Down goes the Dow

“The reason why the stock market must necessarily remain the same is that speculators don’t change; they can’t. Shrewd business men who wouldn’t sell absurdly overpriced securities would not buy, two years later, underpriced stocks and bonds. The same blindness to actual values was there, only that while the heavy black bandage was greed in the bull market, it was fear in the bear market. Reckless fools lost first because they deserved to lose, and careful wise men lost later because a world-wide earthquake doesn’t ask for personal references. Everybody who looked for easy money in 1928 or 1929 lost both dreams and cash in 1929 or 1930. In 1931 nobody was spared.”

– Edwin LeFevre, Vanished Billions

Who?

Wondering when posters here see an end to this run.

Macaroon wrote:

Wondering when posters here see an end to this run.

Most posters here are smart enough to not try to predict a timeline, but there is one guy who has been saying for years that there will be a crash “soon”.

Time to start with my revisits of predictions for the year. I tend to pick on bears, but it's nothing personal. Part of how I stay long is by looking at bearish predictions that never come true. The bears are always roaring about this or that and listening can be scary. But one way to stay long is to look at all the wrong bear predictions of the past and figure today's bear predictions are likely no more accurate than previous years' bear predictions.

the below was in december 2018.

Wrong that money would be tighter, wrong about disaster, wrong that the dollar would plunge, wrong that there would be a recession, wrong that we'd have $2T deficits, half right about political turmoil and that gold would do well.

fred hickey

@htsfhickey

Tighter money will lead to disaster (great for gold). 'Tis why gold typically rallies during interest rate hike campaigns. Mkt. will anticipate end of interest rate hikes, QT's end & reinstatement of QE. Dollar will plunge under weight of recession,$2T deficits& political turmoil

two years ago the conventional wisdom was that real estate prices would fall because of the trump tax plan's reducing the benefit of paying mortgage interest and the lack of deduction for local taxes.

That didn't happen of course - but property values did stall out.

Here moody's predicted a 10% fall. Instead, according to Zillow, prices rose 1% in Essex County, NJ.

Taxes really don't have as much power as policy wonks think they do.

https://slate.com/business/2017/12/housing-markets-worst-hit-by-republican-tax-plan.html

Here is legendary permabear Marc Faber predicting in 2009, with 100% surety, that the US would go into hyperinflation. Instead we've had one of the lowest inflation levels of modern times. Hard to get any wronger than that. Although to be fair, not clear what Faber's time envelope was.

Guest post: Marc Faber says “I am 100% sure that the U.S. will go into hyperinflation”

Posted on May 27, 2009 by Edward Harrison

Submitted by Edward Harrison of the site Credit Writedowns.

You have to hand it to Marc Faber; he knows how to grab your attention. Earlier this year, I posted a video of him saying “don’t underestimate the power of printing money“, a quote that has become mantra for me. Basically, he believes a rising tide of quantitative easing is going to buoy stock markets globally and the global economy (at least for the medium-term). This is a view I agree with and one reason I have taken a more bullish tack at Credit Writedowns.

Earlier today, I also posted a video of Faber talking about Nouriel Roubini and the pressure not to overstay a bearish call and miss the turn which I found rather interesting (Here’s a video of Roubini sounding rather bullish – for him). However, later in that same interview, Faber makes his most quotable statement yet: “I am 100% sure that the U.S. will go into hyperinflation.” That is a very bold claim.

Just last week, I made similar comments in my post, “More thoughts on the fake recovery.”

In my view, the Federal Reserve has effectively demonstrated it is willing to risk hyperinflation in order to beat back the deflationary forces.

But I was using hyperbole. Faber, however, is dead serious. It is the secret desire of the Fed to want inflation that has U.S. government bond yields going bezerk. But, most people are not expecting hyperinflation in the United States ever.

The video of Faber is below. Is this headline-seeking exaggeration or serious punditry?

Here is legendary hedgie Gundlach predicting with absolute surety that in December 2018 we were heading for a new bear market. Instead we had an um legendary bull market, up around 25% from that point.

From mid December 2018:

DoubleLine Capital CEO Jeffrey Gundlach said Monday that he "absolutely" believes the S&P 500 will go below the lows that the index hit early in 2018.

"I'm pretty sure this is a bear market," Gundlach told Scott Wapner on CNBC's " Halftime Report ."

"We've had pretty much all of the variables which characterize a bear market," Gundlach added.

The S&P 500 is not in a bear market yet, down 11 percent from its record high reached in September. Wall Street traditionally defines a bear market as a decline of 20 percent or more. The S&P 500 fell as low as 2532.69 in February, a little more than 2 percent lower from where it is now.

Stocks fall into a bear market typically after "something happens that doesn't make any sense at all," Gundlach said. Cryptocurrency is the "mania" this time around, he said. Gundlach said bitcoin is an indicator of the market getting ahead of itself, much like during the dotcom bubble when technology companies "were being IPO'd that had no sales" or in 2006 when subprime lending "went on longer than it should have."

