40th anniversary of Great Bull Mkt.

https://www.wsj.com/articles/rip-big-bull-market-1982-2022-b…

**RIP Big Bull Market (1982-2022)**
**From start to finish, the Dow rose from 776.91 to 36800, a 9.6% annual rate.**
**By Andy Kessler, The Wall Street Journal, Aug. 7, 2022**

**The bull market started 40 years ago this week. I say “the” bull market, not “a” bull market, because even though we’ve had several bear-market drops of more than 20% — the 1987 crash, dot-com implosion, post-9/11 drop, 2008 financial crisis and Covid — this was the Big One, a secular, interest-rate-plummeting, multiple-expanding, earnings-exploding market bonanza that ushered in the modern digital era.**

**On Aug. 12, 1982, the Dow Jones Industrial Average bottomed at 776.91, around where it was in January 1964, though it had bounced off 1000 five times in the interim. The price-earnings multiple in 1982 was 7.7. The DJIA peaked on Jan. 4, 2022, at 36800, a gain of 47 times, or a 9.6% annual rate, until inflation slew the super bull. I’m really going to miss it....** [end quote]

I think using “RIP” is writer’s hyperbole, a click-bait touch of drama. There’s no evidence whatsoever that the Great Bull Market will die in 2022 and languish for 18 years.

It’s true that the 2022 stock market is still dramatically overvalued on a historical basis. But everything is overvalued, assets, goods and services, inflated on a huge tsunami of fiat money created by the Federal Reserve and government spending.

What is the chance that the Fed and Congress will drain the bathtub of this monumental excess? Not much.

I think the Fed will raise the fed funds rate and imperceptibly slowly reduce their huge book of Treasury and mortgage bonds until inflation tapers down to their desired 2%. Fed Chair Powell is channeling Paul Volcker but I don’t think he will actually take the stunning actions Volcker did. If Powell actually reduces Fed assets to the 2000 level I will be the most surprised girl in the room. Ditto if government deficits and M3 go back to the 2000 levels. Why 2000? Because that’s when the Fed began to unprecedented low levels during an economic recovery. That’s when the government swung from a surplus to a deficit.

https://www.multpl.com/shiller-pe
https://fred.stlouisfed.org/series/WALCL
https://fred.stlouisfed.org/series/MABMM301USM189S
https://fred.stlouisfed.org/series/FYFSD
https://fred.stlouisfed.org/series/FEDFUNDS

I think there will be a recession in 2023 and a return of the 2022 bear market to lower levels. But I don’t think that inflation will get as high as the 1970s because Fed will be patient enough to bring it down.

The true sign of stock market capitulation is fear and loathing. Financial media proclaim the death of stocks. Investors buy bonds and have no interest in risk – the opposite of 2021. We are a long way from that and probably will not get to that point in the foreseeable future. Of course, that’s what they thought in 1929 and 2001…not to mention 1964.

Wendy

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RIP Big Bull Market (1982-2022)
From start to finish, the Dow rose from 776.91 to 36800, a 9.6% annual rate.

I wonder how much of that 9.6% annualized you would have given up if you listened to anything Hussman told you?

Wharton School finance professor Jeremy Siegel argues that the stock market has returned 6.5% to 7% after inflation over the past 200 years. 9.6% annualized (including inflation) over the past 40 is just par for the course, nothing extraordinary.

https://en.wikipedia.org/wiki/Stocks_for_the_Long_Run

intercst

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1981/82 was incredible in another sense. FAR more incredible. That’s because you could buy a 30-year treasury at about 13%. You would earn an essentially risk free 13% for 30 YEARS!!!

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