One big question: Will stocks lose $10 trillion in 2015 or in 2016?

[marmar]

by Paul B Farrell


(MarketWatch) Here we go again. Same cycle all over again. Another bubble, another blowout, another crash dead ahead, another massive $10 trillion loss for American investors, like the 2008 credit meltdown and the 2000 dot-com crash. Déjà vu.

And we know it’s coming, except our brains are own worst enemy. Einstein called it “insanity” that we do the same thing over and over again and expect different results. The Duke University behavioral economist Dan Ariely was a bit kinder in his classic: We’re just, as his book title has it, “Predictably Irrational.”

Predictably irrational, yes, and fair game, too — hunted by those on Wall Street who know our brains are remarkably easy to manipulate. We ignore historical facts, cycles, patterns — anything to stay optimistic, even when a crash is imminent, and even if one is in progress. As IBD publisher Bill O’Neill put it in his perennial best seller, “How to Make Money in Stocks,” the market has topped and tanked about every four years for a century. Bigger crashes every eight years. Read on for proof.

Yes, American investors are born optimists. Years ago we did a research study: 93% of the time the Wall Street gurus are bullish. Today, behavioral economics confirms the same is true with America’s 95 million Main Street investors. Our brains are also perpetual optimists — bulls, in other words.

Get it? We’re naturally optimistic. Blind optimists. Irrational optimists. And the Wall Street gurus are always one step ahead of us, profiling and manipulating us, hunting us even, luring America’s 95 million investors with that 93% good-news spiel, knowing we’ll keep turning up at the stock-market casino. ................(more)

http://www.marketwatch.com/column/paul-b-farrell

[PatrickforO]

1. Yeah bring back Glass-Steagall like Bernie wants and these economic valleys won't be as deep.

As to Wall Street, they are like the three witches in McBeth:

"Bubble, bubble, toil and trouble..."

[Warpy]

8. Even the three witches weren't dumb enough to give Macbeth a timeline

Yes, stocks will fall in face value, the market is hyperinflated. A lot of funny money has gone to pumping it up there and funny money has a nasty habit of going back where it originated, into thin air.

Unfortunately, we don't know if it will be a slow slide or a steep drop and we don't know if it's starting now or will happen far in the future. It all depends on a few ultra protected inner circle poobahs at the biggest investment and hedge fund casinos. Panic among as few as five or six of these guys can send everything into a tailspin.

If the derivatives casino goes first, it will take everything with it, the whole financial structure across the planet. I don't want to be around to see it.

[lumberjack_jeff]

2. Paul Farrell: Successfully predicted 200 of the last two recessions. n/t

[DemReadingDU]

3. Happy Talk

continuation of the above link...

Happy talk downplays 2008 financial meltdown

BusinessWeek, Kiplinger’s and USA Today all reported on false predictions made by well-known Wall Street gurus just before the 2008 subprime meltdown spread rapidly across the U.S. and global economies:

• Treasury Secretary Henry Paulson, in Fortune: “This is far and away the strongest global economy I’ve seen in my business lifetime.”

• “Mad Money” host Jim Cramer: “Bye-bye, bear market; say hello to the bull.”
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Dot-com crash of 2000 ushers in long recession — and the happy talk persists

Back during the 2000-03 recessionary era, while Wall Street was losing $8 trillion in market cap, we commented on “Bull! 144 Statements from the Market’s Fallen Prophets.” Here are a few of the extreme-optimism sound bites by noted gurus who should have known better as the market disintegrated for 30 long months — the Dow, to say nothing of the harder-hit Nasdaq, plunging from 11,722 in early 2000 to 7,286 in October 2002. They prattled on with happy talk. Ironically, today many of these fallen prophets are still misleading America’s 95 million retail-level investors:

• James Glassman, author of “Dow 36,000”: “What is dangerous is for Americans not to be in the market. We’re going to reach a point where stocks are correctly priced … not a bubble. … market is undervalued.” (As quoted in October 1999.)

• Larry Kudlow, CNBC host: “This correction will run its course until the middle of the year. ... Not even Fed Chairman Alan Greenspan can stop the Internet economy.” (February 2000.)
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Even in the midst and the wake of the 1929 crash: happy talk

Want more? Go back to the Crash of ’29 and the Great Depression. Notice the recurring predictable- irrationality pattern: Optimism is rampant at the top, perpetuated by the gurus and the leaders. And optimism among investors obtains. Yes, against all odds, we want to believe. Our brains are gullible, and so we let ourselves be manipulated. We want to trust in a better future, want the good news and the bull markets. We are willing victims of the happy talkers. We deny the facts of past cycles, and the realities of a harsh present, as well as the vagaries of an uncertain future.
Listen to what investors believed in, or wanted to believe in, at the time of the 1929 crash:

• Irving Fisher, Yale Ph.D. in economics: “Stock prices have reached what looks like a permanently high plateau. ... I expect to see the stock market a good deal higher within a few months.” (Oct. 17, 1929, just days before Black Thursday.)

• Goodbody market letter in New York Times: “We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.” (Oct. 25, 1929.)
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The relationship between the predictably irrational brains of Wall Street gurus and their Main Street casino marks is a symbiotic one. Their morbid dance repeats every several years. Wall Street knows this, has you profiled, and knows that you’re easily manipulated by mindless optimism. There’s actually little you can do. Except resist the call of the Wall Street casino.
http://www.marketwatch.com/story/one-big-question-will-stocks-lose-10-trillion-in-2015-or-in-2016-2015-08-14

[Fuddnik]

5. Those prognosticators are losers.....

John McCain predicted a rosy economy during and after the crash!

[whatthehey]

4. Another buying opportunity then. Nobody loses in equities unless they sell

Don't panic when indexes fall, keep putting money in and DCA takes care of the rest.

[Fuddnik]

6. Or unless the companies use "creative bankruptcies" and just wipe out the stock.

Mine (LTV Steal) did it twice.

I papered my bathroom walls with their stock certificates for under $20.

[yeoman6987]

7. Don't sell!!!!!!!!!

I have been in the market since 1987 and never sold a thing but money goes in every month sometimes buying cheap when the market is down or higher if the market is up. I have friends who sell everytime the market drops and buys when it goes up again.....no sense whatsoever even though I have tried to talk them out of this dumb cycle. I even showed them my portfolio to prove to them that it is better to stay in for decades. No use. They know better....

[StoneCarver]

9. Trees don't grow to the sky...

Have you looked at the long term growth of the DOW? If you do a linear regression, it should be about 13K not 17.5K. That feeling of butterflies in your stomach is real - a real fear of heights. Something is wrong and only a few seem to know it. It's just a matter of time. Where is dixiegirl, girlgonemad, warpy, guiderglider? These people are the ones worth listening to.
Stonecarver