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Stocks Have Reached A Permanently High Plateau
Submitted by Charles Hugh Smith from Of Two Minds
Stocks Have Reached a Permanently High Plateau
A permanently high plateau of stock prices is a marvelous innovation.
Somebody said this before, of course, but one glance at a chart of the S&P 500 tells us that stock prices have
reached what looks like a permanently high plateau. How can we identify a
permanently high plateau? One sign is price never touches the 50-week
moving average (MA), much less the 200-week MA: prices just keep
marching higher in a volatility-free permanently rising plateau.
It's almost like a film set, where the special effects department (i.e. the Financial Singularity) has been called in to get rid of pesky volatility and fluctuations.
Memo to Head Office: Done. The MACD indicator has been locked into a permanently high plateau as price marches higher in an orderly fashion.
A permanently high plateau of stock prices is a marvelous innovation: you can practically set your watch to the steady tick of new all-time highs, and all you need to plan your retirement or cash-out of your stock options is a ruler and a pencil--just extend the price line as far forward as you want, and calculate your wealth.
The only downside of this permanently high plateau of stock prices is that it eliminates the need for the financial punditry and the workforce of money managers. With bearish influences and volatility both eradicated, there is nothing left to talk about except the upward slope of the permanent plateau.
As for money management--for most people, there's no need to play around trying to beat the index by a tiny percentage: just lock your money up in a index fund and watch it grow, month after boring month, year after boring year.
The Federal Reserve's testimony to Congress will be boringly predictable: "stock prices continue to rise in an upward sloping permanently high plateau." Congress and the Fed will congratulate their outstanding management of the economy, and once behind closed doors, congratulate the Special Effects crew for their fine work maintaining the permanently high plateau.
Our permanently high plateau of stock prices greatly simplifies life. If you own enough of the stock market, you can calculate your wealth next year and order a new private jet right now, because you know you'll be $25 million richer by then.
And of course the economy will thrive on this steadily rising permanently high plateau because those new private jets will need to be manufactured and maintained, and small airports in wealthy enclaves will need to add space for the new private jets.
Let's face it: this permanently high plateau of stock prices is financial nirvana. Permanently high plateau has such a nice ring to it, doesn't it? Let's say it three times just for the pleasure of the alliteration: permanently high plateau, permanently high plateau, permanently high plateau.
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Central Banks are using the Public Treasury to directly purchase private equities.
It's like getting paid to live in a house and not go to work - and have a maid, a chef, and a gardener provided. Oh, and play golf and talk a lot, and travel. Cha-ching!
Public Treasury is $17T in the hole. So they're using the printing press instead.
Now when have we heard that line before????
From this guy way back when:
http://en.wikipedia.org/wiki/Irving_Fisher
But it's different this time, right?
http://www.youtube.com/watch?v=POMhTJqw1d4
Maybe not..
Thanks. Never read up on the man but Wiki has this to say
"Fisher was perhaps the first celebrity economist, but his reputation during his lifetime was irreparably harmed by his public statements, just prior to the Wall Street Crash of 1929, claiming that the stock market had reached "a permanently high plateau".
WoW! The more things change the more they stay the same.
When theiving becomes novel, criminals become honored. When honor becomes criminal debasement is soon to follow.-ElO
"...eliminates the need for the financial punditry and the workforce of money managers [because] ...there is nothing left to talk about except the upward slope of the permanent plateau."
Sort of like the need for a weatherman in Yuma, Arizona.
The only question is...
Can the Debt Money Monopoly cause a one off rip up in the market to bleed out the shorts before turning on the longs?
That's kind of what I'm looking for before going short.
You see, back then people didn't have goldfish memory because they ate real food, drank real water, and didn't get pumped full of drugs, hormones, and antibiotics.
So naturally, they were inclined to remember statements like Fisher's, and hold the speaker accountable to his words.
Not that any American knew who/what/why The Fed ever was.
The beauty of not having a whole lotta money is you don't have to worry about losing it.
a lot of truth in that statement. And it sure is getting expensive to eat like people used to. Sucks, too, becuase by eating organic, all im really trying to do is eat real food, which used to be the norm in this country a couple generations ago. And once this inevitably comes crashing down again, since, even in normal times, we are getting due for at least a mild recession, all that will be spoken about is 'no one could have predicted this' 'no one saw this coming' etc, and they will mostly get away with it since most people have the attention span of a 2 year old
difference is you didnt have CB's acting as a boundless buyer...
