerful waves that President's don't have the tools or resources to combat at that scale. Politically, I hope you are right.
Presidents have limited powers. Can they prevent all crashes? No. Can a determined President punt certain problems down the road a year or two? Yes. Can a President prevent a crash for 6 months to get past the Midterms? Absolutely.
I keep telling people my only real safety net is having a church I like. I wish I was joking, but everything else in "the real world" seems like such a house of cards. You've expressed that feeling perfectly.
People can no longer afford to sell. I give 3-1 odds on that extinction thing as the Muskrat becomes the world's first quadrillionaire. Millionaires will become the next gang of poor people.
Hi, H.V. As I have said here, for quite some time -- In the entire History of the Stock Market, War has NEVER altered the primary Trend. Ever. War is "Noise" - it is neither Bullish nor Bearish. It is our discomfort with that Truth that forces us to make sense by assigning false reasons that don't make sense but keep us sane. Our unwillingness to accept this proven, time tested Truth, only adds to Market Confusion.
Watch for a Bull Trap on the SPX after todays Gap. I have outlined this scenario in a number of Chris's articles but I don't know if anyone is reading them. If this is indeed the end of a B Wave in an A-B-C Patern, the fall from here will be brutal. Only a rally to ATHs on the SPX will invalidate this Patern. B Waves are notorious for head fakes before a continuation down. The A Wave was the fall from the Top. The B wave is this corrective rally. ( yes, this is Elliott Wave).
It is precisely this type of setup that makes people "give-up" and go Long before the plunge.
I sincerely don't mean for this to sound like a "Lecture" -- The part about War is simply the Truth....and the Set-Up now is still Very Trechoris.
What happens when inflation goes out of control? What happens when the Fed is forced to do YCC in order to keep the Treasury solvent? I'm sure the market will still go up, but will it keep up with inflation?
My involvement with the game of craps has taught me bankroll management and the fact no matter how hot a table is and how many 7's on the roll out, the table will go cold. A lot of $$$ will be made while it is smokin, but when it turns, you can't buy a 7, 11 or your point. The markets are now really just craps.
Excellent essay! Astute, insightful, and entertaining. Dams gotta break, but when? Lots of cracks that seem to fill themselves. Like a bicycle tube that is self sealing. Can't bike forever on it, but how far can you go? Maintain adequate stock of bottled water, MREs, ammo, and toilet paper.
Unfortunately I know a lot of people that listened to people like Dave Collum, Grantham, Hussman, Harry Dent, etc.... who never got back in after the market bottomed in March 2009. They still thought the market was overvalued in 2010. And 2015. And 2021. And have thought for almost 18 years now that a "massive crash is just around the corner".
If you had a mere $1 million in your account in 2009 and just left it in the S&P its now $11 million. 11X. You could have done so many better things with your life the past 18 years then sucking all your time away reading substacks, fintwit, financial media, books about investing. Worry about your postions.
But unfortunately MANY, MANY people missed out on this 11X rise by "thinking and reading" too much. Trying to wait for a crash to get in. Trying to wait for the CAPE to mean revert. Trying to shift their money "in and out of this sector or that sector". When as QTR says, nothing matters anymore, it just always goes up forever. You made the right decision to give up trading and focus on writing QTR.
Extinction between people who eat their meat and people who don't. The only proof we have that the stock markets are corrupt and sell side analysts rode the short bus as kids are verifiable facts. Those things can all be true and you can still be wrong because you simply don't understand substrate shifts happening under your feet.
My wife asks me what our kids are going to do when they grow up. All I can tell her with absolute confidence is what they're not going to do. They're not going to college because those will no longer exist (in their current form or anything resembling it). They're not going to do any manner of desk job that exists today because those will no longer exist. They may not even do any sort of real manual labor because those may also no longer exist.
I tell her we will go through a very hard time as a civilization and people will blame what they know because they are scared of what they don't know. There will be REAL GENUINE MASS JOB LOSS AND SOCIETAL DEVASTATION THAT LAGS THE MASSIVELY POSITIVE BENEFITS OF AI THAT ARE MEANT TO OFFSET THE JOB LOSS. Entropy.
This is the price we pay for societal shifts of this magnitude but I know it will be brighter on the other side. If you want some help intellectually, I suggest you put your bullshit copy of whatever it is you're reading and go to a library and read what Emile Durkheim wrote during the second industrial revolution. You'll find yourself within those pages. written by a man who lived smack dab in the middle of a time like ours.
