[H]ot headlines about the Dow “storming back soon,” soaring to the “Next Stop, Dow 20,000” [is nothing more than] a new cycle of irrational exuberance. After losing an inflation-adjusted 20% the last decade, a prediction that the Dow will roar back 80% anytime soon is misleading, pure speculative hype. Reminds me of book titles like “Dow 36,000” and “Dow 100,000” back in 1999 – and memories of those mutual funds selling with absurd multiples over 40, with annual returns in excess of 100%. Worse than the tulip-bulb mania of the 1590s. What’s really roaring back is hype, happy talk and irrational exuberance. Words: 531
So says Paul B. Farrell (www.marketwatch.com) in an article which Lorimer Wilson, editor of www.munKNEE.com (It’s all about Money!), presents below, in part, with a link to the full article should you wish to read it in its entirety. Farrell goes on to say:
OK, admit it, we all want the good news. Investors are natural optimists, blind optimists. We selectively ignore facts, deny history, block risks and fail to learn lessons like in 2008. Not just Wall Street’s trained killers — the bankers, traders and executives — but also Main Street’s 95 million investors. Yes, you. Research in behavioral economics tells us investors actually want to be deceived. Why? We want to trust in a brighter future, good news, hope, happy talk and bull markets.
Investors believe “this time really is different.” Another meltdown won’t happen, even though the pattern is imbedded deep in an inevitable 800-year historical cycle that’s guaranteed to repeat. So even though we desperately want to forget the crash of 2000, the meltdown of 2008, the bears and recessions that followed, Wall Street remembers, takes advantage of us and won’t stop playing us for suckers. The closer we get to another crash, the more Wall Street pundits ratchet up the propaganda fed to the press about how the market will come roaring back soon.
Unfortunately, the next crash will be bigger. Wall Street and its puppets in Washington never learned the lessons of the 2008 crash. Today their lobbyists are spending hundreds of millions to kill reforms, keeping in place the same toxic, unregulated Reaganomics that triggered the 2008 crash, setting America up for another, bigger crash, kicking America’s problems down the road, one more time, except this time it won’t work. The public’s appetite for another $23.7 trillion in total bailout debt is dead. Of course Wall Street won’t stop. Their greed is so addicting they can’t see their death wish playing out – and won’t see it [un]til its too late, [un]til the Great Depression 2 sweeps across America. [Un]il then, Wall Street’s self-destructive addiction is unstoppable.
Proof? Here are some reminders from three earlier historical cycles and the irrational exuberance that consumes us.[To read Farrell’s excellent article in its entitety please go here]
Editor’s Note: The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.