No, not really all that different when a CB is the crazed desperate buyer without a care for how much risk it is taking as we have today.
my issue is when it ends...it could be years from now...likely having he same conversation when the SP is at 3k...I go to clinets and feel like I'm lying thru my teeth. but what option do I have...from that point it is the same, anything said outside the party line is heresy
Go the Ann Barnhardt route.
Party line?
Heresy?
You're a sheeple!!
Me...no. Most clients yes. You miss the point HB
And different from 2000 and different from 2008 and different from..........
dID THE AUTHOR FORGET THE "SARC" TAG?
Ok so get a "risk adverse" lawyer who risked his future on a quarter or a million dollar school bill and start a petition to sue the god awful entity who is screwing up your life called the Fed. Most people on herel act like tightwad lawyers. I think this site is for lawyers. You think Warren Buffet would have made 70 billion dollars if he complained about the fed and was a lawyer? Lighten up. Print money make money. Bullish
This is easily the greatest of all dead cat bounces.
Why should the masses be any different than o-golfa?
Transgression. As late poet Bukowski used to say, "Slavery hadn't been abolished because it has been expanded to all colors."
Many former slave owners became politicians. Still use the same tactics of fear and keeping the slaves illiterate.
You keep knocking on the Devil's door, Charles, and eventually somebody's gonna answer.
This is not to be spoken of. Just accepted by those in the know and acknoledged between them with a small nod.
As with any criminal ponzi, some inquiring minds at the bottom are going to mess it up for the criminals at the top.
Well he's right. CNBC ratings near an all time low shows that!
We have free range chickens, free range silver and gold.
Why not free range stocks?
Rangebound, bitchezz.
Why am I plugging my I-phone or anything else for that matter to be charged? Why am I not plugging in every electrical device in the house and having that power everything?
Is that the same Bukowski who said: "If you want to find who your friends are, get a jail sentence."?
Something similar was, "You will know who your real friends are when you are in jail or in the hospital".
Unless you were/are in Gold Stocks.
And with the authors sarcasm in mind your mention of gold stocks is poignant.
However, there are many stawks that have already shown a serious correction is coming; sample, Boeing, McD's, Ruger and so on. The rest will correct also imo.
Does the author know what "plateau" means?
Plateau means topping pattern, from bottom left to top right on a chart is somtheing else. Yes the author is apparently ignorant of his terminology.
"Does the author know what "plateau" means?"
I see several plateau's on the way up to where the market is now. It was just mentioned that the S&P kept hitting the 2000 mark over and over, which is a plateau of consolidation, if the SPX is going higher still.
He also uses this term "permanently rising plateau" which is a simple oxymoron. Maybe he uses it for effect.
Or perhaps he is adjusting for inflation.
Forget plateau, concentrate on the "permanent high" part
look at the macd chart, that's the plateau is talking about, he has even drawn the line for you at 25
read the article before making (not so) smart ass comment
quote "The MACD indicator has been locked into a permanently high plateau as price marches higher in an orderly fashion."
Sorry Charles, you said stock prices have plateued yet imply they rise indefinitley. Get someone to proofread. Aside from that, its a real snoozer of a contribution at best anyway.
lol, i'm not charles but i know what macd is & i read the article (vs many here that read the title & gave a glance at half of the chart only)
starting with first paragraph : the prices never touch moving average = Moving Average Convergence Divergence is on a plateau
& since a while which is insane
dead clear if only you know the macd indicator, which is a very popular indicator that most traders work with so stop the silliness & try to understand instead
anyway sell when macd goes under 25
good luck
The author is not wholly serious here. He's making a jab at Irving Fisher, who said something similar back in 1929.
So we should be asking Irving Fisher what the hell he meant by, "permanently high plateau"?
If he showed a graph showing percent gains from the prior year it would be his "high plateau". The sentiment is more important than the terminology. He does sound like an idiot.