So we will have a lost generation of workers who will not downshift from Chief Executive Dick Drinker to Wendy's Fry Cook, but when the dust settles of this very real thing (AI) you keep calling a bubble (it's not), the earth will have changed completely.
Now from an investment perspective I can make a very strong argument for a bubble, but it wouldn't be the kind of bubble people here would accept. That is to say, this thing only goes up, including any explosions. There is NO WORLD that we live in that doesn't have AI. You all need to accept this like you accepted switching from a landline to an iphone, but x10000. If you want to hear what that scenario looks like (and it's not AI consuming the earth via a genetically coded virus or nukes), let me know.
Mr. Irons, if you would just buy the dip yourself, we would know one of the last grizzlies had finally capitulated, and that would mark the end of the bubble and the beginning of a great bear market. Someone prominent like you will do that soon, and then we can return to sanity. Remember, very few thought there was a real problem in 2008, until there was actually a catastrophe. You are right that the fix is in, but that same fix or one like it utterly failed to prevent a meltdown in 2008.
Now? Really now? You make sense, I trust you, on an otherwise marvelous Monday with lots of +3%, +5%, +10% green numbers wiping out most of this month's losses. It's just been such a long trip, decades longer than I ever imagined. 40 years ago, being taunted by disingenuous Reagan-hating co-workers about the $1 trillion national debt. I thought the end was coming 30 years ago based on my layman observation of why is the Dow tripling and doing so during the Clinton Administration, of all things? Pressured a gold-averse Fidelity agent on the phone (pre-online account days) for gold but "we don't do gold" and persisted, I don't trust the stock market. He pointed me to the gold miners fund and told me "over there, nutjob, put that in your IRA if you insist". When G. Gordon Liddy retired from his radio show in 2012, the time slot was taken over by this Peter Schiff dude I'd never heard of. A couple weeks of listening to him and I was convinced it was all going to collapse on Obama and today every Schiff column sounds like a rerun but with bigger numbers. Here in the '20s, losing a bit on an S&P-shorting ETF at it approached 4000 ("it couldn't possibly..."), fooled again on the runup to 5000 ("that's ridiculous") and again at 6000 ("how can this be with this huge national debt and Thomas Massie voting another $1.5 trillion debt ceiling increase for Biden/Harris?") and sat on the sidelines during 7000 ("whatEVAH!"). Forgive me if I see 8000 approaching at high speed and shrug.
"It" will crash when "they" want it to crash and "they" abracadabra "solve" everything. Surely the fix is already designed and just waiting for world finance's version of Patch Tuesday when the worldwide Bank Holiday is declared ("your device outside of active hours") and some giant middle finger presses Install.
Now that we're in the 18th year of a bull market, it's easy to think nothing can go wrong because it hasn't. Did people in 1929 see a Great Depression coming? Nobody did. Who in Mar 2000 thought the Nasdaq would be 75% lower 9 years later?
With all of the AI spending and circular revenue schemes, the S&P 500's price to FCF will probably be around 60-70 this year. That's even higher than the Nikkei in 1989 which took 35 years to be exceeded in nominal prices! What if the 80% of America living paycheck-to-paycheck who own few stocks vote to stop the inflation of financial assets which helps the rich but hurts them?
I suspect we’ll have a multi-decade stagnation. Maybe not as bad as Japan but in that direction — probably overall negative CAGR for 10 years anyway. That’s what helps me sleep at night, thinking of all the bubble money I didn’t make. LOL. Well, the money I do have I don’t want to lose, and if it’s in the market I will.
A quick Google search produced these quotes before the 1929 crash:
"Stock prices have reached what looks like a permanently high plateau." — Irving Fisher, Economist at Yale University (Proclaimed just weeks before the devastating October crash)."The outlook for the future is so bright that it is almost dazzling." — The Wall Street Journal (From an editorial published in mid-1929 celebrating the booming market)."There's no reason to sell; the market is going to the moon." — Michael J. Meehan, Wall Street Broker (Reflecting the speculative mania that encouraged retail investors to keep heavily buying)."Never has the future of American business looked brighter." — Charles M. Schwab, Steel Magnate (Expressing supreme confidence in the expanding national economy)."The country is in a state of unprecedented prosperity, and the stock market reflects this strength." — Paul M. Warburg, Banker and Federal Reserve Board Member (Reflecting the widespread belief that skyrocketing stocks were a natural byproduct of economic health)."A crash is coming, and it may be terrific." — Roger Babson, Financial Expert (One of the rare, highly publicized warnings that preceded the initial September 1929 "Babson Break").
