Links - 07/31/2022
First, a longer excerpt from the book Bull: A History of the Boom and Bust, 1982-2004, which may have some potential relevance to—or at least give some potential perspective on—today’s stock market:
In any market cycle, those who find themselves losing the game of musical chairs are bound to resist the inevitable. Even drowning victims do not go straight down. If investors who lived through a bear market are slow to recognize an upturn, those who have become accustomed to a bull market fight a downturn tooth and nail. Denial, anger, desperation…these are just some of the stages that investors pass through before accepting defeat.
So, even after it became clear to the vast majority of investors that the Great Bull Market of 1982–99 had ended, mutual fund investors stood firm. The mass redemptions from equity funds that many had predicted never took place.
If investors simply bowed their heads and accepted defeat, bear markets would last no more than a few months. Everyone would sell, and that would be that. But human nature, once again, intervenes. Men resist disaster. This is why even the “Great Crash” of 1929 did not happen in a day, a month, or a year.
True, in the fall of 1929, the Dow plunged from a September peak of 381 to a low, on November 13, of 199. But the following spring the market seemed to recover. By April of 1930, the Dow had climbed to 294—up 48 percent.
The bear was playing possum.
The low of November 1929 was a false bottom, the rally of 1930 a sucker rally. In 1930 the bear trap sprang shut. From April of 1930 through July of 1932, the market lost 86 percent of its value. What is commonly called the “Crash of ’29” was in fact the crash of 1930–32: that is when the wealth of Gatsby’s gilded world was destroyed. It seems that a new market cannot begin until the last bull’s heart has been broken, and typically, it takes more than one crash to do the job.
The pattern was repeated at the end of the sixties, when the Dow fell to 631 in May of 1970, rallied to over 1050 in January of 1973, and then took a final, fatal nosedive that ended with the crash of 1973–74. Only then did investors learn not to buy on dips.
It would be another eight years before a new bull market began.
What precisely does this mean for the years ahead? No one knows. But since both human nature and the laws of supply and demand remain more or less constant, there is good reason to expect that past cycles might forecast, at least in broad brush strokes, the shape of the future.
What is certain is that an understanding of the market’s cycles is an investor’s only defense against becoming a victim of those cycles.
Relief or Bear Market Rally? (LINK)
A few presentations from the recent VALUEx Vail Conference have been posted online [Darling Ingredients, Fairfax India, Green Brick] (LINK)
Fight Runaway Inflation With I Bonds - by Jason Zweig (LINK)
Charlie Dreifus on WealthTrack (video) (LINK)
Models, Guidance, Humility: Has Jay Powell Learned an Important Lesson? - by Roger Lowenstein (LINK)
Fed’s Kashkari says officials are ‘a long way’ from backing off inflation fight. (LINK)
The Four Mysteries of Pelosi’s Troublesome Taiwan Trip - by Niall Ferguson (LINK)
WSJ Opinion: A New Nuclear Power Alternative to Back Up Wind and Solar (video) (LINK)
The Investor’s Podcast: TIP466: The Bear Has Arrived w/ Jeremy Grantham (LINK)
The Tony Robbins Podcast: Changing World Order with Ray Dalio: How countries rise and fall | What cycles of history can teach us now (LINK)
Techmeme Ride Home Podcast: Mathew Ball On The Metaverse And Jason Del Rey On Amazon After Bezos (LINK)
Macro Voices Podcast: #334 Adam Rozencwajg: Understanding the Global Energy Crisis [starting at the 17:09 mark] (LINK)
The Daily Stoic Podcast: Morgan Housel on Building Wealth and Happiness (LINK)
Radiolab Podcast: The Humpback and the Killer (LINK)
Killer whales — orcas — eat all sorts of animals, including humpback calves. But one day, biologists saw a group of humpback whales trying to stop some killer whales from eating… a seal. And then it happened again. And again. It turns out, all across the oceans, humpback whales are swimming around stopping killer whales from hunting all kinds of animals — from seals to gray whales to sunfish.
Dr. Eric Topol on BA.5, next-gen vaccines, and America’s maddening capitulation to the virus. (LINK)
Wanna live on the Moon? Pack a sweater and a spacesuit and move to a lava tube. (LINK)
“The most outrageous lies that can be invented will find believers if a man only tells them with all his might.” —Mark Twain