The strongest force in the universe is the human will to believe, even something patently false, if it confirms previously formed opinions and worldviews.
You pick up a good point very few others do. It is actually the source of leftist strength. People WANT to believe all these social programs, central control and large police forces will work, provide not only security but comfort. They want to believe they are run by very wise men with good intentions, free from corruption.
In my whole life up to this point you would not have been able to convince me that I would one day be depressed about serial new highs in the stock market. The higher it gets the worse I feel. It's mind boggling.
The high stock prices are actually warranted in many cases not due to rising intrinsic value nearly as much as simply that it should take more US fiat to buy shares.
Self reference and recursion.
The German stock market went from a value of about 150 to one of 20,000,000,000. Nevertheless, by the time the party ended, German stock market investors failed to keep up with inflation.
http://blog.milesfranklin.com/wp-content/upLoads/2012/03/stock-market-we...
what is mind boggling is the number of programmed moron stuck in the silly right left paradigm and that WANT TO BELIEVE they are so smart & wise themselves.
My Chuck Swab account remains open but has been inactive since 2008. I've got about $1,000 there that I can afford to lose. I've been so out of the market that I've had no 401-k withholdings since 2008.
This is about to crash, HARD, pretty soon. I have the mattress funds to be able to start buying when these games stop. Until then I'm buying the basics and stockpiling (forgive the pun, please).
I'm in the midst of refinancing my house. I've resisted the idea since the day I was offered $350k back in 2006. I'm locking in a fixed rate around 4% versus my 7.5%. My $30k balance is going to $100k, and the $65 grand will first buy a pound of gold, tile the house, fix some minor plumbing issues, and send us on a two week vacation to Ireland, with money left over to pay off other bills (including a years worth of mortgage payments).
It's time to play their game with my rules. My job isn't going anywhere soon. I'm that weird accountant troll in the basement that makes money out of tax law and fees and can close AR and AP in one day and provide financials for fifty entities within fifteen days. I'm in pretty good shape.
But I still won't be putting my 401-k money into anything until I see a crash of at least 75%. I'm waiting for it and know it's coming.
agree about money managers. they are worthless as tits on a boar.
I would have said fraud has reached a high plateau.
The fraud plot, I would think, would look very much like the debt plot, except without a flat region preceding the linear, i.e:
Linear -> Exponential -> Off the cliff, back to linear.
Much more fraud to go.
Or at least until there's a currency crisis.
Postman always rings twice. Never hurts to repeat the truth.
I'm kinda watching the stock buybacks with borrowed money. One good disturbance among the banks and loans will start to be called and it'll be time to invest in nail gun stocks.
You are not thinking the game plan. "Let's say it three times just for the pleasure of the alliteration: permanently high plateau, permanently high plateau, permanently high plateau."
Permanence, ah Olympian permanence !
it's at the point where broker dealers should be treated as utilities. individual traders shouldn't be allowed to get million dollar bonuses (heck, even $250K) when you're "trading" in a scripted, supported market. and the big prop firms should have a cap set on their earnings - everything over a nominal amount goes back to the Fed, since it was derived from the Fed.
Listen man. If you're frustrated with NYSE or NASDAQ, Come trade Sensex. It's a fucking thrill ride $$.
Is this you throwing the towel or yet another post meant to mock the "fake" bull market so that you can claim victory at the next correction?
Charles has been playing both sides lately ... else he just sounds like another dope who lost a bundle trying to short the beast.
Well, let's be a little sympathetic. These are times that try Bears' souls. How many bloggers have espoused perfectly sane theories and yet sat out this 5-year bull and lost most if not all of their readership?
Mr. Smith is echoing Irving Fisher's infamous remark made a mere few weeks before it all came crashing down in October 1929.
An interesting time. The President of the NYSE waded down into the pit with $10 million in authority and started to try to bull up US Steel. He was quickly and absolutely subsumed. Winston Churchill, John Rockefeller Jr. and many others got their asses handed to them. Others such as Ernest Hemingway, Bernard Baruch (the originator of the shoeshine boy story) and of course Jesse Livermore were well-positioned. Joe Kennedy, first SEC chief under FDR, said, "Only a sucker sticks around for the last nickel." Read Hemngway's non-fiction from that era; he called the crash, the deflation and ww2 with surprising accuracy. Of course he spoke French, Spanish, Italian and German and travelled constantly.