Though this time around we have far more abilities to manipulate the markets so who knows?
I’ll never understand why so many people are actually eager for, and excited about, some hypothetical, future economic calamity. I mean, it’s all they talk about. Weird…
❤️❤️❤️👏👏👏Love it - and I am a 84 year old CFA who thought that I had seen it all, but this time really is different for multiple reasons. May comment further after I think about this during my marathon training run. If your time frame is long enough, that is if you are investing for the really long run, all the long held principles still apply. Only one caveat, the pace of change has accelerated and therefore uncertainty increased so you have to endure more short term extreme volatility.
Enjoy your day since the Iran War has now concluded. 🙂🙂🙂👋👋👋
****** WARNING --- MARKET --- WARNING ****** (6/15)
KTA - My apologies for putting this here but I want people to read this:
On of two outcomes are "likely" Eminent in the SPX and one of those will impact everything.
1) The SPX will soon make a new ATH and invalidate a Bearish pattern I have been tracking and invalidate this warning.
2) A VERY strong and percipitous decline in the SPX ( and therefore all markets) is right before us.
I have a slight lean to #2.
If this strong and rapid decline takes hold I will have more to say.
Note: on 6/12 after market close I posted a Market Update in the June 12th SpaceX article to watch for a Very Strong Market open on Monday (today 6/15) to complete a pattern I am watching. It's still there on page 2 of that article if you want to read it.
Have a great evening all!
**** 6/20 Update -- this structure is still active ****
The future will eventually humble anyone who lives a long and opinionated ( meant in a value neutral ) life. Why I am so often surprised - positively and negatively. Only look backward to remember your fondest and most treasured moments or so you learn from and don’t repeat your mistakes. Will look at your posts. 👋👋👋
Wise words. I have a number of past comments on the Market in various articles that Chris has written/posted.
- Trump is not going to allow a market crash to happen before the Midterms and all necessary associated runoffs in the 2 months afterward. He just isn't. He will pull whatever levers are necessary.
- Trump will do what he can to ensure that the big coming AI IPOs are as successful as SpaceX was. That will ensure that the can is kicked at least another year.
- Trump's Iran "deal" is nothing more than a big punt, but he will push the crisis at least after the Midterms (if he is lucky).
- On the other hand, I see plenty of evidence of consumer retrenchment. Particularly, lots of food and drink related businesses in Northern VA (grocery, restaurant, winery, etc..) are continuing to cut opening hours, and the trend seems to be accelerating.
- My guess is recession in 2027, probably after the big AI IPOs have all been consummated.
My only though about that, Andrew, is that if crashes were "Presidentually Avoidable" it seems to me we would never have a full blown crash on any President's watch. It's my belief that Markets move in long and powerful waves that President's don't have the tools or resources to combat at that scale. Politically, I hope you are right.
Presidents have limited powers. Can they prevent all crashes? No. Can a determined President punt certain problems down the road a year or two? Yes. Can a President prevent a crash for 6 months to get past the Midterms? Absolutely.
I keep telling people my only real safety net is having a church I like. I wish I was joking, but everything else in "the real world" seems like such a house of cards. You've expressed that feeling perfectly.
People can no longer afford to sell. I give 3-1 odds on that extinction thing as the Muskrat becomes the world's first quadrillionaire. Millionaires will become the next gang of poor people.
Good one. About the damn truth.
Great analysis, Chris.
I am going to be here when you back up even further and the picture gets even clearer.
"As a result, markets have evolved into something that often resembles a religious institution more than a pricing mechanism."
The "resemblance" will only get more pronounced and strikingly clear.
There's a reason this is happening......and it goes beyond the desire to "make more money."
Hi, H.V. As I have said here, for quite some time -- In the entire History of the Stock Market, War has NEVER altered the primary Trend. Ever. War is "Noise" - it is neither Bullish nor Bearish. It is our discomfort with that Truth that forces us to make sense by assigning false reasons that don't make sense but keep us sane. Our unwillingness to accept this proven, time tested Truth, only adds to Market Confusion.
