Why America Hasn’t Had a Raise in Forty Years
Why America Hasn’t Had a Raise in Forty Years by Bill Bonner – Bonner and Partners
POITOU, FRANCE – Whoa! What’s this?
The Dow popped up nearly 400 points yesterday. It is now just 4% off its all-time high of 26,616, reached on January 26 of this year.
And you know what that means.
Markets are either going up or going down. According to Dow theory, a market goes down after it hits its high for the cycle.
We had previously predicted that the high on January 26 would be the peak of the current cycle, and that the “primary trend” for stocks would, therefore, be down for the foreseeable future.
We’re not sure Dow theory makes any predictive sense. After all, you might just as well say, “Prices go up… until they go down.”
But we like the drama of it… and the big-picture view it gives us. It helps us recognize the long, large sweeps in market history, and reminds us that the most important thing is to be in the right place at the right time.
The latest place to be was in U.S. stocks, which ran up from under 1,000 on the Dow in 1982 to the aforementioned all-time high in January.
You didn’t have to know anything more. You didn’t have to do any real research. All you had to do was get on that train in August 1982 and stay on board.
Of course, conductors get drunk… trees fall on the tracks… and trains run off the rails.
And the Ol’ Cannonball that pulls out of Washington’s Union Station at 6:07 a.m. for the run to New York’s Pennsylvania Station then turns around and goes the other way at 12:02 p.m.
Markets are not so regular or predictable. Still, after January, it looked like we were headed for a long ride back down the line.
But the financial press reports that two things emboldened investors yesterday and may have turned the train around – Walmart’s latest results and the upcoming trade talks with China.
Hmmm. We stop. We listen. We put our ear to the rail… trying to hear what’s coming down the track.