Remember, too, that the NYSE President you speak of - Richard Whitney - was embezzling from the NYSE at the time, and he was later sentenced to 5 to 10 years in prison. It is said that six thousand people turned up at Grand Central Station to watch him get on the train to Sing Sing.
Yes, Virginia, there once was a time when crime by banker types was actually punished.
http://tinyurl.com/ktwxued
This market is like the communist political prisoner who reads the carefully scripted confession after long rounds of torture. If you look closely he will blink the word "torture" with his eyelids. It is the eyelids, not the lips that speak the truth.
Welcome to the Fed tortured markets.
Whats the driver for this market? Earnings? Too much money chasing too few stocks? Most every justification ends up out the window. Light volume premarket pump, very few sellers and fed meddling combine for a nosebleed ascension where the air is thin and mental faculties diminish.
Yes to all
earnings still going up
stock buybacks still going strong
light volume
but all on the clock
tick tock tick tock tick tock ...
Off topic but needs to be discussed. BABAs IPO
F-1 filing on bottom of page 29 says basically that the PBOC has filed for regulations limiting the amount of money which can go from a bank account to Alibaba. They try to play this down with statements about escrow. But for anyone who knows what escrow means knows it means if you sell but then buy on Alibaba (escrow) you are unlimited. However the PBOC wants to limit the amount of cash moving from bank accounts to Alibaba accounts.
Does anyone see this? This is a HUGE deal and a huge negative. Does anyone really think PBOC will say we made a mistake on the regulation we want to adapt. This is almost comical. If PBOC said this I think it's near the first quarter of this year of course they will adapt some form of it. The F-1 warns if this happens BABAs income will be MATERIALLY effected.
<Discloser: Short 1 Lot YHOO. Short 10 Lots Credit Spread Calls for Next Week ($40/$41 strikes)>
I did not read the F-1 at the time my position was instated. It hadn't been disclosed yet. I just guessed.
Goldman slacks must be here to down vote me :-)
Off topic but needs to be discussed. BABAs IPO
F-1 filing on bottom of page 29 says basically that the PBOC has filed for regulations limiting the amount of money which can go from a bank account to Alibaba. They try to play this down with statements about escrow. But for anyone who knows what escrow means knows it means if you sell but then buy on Alibaba (escrow) you are unlimited. However the PBOC wants to limit the amount of cash moving from bank accounts to Alibaba accounts.
Does anyone see this? This is a HUGE deal and a huge negative. Does anyone really think PBOC will say we made a mistake on the regulation we want to adapt. This is almost comical. If PBOC said this I think it's near the first quarter of this year of course they will adapt some form of it. The F-1 warns if this happens BABAs income will be MATERIALLY effected.
Sorry guys I'm not trying to double post. It seems to be doing it by itself.
"Buy low and sell high," says it all; and it be too high now. If investors don't follow that rule [and get too greedy] the pain will be great in my sperience. Ax those internet victims how much they lost trying to capture that next high....
Chuck sounds pissed. Goldman Sachs has taken over the western world by way of FRAUD and bribery. Does FRAUD and bribery work out for ever? No not when there is nobody left to commit it against.
You get to print the most powerful nation in the world's money. You take ownership of all the gold in that country. Then you start to change the regulations of that country over you. Then you take over its political process. You then control that countries politicians and money. You do the same for nations in other regions of the world. You create a organization called NATO for military command. You take over control of all the nations militaries by taking command of NATO. You get the justice systems of the world to place you above any laws. You use NATO to take over world resources.
But you run into a problem because the FRAUD and bribery requires ever more FRAUD and bribery to keep the machine that you have created funded. The easy money seems harder to get so you begin buying into stock markets with printed money. Then you take control of all corporations that are publicly traded. You manipulate all markets to skim as much out of them without killing them. You also pay off the populations by supplying them with subsistance social programs--enough to keep them from creating a revolution. But just in case you build up a super security state and monitor each individual and organization.It is still not enough, fast enough so you use the military to unleash weaponized viruses that will allow you to quickly gain control over the remaining world's resources.