Watch for a Bull Trap on the SPX after todays Gap. I have outlined this scenario in a number of Chris's articles but I don't know if anyone is reading them. If this is indeed the end of a B Wave in an A-B-C Patern, the fall from here will be brutal. Only a rally to ATHs on the SPX will invalidate this Patern. B Waves are notorious for head fakes before a continuation down. The A Wave was the fall from the Top. The B wave is this corrective rally. ( yes, this is Elliott Wave).
It is precisely this type of setup that makes people "give-up" and go Long before the plunge.
I sincerely don't mean for this to sound like a "Lecture" -- The part about War is simply the Truth....and the Set-Up now is still Very Trechoris.
Have a great week!
What happens when inflation goes out of control? What happens when the Fed is forced to do YCC in order to keep the Treasury solvent? I'm sure the market will still go up, but will it keep up with inflation?
Maybe not, but people not even trying to keep up with inflation in their decision-making, will get what they deserve…
So, so good, lmfao.
My involvement with the game of craps has taught me bankroll management and the fact no matter how hot a table is and how many 7's on the roll out, the table will go cold. A lot of $$$ will be made while it is smokin, but when it turns, you can't buy a 7, 11 or your point. The markets are now really just craps.
Next shooter!
Excellent essay! Astute, insightful, and entertaining. Dams gotta break, but when? Lots of cracks that seem to fill themselves. Like a bicycle tube that is self sealing. Can't bike forever on it, but how far can you go? Maintain adequate stock of bottled water, MREs, ammo, and toilet paper.
Unfortunately I know a lot of people that listened to people like Dave Collum, Grantham, Hussman, Harry Dent, etc.... who never got back in after the market bottomed in March 2009. They still thought the market was overvalued in 2010. And 2015. And 2021. And have thought for almost 18 years now that a "massive crash is just around the corner".
If you had a mere $1 million in your account in 2009 and just left it in the S&P its now $11 million. 11X. You could have done so many better things with your life the past 18 years then sucking all your time away reading substacks, fintwit, financial media, books about investing. Worry about your postions.
But unfortunately MANY, MANY people missed out on this 11X rise by "thinking and reading" too much. Trying to wait for a crash to get in. Trying to wait for the CAPE to mean revert. Trying to shift their money "in and out of this sector or that sector". When as QTR says, nothing matters anymore, it just always goes up forever. You made the right decision to give up trading and focus on writing QTR.
Extinction between people who eat their meat and people who don't. The only proof we have that the stock markets are corrupt and sell side analysts rode the short bus as kids are verifiable facts. Those things can all be true and you can still be wrong because you simply don't understand substrate shifts happening under your feet.
My wife asks me what our kids are going to do when they grow up. All I can tell her with absolute confidence is what they're not going to do. They're not going to college because those will no longer exist (in their current form or anything resembling it). They're not going to do any manner of desk job that exists today because those will no longer exist. They may not even do any sort of real manual labor because those may also no longer exist.
I tell her we will go through a very hard time as a civilization and people will blame what they know because they are scared of what they don't know. There will be REAL GENUINE MASS JOB LOSS AND SOCIETAL DEVASTATION THAT LAGS THE MASSIVELY POSITIVE BENEFITS OF AI THAT ARE MEANT TO OFFSET THE JOB LOSS. Entropy.
This is the price we pay for societal shifts of this magnitude but I know it will be brighter on the other side. If you want some help intellectually, I suggest you put your bullshit copy of whatever it is you're reading and go to a library and read what Emile Durkheim wrote during the second industrial revolution. You'll find yourself within those pages. written by a man who lived smack dab in the middle of a time like ours.
So we will have a lost generation of workers who will not downshift from Chief Executive Dick Drinker to Wendy's Fry Cook, but when the dust settles of this very real thing (AI) you keep calling a bubble (it's not), the earth will have changed completely.
Now from an investment perspective I can make a very strong argument for a bubble, but it wouldn't be the kind of bubble people here would accept. That is to say, this thing only goes up, including any explosions. There is NO WORLD that we live in that doesn't have AI. You all need to accept this like you accepted switching from a landline to an iphone, but x10000. If you want to hear what that scenario looks like (and it's not AI consuming the earth via a genetically coded virus or nukes), let me know.
