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Confronting Brutal Facts: The US Market Is A Fly In Search Of A Windscreen

Tyler Durden's picture


Submitted by Tim Price via Sovereign Man blog,

On September 9th, 1965, US Navy pilot James Stockdale was shot down over North Vietnam and seized by a mob.


He would spend the next seven years in Hoa Lo Prison, the infamous “Hanoi Hilton”.


The physical brutality was unspeakable, and the mental torture never stopped. He would be kept in solitary confinement, in total darkness, for four years.


He would be kept in heavy leg-irons for two years and put on a starvation diet.


When told he would be paraded in front of foreign journalists, he slashed his own scalp with a razor and beat himself in the face with a wooden stool so that he would be unrecognizable and useless to the enemy’s press.


When he discovered that his fellow prisoners were being tortured to death, he slashed his wrists to show his torturers that he would not submit to them.


When his guards finally realized that he would die before cooperating, they relented.


The torture of American prisoners ended, and the treatment of all American prisoners of war improved.


Jim Collins, author of the influential study of US businesses, ‘Good to Great’, interviewed Stockdale during his research for the book. How had he found the courage to survive those long, dark years ?


“I never lost faith in the end of the story,” replied Stockdale.


“I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining moment of my life, which in retrospect, I would not trade.”


Collins was silent for a few minutes. The two men walked along, Stockdale with a heavy limp, swinging a stiff leg that had never properly recovered from repeated torture.


Finally, Collins went on to ask another question. Who didn’t make it out ?


"Oh, that’s easy,” replied Stockdale. “The optimists.”


Collins was confused.


“The optimists. Oh, they were the ones who said, ‘We’re going to be out by Christmas.’


And Christmas would come, and Christmas would go. Then they’d say, ‘We’re going to be out by Easter.’


And Easter would come, and Easter would go. And then Thanksgiving. And then it would be Christmas again. And they died of a broken heart.”

As the two men walked slowly onward, Stockdale turned to Collins.

“This is a very important lesson. You must never confuse faith that you will prevail in the end - which you can never afford to lose - with the discipline to confront the most brutal facts of your current reality, whatever they might be.”

At the risk of stating the blindingly obvious, this is hardly a ‘good news’ market. Ebola. Ukraine. Iraq. Gaza.

In a more narrowly financial sphere, the euro zone economy looks to be slowing, with Italy flirting with a triple dip recession, Portugal suffering a renewed banking crisis, and the ECB on the brink of rolling out QE.

What are the implications for global stocks?

On any fair analysis, the US market in particular is a fly in search of a windscreen.

Using Professor Robert Shiller’s cyclically adjusted price / earnings ratio for the broad US stock market, US stocks have only been more expensive than they are today on two occasions in the past 130 years: in 1929, and in 2000.

Time will tell just how disappointing (both by scale and by duration) the coming years will be for US equity market bulls.

But we’re not interested in markets. We’re interested in value opportunities incorporating a margin of safety.

If the geographic allocations within Greg Fisher’s Asian Prosperity Fund are any guide, those value opportunities are currently most numerous in Japan and Vietnam.

The Asian Prosperity Fund is practically a poster child for the opportunity inherent in global, unconstrained, Ben Graham-style value investing.

Its average price / earnings ratio stands at 9x (versus 17x for the S&P 500); its price / book ratio stands at just one; average dividend yield stands at 4.2%.

And this from a region where long-term economic growth seems entirely plausible rather than a delusional fantasy.

Vice Admiral Stockdale was unequivocal: while we need to confront the “brutal facts” of the marketplace, we also need to keep faith that we will prevail.

To us, that boils down to avoiding conspicuous overvaluation and embracing equally conspicuous value – where poor sentiment is likely to intensify subsequent returns.

In this uniquely oppressive financial environment where the skies are darkening with the prospect of a turn in the interest rates, optimism could be fatal.

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Mon, 08/11/2014 - 12:47 | 5076890 q99x2
q99x2's picture

The FEDs have no intention of losing that is why they created the DHS and bought all the ammo. They plan to kill us.

Mon, 08/11/2014 - 12:51 | 5076909 RafterManFMJ
RafterManFMJ's picture

A windshield named Ukraine, perhaps?

Mon, 08/11/2014 - 13:09 | 5076964 El Oregonian
El Oregonian's picture

Well "Songbird" McCain could never tell you just how terrible the Hanoi Hilton was since he was a collaborator. Hence, the nickname "Songbird". McCain can't even loosen the boot laces of James Stockdale's boots.



Mon, 08/11/2014 - 13:14 | 5077018 TeethVillage88s
TeethVillage88s's picture

Thanks for that info on McCain.

