Past Is Prologue: Repeating The Secular Bear Of The 70's?

Tyler Durden's picture

Submitted by Lance Roberts of STA Wealth Management,


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Sudden Debt's picture


Occident Mortal's picture


Are markets rising or is currency crashing?


Is there any difference?



Why would anyone hold currency at a time when it is being openly debased?

Fundamentals for securities might be terrible, but at least they are not being diluted.


You have to allocate capital relative to other assets, not relevant to other times in history.


I can’t allocate my capital to 1974.


I have to choose the best allocation relative to other assets, whether the broader asset markets rise 30% or plunge 70%. It’s how I perform relative to other asset classes that matters, not how I perform relative to other vintages.


What was the best performing asset class for 2013? Was it liquid equities? Why? Where other asset classes being corrupted by supra-entities? Yes they were, currency and fixed income were both being eroded throughout 2013. Therefore it is prudent to allocate capital to alternative asset classes. The choices are finite.


Sometimes you just have to hold your nose and buy crap to avoid worse crap, e.g. currency.

FreeMktFisherMN's picture

The stock mkt is not at all correlated with the economy; probably as inverse as ever, actually. The key is that in addition to ZIRP for cheap buybacks to goose stock prices, corporations that are publicly traded generally are able to deal with compliance costs and red tape and 0bamacare whereas smaller would be competitors can't, so these big entities just consolidate more and swallow up more market share. This is not a product of free market capitalism, as this is not about economies of scale and efficiencies developed, but rather rent-seeking cronyism. Hence stocks going up, although with some of these retarded returns over the past few years that by almost any valuation metric have no basis is just as a poster was saying yesterday, float jam and short squeeze du jour and high ups just looking at finance as opposed to real growth. It's just one off rather than long term prudence, and then the execs are on their way. And again, this is not an outcome due to market problems, but rather the incentives via ZIRP and all the debt out there. Tremendous malinvestment.

Fredo Corleone's picture

Never underestimate the Fed's appetite for intervention. In the like image of her predecessor, Old Yellen will flood the markets with liquidity to buoy the S&P 500, at the first indication of the index's "numerical deflation."

pitz's picture

Will that actually go into the index, or just into something like gold though? 

q99x2's picture

Not to worry. The FED has taken over the S&P in a centralized globalist effort to kill everyone that opposes them.

ebworthen's picture

I suppose if $17 Trillion in debt is considered payable; $34 Trillion will be as well.

LawsofPhysics's picture

Please, this is not the 70's, what was the outstanding debt in the 70's?  Not even close motherfuckers.

ebworthen's picture

Yup, and we still had a manufacturing base, T.V.'s and Toasters and all that.

Now we have $17 Trillion in debt (un-payable) and everything is made in China.


Hippocratic Oaf's picture

and everything is made in China.

And when you need to call and get get Ahmad.

Rainman's picture

USA debt about $ 300B in 1971, then more than doubled by 1980 once unhinged from the gold standard.

LawsofPhysics's picture

Yes, but trade imbalances are more important, especially now that everyone on earth is printing as fast as they can.

Bangin7GramRocks's picture

Fundamental variables? Enough with this bullshit! There is only 1 variable; the US Federal Reserve. They control the markets. Period. End of story. Now stop wasting so much fucking time combing through historical charts. There is no data in history that can be used for the present "markets". Learn a new language or hobby, volunteer at a shelter or food bank with all the extra time.

Winston Churchill's picture

Zimbabwe and/or Weimar are in the history books as examples of this

type of CB intervention.Both stock markets carried on rising.

"Humans biggest failing is not learning from history".

The USD is toast, hedge accordingly.

Bangin7GramRocks's picture

But that was through inflation. The Fed learned in 2008 that because of 401k's and instant access to information, the stock market is a national indicator of the health of our economy for 99% of the people. The Fed is directly or indirectly forcing the markets higher to increase comsumer sentiment artificially. And it's working on most of the people and the media. It's actual manipulation versus the other examples of hyper inflation .

LawsofPhysics's picture

It's working?  Less than half of the population has any sort of portfolio connected to the stock market.  In addition, the real cost of this manipulation-  food stamps, unemployment, disability etc.  is going up much faster.


Bangin7GramRocks's picture

What I mean is that if the same people who have a job but don't own stock saw the Dow Jones drop by 10,000 points, would instantly cancel vacations, new car purchases and any thoughts of buying a new house. They may be uninformed and ignorant, but most people are living life like the good times are here forever. A massive stock market drop would change their attitudes instantly. I am not implying that the Fed master plan will be successful long term.

LawsofPhysics's picture

"but most people are living life like the good times are here forever" - Sorry, not many i know, beside many of them that are also have huge debt loads and live this way regardless of what the "markets" are doing.  That which is not sustainable, will not continue, regardless.  Rewarding irresponsible behavior for so long will have consequences, hedge accordingly.

alangreedspank's picture

If you are in the market to make money, you sometimes need to do so if you are tyring to get a timing right. On the other hand, if you are an armchair commentator, of course "it's all BS". Knowing the Fed conducts POMOs is not enough...

wisehiney's picture

I thought those old secular bears were extinct.

Bearwagon's picture

I'll be blowed if we'll be!

GeorgeHayduke's picture

Ahhh, the 70's, when women wore short shorts and went bra-less with a halter, tank or tube top yet they didn't have two spare tires around their gut, a bugling butt bursting the seams of their shorts and tattoos everywhere. Many of the Classic rock songs of today were written then too.

Today isn't so much like then in several ways.

DoneThis2Long's picture

Ahhh ..... [rips the knob off to a large collection of venerables, leading with Humble Pie - "Hot Coffee"]. The days of boundless opportunities and a respected nation being built not dismantled. Just like today .... only reversed.

Reference Variable's picture

The existing data sets cannot predict what is in store for this market. You would need 1,000 years of data to predict what this market is going to do. While very technical and well researched, we've left fundamentals too far behind for this to have any relevance.

forwardho's picture

The existing data sets cannot predict what is in store for this market.

The idea of drawing conclusions from charts pre 2007 is assinine. Find a chart that shows the effect of TARP, Bailout, QE1-4. Everything has changed, never before in the history of finance has trillions of fiat been dumped into a market at a time when production of value across the board  is crashing.

Throw out the charts from the past.

We, all of us, are living in a fantasy, paid for with make believe fiat.

alangreedspank's picture

In other words, Fed's gonna have to raise rates (high) if you are going to have such a market. 

Spungo's picture

You mean this period of rising interest rates will be just like the 1970's period of rising interest rates? NO SHIT. Next you'll say the sky that is blue today will also be blue tomorrow.

Laughing Stock's picture

Good solid post...well thought out and actually contained some useful info