The Zombie Epocalypse: A River of Denial Floods Markets Everywhere
The Zombie Epocalypse: A River of Denial Floods Markets Everywhere by David Haggith for The Great Recession
The highest summit of irrational exuberance ever not seen by those engaging in it makes the perfect peak for the greatest global economic collapse ever not known by those who fell into it.
Some days the level of denial in the stock market twists my head into a knot — notbecause I am surprised at lemmings jumping over a cliff because they know all the other lemmings are going to jump. In that case, the jump will pay off because the market IS the crowd, so it goes wherever the crowd goes, and the lemmings are merely betting on where the crowd is heading. I understand that.
The head-twisting knot comes when I endlessly see so many seemingly smart people parrot the same falsehoods in their writing when the self-deception is so obvious. Attempting to break through the mainstream media’s deception about the economy is why I started this blog, but the deception and delusion has become almost entirely accepted delusion.
Today I read a writer who clearly had a solid grasp of how irrational and overvalued the US stock market is right now — that was the whole point of his article — and yet even he wrote the following incongruous statement simply because it is what so many people are saying: (emphasis mine)
Indeed the stock markets crumbled under that Fed-tightening onslaught, plunging 19.8% over the next 3.1 months into late December 2018. That severe correction was right on the verge of crossing the -20% threshold into new-bear territory.
He uses the only gauge that didn’t fall by 20% as if it represents the entire market. Thus, he speaks of 2018 as a correction that almost became a bear market. Yet, this guy seems to have things well understood in the rest of his article, the general theme of which is about “extreme technicals, sentiment, and valuations” in a market where “traders’ euphoria and complacency have been running at bull-slaying levels, while valuations remain way up near perilous bubble territory.” He even notes,
All this is happening as corporate profits flatline after surging dramatically. Like after every past waterfall decline, the stock markets are due to roll over and retest their deep late-December lows. Odds are they will fail, confirming a major new bear.
Though he is still following the herd by acquiescing to the way the most popular analysts are calling last fall’s crash, I’ll give him credit for the rest of the article and say this was just a momentary lapse. I reference him because he demonstrates how the dominant thinking even shapes the writing of those who are not trying to follow the dominant thinking. It goes to show how prevalent, pervasive and persistent the rose-colored glasses are and how easily one falls into parroting the pack on its own terms when someone who is writing about how the present market is almost certain to make a “bear-confirming” plunge repeats the party line that claims the old bull is still alive.