Sovereign Man's Article is a Good Idea and the analogy goes a long way. Most of us can just try to live in the solution instead of blaming others or crying about things. But sometimes life is much tougher. US Politics is asinine of course...Hence John McCain being there.

- Federal Spending, Federal Reserve Monetary Policy, US Wall Street Banking Monopoly System, and the US Stock Market all have a Wind Screen in Common.

Mon, 08/11/2014 - 14:09 | 5077390 Jumbotron
Jumbotron's picture

The thing that makes McCain so dangerous is he is still trying to fight the gooks over in Viet Nam and try to assuage his guilt over being a songbird.

So he sends your sons and daughters to die in his stead in the Middle East.

Time to tell McCain to fuck off and die already.   Live with your guilt and anger alone and away from the public with your trophy wife and leave our sons and daughters alone.

Mon, 08/11/2014 - 16:17 | 5078418 TeethVillage88s
TeethVillage88s's picture

Yeah, I heard that US Vets had been petitioning McCain for assistance for Medical Care for Vietnam Vets and Benefits Assistance and for help with MIAs... back in the 1980s.

McCain could have stood for the Vets over the last 30 years.

Instead he told Vets he was done helping them.

He got in the House in 1983, then into the Senate in 1987.

Mon, 08/11/2014 - 12:53 | 5076924 Herd Redirectio...
Herd Redirection Committee's picture

I think their primary goal there was: Make sure the public doesn't get to stock these rounds.

They couldn't ban ammo sales, so they bought them up themselves.

Whether they will use them...  I think that decision is in the hands of the individual men and women in the 'service' of the people of America.

Mon, 08/11/2014 - 13:01 | 5076962 ZerOhead
ZerOhead's picture

"Whether they will use them...  I think that decision is in the hands of the individual men and women in the 'service' of the people of America."

If they are instructed to use them they will use them. (I am not an optimist)

Mon, 08/11/2014 - 13:06 | 5076991 El Oregonian
El Oregonian's picture

Not the boys I know that are embedded for this very reason. They're committed to the principle of liberty.

So take heart.

Mon, 08/11/2014 - 13:13 | 5077010 ZerOhead
ZerOhead's picture

The NSA knows who they are.

These terrorists will be liquidated first...

Mon, 08/11/2014 - 13:16 | 5077033 El Oregonian
El Oregonian's picture

I think not. You'd be surprised, especially the caliber of the embeds.

Mon, 08/11/2014 - 13:35 | 5077118 himaroid
himaroid's picture

Not to mention the pop gun caliber of DHS.

Mon, 08/11/2014 - 13:39 | 5077145 Freddie
Freddie's picture


As of 2013 - 14.6 million licensed American hunters.   My guess is most of them have scoped .308 rifles.

Mon, 08/11/2014 - 13:44 | 5077172 CheapBastard
CheapBastard's picture

"They're jealous of our Freedom...."

Mon, 08/11/2014 - 16:39 | 5078531 EBT excepted
EBT excepted's picture

and .270, 30-06...

Mon, 08/11/2014 - 14:01 | 5077326 jaxville
jaxville's picture

 Hard to imagine ayone with a government job who is committed to liberty.  Hard to imagine the same with a sense of human decency. 

  I suppose there are exceptions out there but current events make those even more exceptional.

Mon, 08/11/2014 - 18:29 | 5079054 Rat Race Winner
Rat Race Winner's picture

I have a "government" job.  Once, I offered a small, time-off incentive for those willing to take a 15 minute computer based course on the US Constitution and Bill of Rights, seeing that they take an oath to "support and defend",  10% took me up on the offer...

Mon, 08/11/2014 - 13:13 | 5077011 XitSam
Mon, 08/11/2014 - 13:35 | 5077123 Freddie
Freddie's picture

Ammo is a lot more plentiful now especially .223.

Mon, 08/11/2014 - 13:01 | 5076963 Seize Mars
Seize Mars's picture

We're all Palestinians now.

Mon, 08/11/2014 - 13:10 | 5076992 XitSam
XitSam's picture

They are going to try to enslave us, not kill. Resisters will be shot.

I aim to misbehave.

PS. Admiral Stockdale: my hero.

Mon, 08/11/2014 - 15:53 | 5078272 pakled
pakled's picture

"They are going to try to enslave us, not kill. Resisters will be shot."


I think that's about it. That's what the 6 million plus DHS rounds are for. They're erring on the side of caution (it's only Federal Reserve notes).


But, the threshold for who is a "resister" may be quite low. I met A DHS agent once. He was freak. Also reminded of how the police behaved across the nation durihg the height of the Occupy movement. Many were enjoying themselves.


And then there is the quesiton of how extended the "cull the population" movement has become. Of course they may have Ebola for that.

