bear market

Fearing Greed

I.C. Angles Investment Post…

Investors should be nervous about the stock market, but they’re not, and that’s even more reason to be worried. Retail investors tend to sell low and buy high, and throughout the current bull market they have been mostly negative on stocks and missed out on much of the gains. Now after years of strong returns they’re finally turning positive on stocks. That is not unusual. Investors react to performance. At stock market bottoms prolonged market losses make them fearful, and at market tops years of gains make them greedy for more at just the wrong time. Some measures show investor sentiment has not been this positive since the last stock market top, and if history is repeating retail investors are turning optimistic on the stock market just in time for the next bear market.

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The Party is Over

I.C. Angles Investment Post…

We are entering a new era for central banking, where the freedom to pursue the easy money policies of the past are receding. To the degree cheap money has fueled the global economy and market rise since 2009 this development is particularly worrisome for the near term. Conversely, insofar as central bank policies have created market imbalances and stood in the way of needed structural reforms this will be a long-term positive over the coming decades. In short the easy money party is winding down. And that means stock market risk is higher now than at any point since 2007.

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The Three Bears Economy

ICangles Investment Post…

In hindsight it’s ironic that the economy of the nineties was described as the Goldilocks economy—not too hot, not too cold, but just right for high employment and strong growth. Ironic, because the real moral of the story people should have heeded is that there is no free lunch. And, like in the Goldilocks’ fairy tale, three unfriendly bears emerged. If the nineties was the Goldilocks economy then the period we now find ourselves in of both weak growth and employment might best be described as the three bears economy. Since 2000 there was the baby bear of the dotcom bubble, the mamma bear of the residential real estate bubble and the daddy bear of the government debt bubble—corporate, consumer and now government-led bubbles of unproductive and hence unsustainable spending.

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