But resistance increases from China and Russia and lesser areas of the planet which threatens to slow your much needed supplies to the machine that you have created. You realize that no matter what you do the FRAUD and bribery machine cannot continue long into the future. You decide to reduce your enemies by depopulation through asymmetrical warfare.against the nations you have control over. But that too meets resistance. You cancel that idea and choose the nuclear and biological last resort.
Hello is there anybody out there. Goldman Sachs must be stopped at all costs.
Steep growth curves, and ponzi schemes always end. Even Ebola growth curve will run out of Africans and other poor crowded sub tropical hosts.
This article implies this time is different. I call this Harry Potter economics. Yellen does look like a minor professor at Hogwarts who has lost her wand.
"It's almost like a film set, where the special effects department"
How bout those ISIS CIA characters with their tennis shows Toyota pickup trucks and black outfits beheading western journalists. Pretty F'n retarded eh? Arrest Rumsfeld, Bandar and Cheney.
PHP... where have I heard that before? Its like a drug of some kind...
With central banks having pumped 68T into the market, there truly is no downside as long as they work collectively. Looking at the chart, it's clear they're following the script nicely... right now.
So the next question is 'what are the factors that would cause a central bank to betray their brethren?'
Identify this and hope you placed some puts in your 'carrion' bag, because the flight will be going down, fast.
So the next question is 'what are the factors that would cause a central bank to betray their brethren? exactly the equestion. right now its in everyones best interest to keep stocks high...for so many reasons...its a costless trade for CB's. As speculators rigged the market in the 20's, CB's are rigging the market today...whats the flash point...a loss of confidence in global fiat. but when, it could be years form now...
Emazing what a little printer can do to the world economy? !
yellen squats on pumpkins and makes them disappear
I don't care what the author says, my broker told me emphatically, "stawks never go down."
To the lemmings, they have. Nearly everyone believes that line. People are all in, retirees, elderly, people in their 30’s, 40’s, 50’s. It is now considered 100% certain stocks will only go up and not be “allowed” to fall, ever again. “Too big to fail; the Fed Bank won’t let the markets fall”. Fund managers look like geniuses as the rising tide lifts all boats. They constantly brag on their returns. One investment fund now has $3 TRILLION in it. So far, it is all true, the central bankers are all in too to support the markets. Failure means social unrest big time. Dow at 6,000 would mean collapse and much more than a Ferguson. Millions have all their money in the markets though 401k’s, etc.
When I ask people about the risk, they tell me all risk has been removed by the Fed and the government. Any serious sell-off would be met by Fed Bank printing and asset buying. They are perceived as “insuring” market investors against losses in much the same way the FDIC insures savers. The top 5% will not sell equities either with such guarantees in place. This is America’s New Normal, where wars are page ten news and more important is that another new model I-phone is out.
High? Bong hits all around. At least that is a real reason...
I understand somewhat ....what is going on. Fiat pumped into the market is via......I don't know, is responsible for high after high. It's all a money game. I do not understand why it hasn't crashed yet. I have just about given up. I had thoughts today that this could go on for years. One aspect I just do not get is the inflation should be horrendous, its out there and worst that they let on but not hyper yet. With all the fiat how did they pull that off? Sorry hedgers, I'm just admitting my lack of understanding. Maybe the Keynsians are right and we are wrong. We can just "print manage" nirvanna.
The only limiting factor to stocks from going higher is the availablity of money and a willingness to buy shares at the next higher prices. It would seem that the 2 requirements are wasting and can be seen as the price goes up but the volume is dropping.
http://stockcharts.com/h-sc/ui?s=!250ETVNYA
When is this bull shit going to end.....?
When the dollar crashes, otherwise it's from one Federal Reserve scheme to another. The switch to SDRs is their end dollar scheme.
Give me the control over the digits and keep the rest.
Syriana, @1:22:06, (total length 2:07:35)
Pg. 93 of 130 (Pg. labeled 139) in script (some discrepancies)
http://pdl.warnerbros.com/wbmovies/syriana/site/med/Syriana-Screenplay.pdf
Danny D.:
Some trust-fund prosecutor got off message at Yale…
…thinks he’s gonna run this up the flagpole?