Gundlach predicted in March that the closely-watched 10-year Treasury yield would hit 3 percent and send stocks tumbling. His call came true a few months ago, as October was one of the worst months for U.S. stocks since the financial crisis.

Gundlach revealed in February that he was betting against Facebook FB shares. He said h is short was due to falling public perceptions of the company. Facebook's stock is down more than 13 percent since Gundlach's call.

He also in 2017 envisioned bitcoin cratering, saying that "if you short bitcoin today, you'll make money." At the time, bitcoin traded at about $16,000. The cryptocurrency now trades at about $3,400, losing about 75 percent of its value this year.

DoubleLine has more than $120 billion in assets under management, according to the firm's website .

HIckey is always good for a dose of 'huh?'

Here he is at the bottom of the dec 2018 correction, 25% lower, completely getting it wrong.

https://twitter.com/htsfhickey/status/1075542488620912640?s=20

Vanguard's late 2018 prediction. Too early to say but not bad.

Jeffrey Ptak

@syouth1

Vanguard issued its 2019 market outlook today. Forecasting 4.5-6.5% p.a. global equity rtn over next 10 yrs; 2.5-4.5% p.a. for global bonds; 4-6% p.a. for global 60/40 portfolio. They think we’ll avoid recession next year.

Whoah - UBS absolutely nailed their 2019 prediction.

At the bottom of the Dec 2018 correction they guessed SP500 3200 for 12/31/19.

Today? 3193.

https://www.cnbc.com/2018/12/14/the-sp-500-will-rally-to-3200-by-the-end-of-2019-ubs.html?__source=twitter%7Cmain

I have a bunch of wrong Hussman predictions but he blocked me on twitter so you'll have to imagine just how wrong that guy has been.

Here's Morgan Stanley being overly pessimistic and suggesting a return to the 2018 lows was likely

https://www.cnn.com/2019/01/15/investing/stock-market-today-morgan-stanley/index.html

B of A predicting SPX 2900 at this time.

Instead 3193. 10% off.

https://www.cnbc.com/2018/11/23/bank-of-america-sees-market-decline-next-year-there-is-now-an-alternative-to-stocks.html?__source=twitter%7Cmain

Ah, no.

Bullish on Stocks in 2019? Just ‘Wishful Thinking,’ Investec Says

By Moxy Ying

December 5, 2018, 4:00 PM EST

https://www.bloomberg.com/news/articles/2018-12-05/bullish-on-stocks-in-2019-just-wishful-thinking-investec-says

Great stuff, agip. Here’s a good one from a year ago courtesy of our resident permabear.

Ghost of Igloi wrote:

https://www.zerohedge.com/news/2018-12-26/worst-yet-come-next-year

As you know, I don’t believe any numbers unless I know exactly what is behind them.

RE=very local. Also comm vs residential, also permits opened vs closed, etc

Also, I don’t assume any particular motive for accuracy in these predictions. It is ALL self-interest. Caveat emptor. The one iseful thinf would be to track a particular individual’s prediction precision and accuracy over time. Also, to examine how those predicting actually performed over the prediction period, and how that turned out relative to their prediction.

Gold...it has ratcheted, and in part, that may be an indicator of the consumer inflation that actually exists but which is hidden by the inflation calculation revisions. It went up when rates went up, but it has pretty much maintained even though rates have dropped. I was waiting for a drop back down, but I don’t think it will happen. I am looking at ZGLDUS.SW as a vehicle, also GDX and GDXJ, of course.

https://www.swissfunddata.ch/sfdpub/docs/odm-70501-20121123-en.pdf

Consumer inflation is one thing, increase in money supply is another. Money printing is an inflation of the money supply. Around the world (I know most of you are in the US), gold is more important than it is here. It is always difficult to decide how much to get, how to get it, and why.

Lots of bullish predictions for 2020 Q1, and I agree with them. On Friday bought SPXL, has already gone up nicely. Will hold it for a bit, likely into next year. QE will continue, trade drama will be spun favorably and I am sure that private concessions will be made. Dollar index stays high, with uncertainty elsewhere, meaning continued inflows (maybe not net). I ask again, what will boomers with money do with their rmd’s? Plow them right into brokerage, and some will be equities.

IDK about all of Q1, but until next year and in the first part of 2020, I think the good times continue—especially after the holiday. It will be like a re-start, not from record highs but from a new psychological zero level.

All eight indexes on our world watch list posted gains through December 16, 2019. The top performer is France's CAC 40 with a gain of 27.77% and in second is our own S&P 500 with a gain of 27.15%. In third is Germany's DAXK with a gain of 22.74%. Coming in last is Hong Kong's Hang Seng with a gain of 9.26%.

https://www.advisorperspectives.com/dshort/updates/2019/12/16/world-markets-update?bt_ee=fKNK7kWV%2BrWoczeq4iFRCKFP3t%2BjB6pzS%2FjRwwsxRAWr7aGJun91KoEqYqaTFpn2&bt_ts=1576589012179

“Taxes really don't have as much power as policy wonks think they do.”

Disagree strongly. Yours is not a meaningful analysis, and there is a great body of specific evidence to the contrary.