About to start longest equity bull market in history
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While I would have to agree that inflation will drive this market for some years yet, eventually it will end in pain as the middle class dwindles to some fraction of what it is today (which is already down from its high), wages continue their slide in constant dollars, and the standard of living, for all but the wealthy deteriorates noticeably further, prison populations swell even further, and the country drifts much further toward crime and lawlessness.
I would think that stock in security equipment companies makes sense as a intermediate term investment.
But one should always be cautious in extrapolating too far out. The further one goes out, the greater the uncertainty. The U.S. has typically been a nation driven by crises, rather than consistent and steady long-range planning. Given a crises of sufficiently large proportion there is at least a chance that the Government could overcome its present paralysis.
With Bubble ben bernanke doing anything and everything possible the market will only move higher, once there is any signs of weakening in the equity markets Bubble ben bernanke will continue to pump up the markets with cheap worthless dollars. The only reasons why the markets are up 100% is because of the trillions he has pushed into the market, if anyone cant notice that you are a complete fool.
From a historical perspective, the statement you just wrote is the kind of statement which is only possible in a market closer to its high than its low. Since we know that the market mean-reverts over time, it seems like it is nearly impossible for what you right to be true. Think about it, would anyone write the statement you just did at a bottom?
Besides, you miss the crucial limiting factor on the market, which is oil prices. If they get too high, the economy will slow at a faster rate than the short-term benefits of cheap money can be felt, which will cause Bernake to pause in his attempt to flood the markets with cheap liquidity. The reason a place like Zimbabwe can end up in such a massive hyperinflationary spiral is because modern production techniques requiring oil are such a small component of their economy. Hyperinflation in an oil-dependent economy is a virtual impossibility. Think of oil as the new "gold standard" in terms of how it can slow the economy. We don't need gold to back the currency because energy does just as good a job of backing it. In the old days, when energy was primarily stored in human bodies doing manual labor, gold made sense, but it doesn't anymore, since the most important uses of energy aren't in powering human muscles, but in powering machinery.
I think predictions about the market like the one that started this thread are pretty useless, but it is helpful to think about the long-term constraints, with oil prices being the most important of those, in my opinion.
Yes, corporations will be king unless civil war but doubtful because govt will spend and subsidize for years. You just said. That the US is driven by crises.. The US banking crisis was the crisis as is the global solvency issues. They are still fresh. It takes many years before bears can surprise people when all of the chaos is known.
Thanks.
You are so right! The crisis just past is boring us already -- we have a very short collective attention span. We will need a new, and extremely serious crisis, i.e., one that again threatens the well being of the 1-5%, to derail the current drift that I have outlined. I wouldn't want to even attempt to predict how far out that might be, but I am confident that I have the direction of the drift correct.
Here is something that could, in fact would, limit how far out your prediction holds true: Were the Congress and the Fed to act responsibly and invoke the second part of Keynes prescription for recessions, once the economy is back hitting on all cylinders again, fueled, of course, via the Fed's money pump; one could then expect a long sideways to slow up market for an extended period. I can see at least finite odds that the Fed will tighten when appropriate, but what are the chances of Congress acting responsibly and putting into place their part of the prescription? Near zero, I would think, if recent congressional non-cooperation is a reliable predictor.
The script is already written. All of this political strife is to keep the people pre-occupied in the noise. Also, straying off a bit, the United States is the wealthiest nation in the world in terms of resources, technology and productivity. The US could enact a massive social welfare program, and everyone would still own 2 cars, and have a decent place to live. Oops, actually this is what's happening. Who ever saves his welfare check. It's sent so that it can be used for CONSUMPTION. The greater the welfare, the higher the consumption. This can go on as a function of national resources. Think ants and the corporate money machine grows. Stocks don't reflect macroeconomics. They reflect corporate earnings growth.
Why else do many in the 1% support Obama and his pro-welfare campaign. The checks go straight to the corporate cash coffers.