Pride goeth before the fall.....spare us your claptrap.
You’re definitely not getting any pudding.
Hahahaha now that was funny.... :)
Mr. Irons, if you would just buy the dip yourself, we would know one of the last grizzlies had finally capitulated, and that would mark the end of the bubble and the beginning of a great bear market. Someone prominent like you will do that soon, and then we can return to sanity. Remember, very few thought there was a real problem in 2008, until there was actually a catastrophe. You are right that the fix is in, but that same fix or one like it utterly failed to prevent a meltdown in 2008.
Now? Really now? You make sense, I trust you, on an otherwise marvelous Monday with lots of +3%, +5%, +10% green numbers wiping out most of this month's losses. It's just been such a long trip, decades longer than I ever imagined. 40 years ago, being taunted by disingenuous Reagan-hating co-workers about the $1 trillion national debt. I thought the end was coming 30 years ago based on my layman observation of why is the Dow tripling and doing so during the Clinton Administration, of all things? Pressured a gold-averse Fidelity agent on the phone (pre-online account days) for gold but "we don't do gold" and persisted, I don't trust the stock market. He pointed me to the gold miners fund and told me "over there, nutjob, put that in your IRA if you insist". When G. Gordon Liddy retired from his radio show in 2012, the time slot was taken over by this Peter Schiff dude I'd never heard of. A couple weeks of listening to him and I was convinced it was all going to collapse on Obama and today every Schiff column sounds like a rerun but with bigger numbers. Here in the '20s, losing a bit on an S&P-shorting ETF at it approached 4000 ("it couldn't possibly..."), fooled again on the runup to 5000 ("that's ridiculous") and again at 6000 ("how can this be with this huge national debt and Thomas Massie voting another $1.5 trillion debt ceiling increase for Biden/Harris?") and sat on the sidelines during 7000 ("whatEVAH!"). Forgive me if I see 8000 approaching at high speed and shrug.
"It" will crash when "they" want it to crash and "they" abracadabra "solve" everything. Surely the fix is already designed and just waiting for world finance's version of Patch Tuesday when the worldwide Bank Holiday is declared ("your device outside of active hours") and some giant middle finger presses Install.
Now that we're in the 18th year of a bull market, it's easy to think nothing can go wrong because it hasn't. Did people in 1929 see a Great Depression coming? Nobody did. Who in Mar 2000 thought the Nasdaq would be 75% lower 9 years later?
With all of the AI spending and circular revenue schemes, the S&P 500's price to FCF will probably be around 60-70 this year. That's even higher than the Nikkei in 1989 which took 35 years to be exceeded in nominal prices! What if the 80% of America living paycheck-to-paycheck who own few stocks vote to stop the inflation of financial assets which helps the rich but hurts them?
I suspect we’ll have a multi-decade stagnation. Maybe not as bad as Japan but in that direction — probably overall negative CAGR for 10 years anyway. That’s what helps me sleep at night, thinking of all the bubble money I didn’t make. LOL. Well, the money I do have I don’t want to lose, and if it’s in the market I will.
Back in 1929 people talked about a "permanently higher plateau". That didn't age well.
A quick Google search produced these quotes before the 1929 crash:
"Stock prices have reached what looks like a permanently high plateau." — Irving Fisher, Economist at Yale University (Proclaimed just weeks before the devastating October crash)."The outlook for the future is so bright that it is almost dazzling." — The Wall Street Journal (From an editorial published in mid-1929 celebrating the booming market)."There's no reason to sell; the market is going to the moon." — Michael J. Meehan, Wall Street Broker (Reflecting the speculative mania that encouraged retail investors to keep heavily buying)."Never has the future of American business looked brighter." — Charles M. Schwab, Steel Magnate (Expressing supreme confidence in the expanding national economy)."The country is in a state of unprecedented prosperity, and the stock market reflects this strength." — Paul M. Warburg, Banker and Federal Reserve Board Member (Reflecting the widespread belief that skyrocketing stocks were a natural byproduct of economic health)."A crash is coming, and it may be terrific." — Roger Babson, Financial Expert (One of the rare, highly publicized warnings that preceded the initial September 1929 "Babson Break").
Though this time around we have far more abilities to manipulate the markets so who knows?
I’ll never understand why so many people are actually eager for, and excited about, some hypothetical, future economic calamity. I mean, it’s all they talk about. Weird…