Mon, 08/11/2014 - 13:27 | 5077096 TeethVillage88s
TeethVillage88s's picture


What is a little Fascism between friends buddy? /s joking

USA went Sideways in an Obvious way in 2002. Not sure when the Coup took place and the Constitution was scuttled:

A) 1913 Fed Act
B) 1886 Corporate Personhood
C) 1947 National Security Act
D) 1963 Assassination of JFK
E) 1964 Gulf of Tonkin False Flag
F) 1949 Syrian Coup aided by CIA
G) 1945 US Covert Assistance to Nazis & Set up of Nazi & Fascist Networks in Europe

Mon, 08/11/2014 - 15:17 | 5077994 goldsansstandard
goldsansstandard's picture

1862 Endof gold as currency in the Us. Establishment of the National Bank oligopoly, and end of Free banking. AfThe money is still green, not gold. This was the real bankster takeover, the Fed just perfected the system put in place by Secretary Chase. Note the name.

Mon, 08/11/2014 - 16:26 | 5078476 TeethVillage88s
TeethVillage88s's picture

Remember the Wizard of Oz.

I heard the story is about how Farmers needed Silver Certificates to have currency to work with. Looks like the Forth Coinage Act put us on a Gold Standard which hit rural people very hard. They needed smaller denominations.

Silver certificates are a type of representative money issued between 1878 and 1964 in the United States as part of its circulation of paper currency.[1] They were produced in response to silver agitation by citizens who were angered by the Fourth Coinage Act, which had effectively placed the United States on a gold standard.[2]

Free silver was a Central United States policy issue in the late 19th century. The Silverites promoted bimetallism, the use of both silver and gold as currency at the ratio of 16 to 1. The issue peaked from 1893 to 1896, when the economy was in a severe depression—called the Panic of 1893—characterized by falling prices (deflation), high unemployment in industrial areas, and severe distress for farmers.[1]

Mon, 08/11/2014 - 22:33 | 5080285 garypaul
garypaul's picture

I believe this article could also be called "Keeping It Real"

Mon, 08/11/2014 - 12:47 | 5076891 order66
order66's picture

The only quesion that matters is this:

If the economy is doing so well (as reflected by asset prices), why do we need 0% rates?



Mon, 08/11/2014 - 12:52 | 5076911 LawsofPhysics
LawsofPhysics's picture

How else will those bankers get paid and make it possible for the goverment to fund it's liabilities?

Shit, that was easy.

Mon, 08/11/2014 - 13:10 | 5076995 ZerOhead
ZerOhead's picture

Fair point...

I can still remember the announcement of the "temporary" action that allowed Investment Banks to become 'Bank Holding Companies' to access tons of free Fed cash until things improved...

What's that? ... 6 fucking years now?


By Robert Schroeder, MarketWatch

WASHINGTON (MarketWatch) -- In yet another extraordinary development for Wall Street, the Federal Reserve said late Sunday night that venerable investment banks Goldman Sachs and Morgan Stanley will become bank holding companies, subjecting themselves to stricter federal oversight.

The Wall Street titans will be allowed to transition into holding companies following a mandatory five-day waiting period, and will be able to take advantage of credit from the Federal Reserve Bank of New York in order to complete the transition.



Mon, 08/11/2014 - 16:05 | 5078343 theprofromdover
theprofromdover's picture

5-day waiting period?

I don't think they even had to wait 24hrs

Mon, 08/11/2014 - 12:49 | 5076896 theonewhowaskazu
theonewhowaskazu's picture

This article... is very optimistic.

Mon, 08/11/2014 - 12:50 | 5076903 LawsofPhysics
LawsofPhysics's picture

Please, look around, I see a lot of dirty shirts out there.  Wake me when a government adopts a real commodity-backed currency (PMs or otherwise).  Until then, why would I put on a dirtier shirt?

Mon, 08/11/2014 - 14:15 | 5077439 RiderOnTheStorm
RiderOnTheStorm's picture

Because no one here wants to see you naked!

Mon, 08/11/2014 - 12:57 | 5076942 Squid Viscous
Squid Viscous's picture

Vietnam, lol... and anyone who went

Mon, 08/11/2014 - 12:59 | 5076949 TabakLover
TabakLover's picture

Talking my book for sure......but it just feels like this time the dip buyers are goona really get hammered.

Mon, 08/11/2014 - 13:02 | 5076966 himaroid
himaroid's picture

They ask "Why would you want to live in such a collapse scenario?" I gotta believe that there will be an end to the hell, and the chance for a whole new beginning. Thinking it will take extra determination for a middle age guy. "Defining moment" indeed.

