[2018]–So, 2,000 stocks fell an average of 28%, and are nowhere near recovering; but we never had a bear market; it was just a correction. That’s 2,000 companies — many of which have been around for years that lost more than a quarter of all the value they have accumulated in those years in just four months, but that was just a correction!
That shows how biased people are toward interpreting everything as being bullish for as long as they possibly can strain interpretation in that direction just because they want to when they won’t accept that a 40% crash in the FAANGs last summer, coupled with a 20%+ crash in the fall of all major indices but one, which was within a mere head nod of 20%, as well as a 20%+ crash of the overall NYSE from its last high is not a bear market — especially when EVEN THE S&P 500 HOLD-OUT CRASHED 20% INTRADAY!
If you don’t think that’s absurdly biased, then take the next step, and put these calls in context! Think rationally about how much further the stock market would have crashed if the Fed had not put a quick stop to its “boring as watching paint dry,” “auto-pilot” money-supply reduction and its interest increases in one fell swoop.
Then add to that context for the market’s salvation, the additional context that Steven Munchkin had to PUBLICLY call in the entire plunge protection team as he panicked out loud about whether or not banks had enough cash to remain solvent!
Without that sudden (by glacial Fed standards) tectonic shift in the Fed’s long telegraphed monetary policy, coupled with government-enforced investment (the PPT), the market would have crashed into a total hell hole! We all KNOW that the Fed’s instant release of its interest brakes and its shift out of reverse easing (tightening) coupled with the government’s full-forward push on the investment thrusters is the only thing that saved the stock market from going far deeper.
Yet, here people are — even the ones brave enough to say the present rally is perilously overbought — acquiescing to the fantasy that this is still the longest bull market ever! No, the bull died in December, and you are just deep, deep, deep in denial if you parrot that nonsense about the long bull market still running. You are picking and choosing indices to find the sole major index that fits the narrative you want, and then claiming it is the only index that counts. That’s called “goal seeking.”
Now here is the most irrational part
As if all of that were not irrational enough, I actually have an uphill climb in hammering through my argument that this is irrational. What could be sounder proof that the present rally is nothing but irrational exuberance?
As if the difficulty of conveying a message confirmed by every major index but one (and that one within a rounding error of the same message) is not proof of irrationality, I hear actually people saying, “Where is the irrational exuberance that is needed for a crash? We haven’t seen that yet, and the market cannot crash until we see irrational exuberance.” They actually say that with straight faces in the midst of the steepest rally ever known to mankind! They don’t recognize that they ARE the irrational exuberance!
Then, as if all of that is not the height of irrational exuberance, they claim the market has “priced in” a recession in corporate earnings, even though the market has done nothing but go up the entire time everyone talked about how earnings were going to go way down! How is that “pricing in” a recession in earrings?
Yet, they have become even more irrational than that because I’ve read more than once during this earnings reporting season that the “earnings recession never materialized” because earnings have come in fatter by a gnat’s waistline than the abysmal prognostications these same people had downgraded their projections to — never mind that earnings have, in fact, receded far below what we had been seeing from earnings last year.
In other words, if you, at least, say things are going to be really, REALLY bad just before they turn out to be only really bad, then they really weren’t bad at all!
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