Make a name for himself?
Maybe get elected some two-bit congressman from nowhere…
…with the result that China or Russia…
…can suddenly start having, at our expense…
… all the advantages we enjoy here?
No, I tell you. No, sir.
Corruption charges. Corruption?
Corruption is government intrusion…
…into market efficiencies in the form of regulation.
That’s Milton Friedman. He got a goddam Nobel Prize.
We have laws against it precisely so we can get away with it.
Corruption is our protection.
Corruption keeps us safe and warm!
Corruption is why you and I are prancing around in here…
…instead of fighting over scraps of meat out in the street.
Corruption is why we win.
"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929
http://freedomshift.blogspot.com/p/pre-depression-quotes.html
great quotes - thanks for the link
I am starting to think that the market is indeed a policy tool, but the policy they are pursuing is not that of permanent prosperity but that of confiscation. We know there are only 3 options for a bankrupt state - default, hyper-inflation and confiscation. They clearly do not want the first two, but the third one is politically unthinkable, at least, at the moment. But there is always a work-around, which does not require any politics involved - keep selling them stocks at higher prices and taking their money. Then at some point drop the market, buy the stock back at half the price, and keep the rest of the money. Mission accomplished and nobody would complain loudly because this is just what happens when bubble s pop, right? People lose money, and nobody could see it coming. With SP500 down 50% they would lose maybe 0.5% of GDP growth per year from the reduced wealth effect, does not seem all that bad compared to the amount of money they would end up confiscating. A plan like this has only one caveat - it would have certainly leaked out one way or another, yet this has not happened.
A slight modification of the same plan would be them buying the dips and then unloading at the top. Rinse, repeat. Works for as long as sheepl keeps to BTFATH.
BTFPHP!
(buy the f-ing permanant hight plateau!)
what fucking planet are you from. Obviously you are not an accountant or have any kind of accounting background. If I invested 200 dollars 100 years ago today 4500 dollars in 1913 and got a return of 8 percent each year and yes this is possible I would have $450,000. Get the fuck out of here the market does not go straight up stop complaining yes it will dip then you dollar cost average or put it stop gaps. Even with bad years it still goes up. Who cares as long as we're making money. Do you want to make everybody in the world poor with negative sentiment? This is hardly the margin call depression / the dot com oddity / or the housing credit bubble. What it is a stock buyback frenzy, and US companies are outperforming their peers. You have a better idea? Problems are being addressed. This country is so far ahead of the rest of the world they might never catch up - 30 percent of the worlds market cap and it should be higher. Rest of the world has crap for investments but they are finally starting to go up even with all their retardation. Take a break and if you really want a great investment you should have invested China Shanghai index in 2009 because China is so much better.
S&P target 2024 = 3571. Bullish
What's he yammering about, the permanent rise or permanent plateau is just the opposite of the doom and gloom he's been preaching for months.
And nothing is that permanent, I'm sure the Fed plan is to reduce QE and ZIRP so that rates double from here over five years or more, giving stocks some time to adjust without obviously plunging, attempt to keep real growth higher than percentage QE reduction. I mean good luck with that, but it's not a permanent plateau anyway.
Technical Analysis do not work in markets controlled by Predators. Markets are just hunting grounds for preys. TA only works when you are trading with real price discovery in free markets i,e, not held hostage by Predators.
These charlatans (maket analysts, etc) who have no skins in the game are just churning muppets or worse are adjuncts to Predators.
There are of course values in some well managed/ethical companies but their values are not to be found in rigged markets with a House (Central Bank) that control the chips.
Wile E Cayote often thought he was on a permanently high plateau.
The question is how long can they continue this trend that they are so locked into now. At what point will the guy on the street have a WTF moment and reach for his plowshare. As the situation deteriorates you will see more desperate actions by TPTB to continue their financial sovereignty. That, in turn will lead to more and more political actions that are nothing short of desperate
Hey, youngin'. Those of us that were around in the 90s are not impressed yet. Schiller P/E in 2000: 45. Schiller P/E now: 26.
Here's a hint for ya: it's not a real bubble until everyone thinks it isn't. That means that even you will no longer think it's a bubble when it finally pops.