Mon, 08/11/2014 - 13:02 | 5076968 SmittyinLA
SmittyinLA's picture

Sad he had to run for veep and couldn't just watch America burn from a recliner, sadder still America rejected him and Perot in favor of Ameriquest and Bush, and our media didn't help, most didn't even know Stockdale's story, or Perot's for that matter, instead we got the drunken liar legacy.

Mon, 08/11/2014 - 13:56 | 5077288 phaedrus1952
phaedrus1952's picture

That election in 1992 was a watershed event for me in regards to America as a society and politics in particular.

When an acknowledged rapist (see Juanita Broderick's 60 Minutes interview) was elected president, narrowly beating out a recognized serial killer -  GHW Bush - over two outstanding Americans of demonstrated integrity and intelligence, it was more a reflection to me on America's character as opposed to merely differences in political views.  I have never since looked back with much sense of optimism or pride for this country.

Mon, 08/11/2014 - 13:03 | 5076976 SanfordandSon
SanfordandSon's picture

Faith is reality based, and reality is faith based - no more, no less.

Mon, 08/11/2014 - 13:32 | 5077114 CHX
CHX's picture

Sounds good, but is complete rubbish IMHO, at least in most cases. Reality is whatever is "is", and has nothing to do with what I, you,  or anyone believes. Reality just is. Faith on the other hand may or may not have some anchor in reality. If someone has the faith that there is eternal live and bliss after death then this is hardly a reality, maybe a wish, hope, or simply a thought; a real thought, but that's not reality. It could be true, it may be not, we really do not know.

Mon, 08/11/2014 - 15:01 | 5077879 SanfordandSon
SanfordandSon's picture

Just don't agree with you.  Watch the movie about the Nobel Prize winner - "A Beautiful Mind".  What "is" to some people is not reality, possibly more than one might think.  This brilliant mathematician lived portions of his life totally not in reality.  Unlike many, once he became aware that whatever "is" wasn't, by faith he believed that whatever "was" actually "wasn't".  You took my statement and read it as whatever is "is" but you looked at it through a predisposed opinion of eternal life.  It's funny, you didn't read and react to my statement based upon your own arguement.  Hope you take my reply as it is intended to be - one of respect to you.

Mon, 08/11/2014 - 17:15 | 5078734 CHX
CHX's picture


Respect to you too, and we can just agree to disagree. I have faith that we agree that perceived reality (whatever neurons' works do to our thoughts) is not reality ;-) I just took eternal life as an example of (religious) faith. And no, I do not have a "predisposed opinion" on that topic, as a 99% agnaustic it's a moot point to discuss. Best to you and all. x 


Mon, 08/11/2014 - 13:06 | 5076990 Frank N. Beans
Frank N. Beans's picture

His name was James Bond Stockdale.   Quite the warrior even if you disagree with the politics of the Vietnam War.

Mon, 08/11/2014 - 13:16 | 5077008 sunkeye
sunkeye's picture

Props to a true - TRUE - tough guy - Airman Stockdale.  But I'm still PO'd @ Perot for what he allowed to happen vp debate-wise.

Mon, 08/11/2014 - 14:03 | 5077339 Freddie
Freddie's picture

Not to be a jerk but his rank when he was shot down was Commander.


Airman is usually an enlisted rank for sailors in naval aviation.  The whole thing is a scam anyway for the banskters like all wars.

Mon, 08/11/2014 - 13:20 | 5077054 Quinvarius
Quinvarius's picture

This market has had a nice little technical bounce off of the 200 DMA.  But the fact remains.  It is up entirely on the flow of QE money which is shrinking and ending fast.  No money means no rally.  There is no money coming to chase this bounce and it will be sold.

Mon, 08/11/2014 - 13:26 | 5077083 orangegeek
orangegeek's picture

Q:  What's the last thing to go through a bug's mind when it hits the windshield?


A:  Its ass.

Mon, 08/11/2014 - 13:45 | 5077163 trader1
trader1's picture



Death is everywhere
There are flies on the windscreen
For a start
Reminding us
We could be torn apart

Death is everywhere
There are lambs for the slaughter
Waiting to die
And I can sense
The hours slipping by

- Fly on the Windscreen by Depeche Mode
Mon, 08/11/2014 - 13:53 | 5077258 MBB
MBB's picture

The world is a total fuck up. Both economically and politically. All you can do is try and pre empt the end result and protect yourself accordingly.

Mon, 08/11/2014 - 15:46 | 5078232 Clesthenes
Clesthenes's picture


A major lesson of history is that an attempt to survive tyranny as a lone individual is always a mission of suicide.

Making the same attempt thru the mechanism of a First-Amendment assembly is sometimes successful: nothing else in human history has ever succeeded (only three times).

Do NOT follow this link or you will be banned from the site!