This Time is No Different

Bill Tatro
|
Posted: May 11, 2013 12:01 AM

What happens when the music stops?  Baseball games usually end after nine innings, basketball and football games normally conclude after four quarters, and in horse racing the dramatic finish occurs as the first horse crosses the finish line. 

If you’re a mountain climber that reaches the summit and then realize that it’s time to go home — unless you’re in the top one-half percent in the country and wait for the helicopter to pick you up — you hike down the other side of the mountain. 

When you go to a restaurant, you enter the establishment, sit down, have a drink, enjoy an appetizer, consume your entrée, treat yourself to desert, pay, get up and leave — unless you own the place.  What all these aforesaid activities have in common is that there is a beginning, a middle, and an end. 

When it comes to the current stock market bubble (some say referring to the current market as a “bubble” is debatable), the majority of participants are calling for “no ending.”  This popular belief seems to suggest that all the various technical and fundamental indicators, including moving averages and Dr. Copper, are all misguided — and that this time around it will definitely be different.    

By studying some of the greatest bull markets of all time, including the 1920s, the 1990s, mid-2000, and right now, the participants all seemed to echo the very same words: “Get on board,” “buying opportunity,” “FOMO.” (Fear of missing out - a new term but an old idea.)  And, of course, the always popular: “A permanently high plateau.” (An old term, but a continuing idea.) 

Yet, just remember that everything, and I mean everything, has a beginning, a middle, and an end — including the term of our current president, thank goodness.  (Unless of course, he…..  Oh well, that’s a completely different conversation.)  Indeed, “everything” definitely includes our current bull market. 

Undoubtedly, everyone wishes their dreams, fantasies, and “bubbles” would last forever.  Unfortunately (or fortunately), that is simply not reality. 

A lot of runs can be scored in the ninth inning, or points scored in the fourth quarter.  But all sports fans know that when the clock runs out, the game is over and it’s time to go home.  So too, can much money be made in the stock market run-off. 

However, the markets are definitely telling us it’s time to leave and unlike the 1920s, the 1990s, 2008, gold, Apple (AAPL), China, etc., we should all heed the call and not turn a deaf ear. 

The warnings are loud and clear.  However, what happens if we don’t heed the warnings?  We already know the answer; all we need to do is look behind us.  Now, for all those non-sports buffs, let me rephrase this: What happens when the music stops?  Or, the museum closes down?  Or, the book says “The End.”