http://www.forbes.com/feeds/ap/2007/07/17/ap3924116.html For as long as humans have enjoyed huddling around a warm campfire and enjoying fellowship with their friends, people have always craved a good story. From the epic poetry of legendary Greek storyteller Homer of almost three millennia ago to modern sagas like George Lucas' Star Wars series, there is nothing like a good story to lift our spirits! While epic stories have taken many different forms through the ages, one could argue that among today's most popular heroic storytelling formats is that all-American staple, the action movie. Being a guy, I have to admit I love action movies. While television generally annoys the heck out of me, it is such a wonderful diversion to go catch a movie on the giant silver screen and be transported to a different world for a couple exciting hours. Although a good heroic story is crucially important to make a stellar action flick, the real star is truly the actual action sequences themselves. One of my all-time favorite action movies is 1999's amazing "The Matrix." If you are one of the few people left in the First World who haven't seen it yet, it is a surprisingly deep tale about a dark future where humanity is trying to escape from a virtual-reality simulation created by artificial intelligence to enslave them. I liked the movie so much I saw it multiple times in the theaters! While "The Matrix" was graced with several phenomenal action scenes, the now famous over-the-top lobby scene takes the cake. Our hero Neo and his gorgeous sidekick Trinity embark upon a daring mission to infiltrate a building where the bad guys are holding the good guys' leader, Morpheus, hostage. Neo and Trinity calmly walk into the lobby of the bad guys' skyscraper, security stops them, and some resulting magnificent movie mayhem explodes onto the screen. Neo and Trinity proceed to whip out more firepower than the Canadian Army could deploy and an amazing symphony of destruction ensues. Legions of bad guys swarm into the lobby to try to stop our heroes, but they deftly dodge bullets and shoot back with inhuman precision to cap the bad guys. One of the coolest parts about the whole lobby scene is the breathtaking slow motion! Time dilated, a relentless hail of bullets spews forth from various weapons, staccato muzzle flashes like strobe lights, carving explosive holes all over the granite walls. Spent brass cascades out of the breeches of automatic weapons and bounces on the hard shiny marble floor. Our heroes nimbly avoid the blizzards of lead from return fire with acrobatic flair and don't even break a sweat. The signature Matrix lobby scene, in glorious slow motion, is truly an awesome masterpiece of adrenaline and testosterone, dramatically raising the bar by which all future action movies will be judged. The phenomenal slow-motion effects in "The Matrix" remind me a lot of the S&P 500 over the last couple years. I fully realize that "crash" is a very strong word full of all kinds of very definite connotations, but I really can't think of any other way to articulate what is happening. Whenever the wizards at the Fed run the proverbial printing presses to create more fiat dollars out of thin air, those inflationary dollars have to seek out a new home and a great deal of them begin bidding competitively on the already overvalued US equity markets. It is no coincidence that the S&P 500 bubble really ignited after the Fed began aggressively goosing US money supplies in the mid-1990s! Any way you slice it though, the fundamental and technical case for the S&P 500 is certainly for another serious downleg approaching, probably carrying us to the ultimate bottom. Once the mighty index trades below 1430 or so for a few weeks, the selling pressure will probably intensify immensely as fear increases and investors and traders decide discretion is the better part of valor for now. Bear markets typically evolve in three phases. First, the market declines 20% or so but everyone believes it is just a "correction" in a primary bullish trend and no one is concerned. Second, as the decline continues, investors on the periphery of the markets (ie, not mainstream long mutual fund holders) gradually grow fearful and selling pressure intensifies. Each successive major rally fails and new interim lows are carved out. Finally, in the horrific capitulation phase, mainstream investors have reached the outer limit of their pain tolerance and patience and clamber to sell at any price and vow to never, ever even think about owning those infernal stocks again. With the S&P 500's enormously-overvalued P/E ratio and immensely bearish technical breakdown, I can't help but think that the professionals are selling out like crazy leaving the folks the Wall Street crowd call "suckers," the mainstream working American middle-class with their precious retirement and college savings in the markets, left holding the bag, which is emptying fast. It is truly a tragic sight to behold, but this is the way these supercycle busts always work in history too yet virtually no one seems to heed their hard lessons. The Matrix was an imaginary virtual reality computer construct. People trapped within the Matrix perceived one "reality" with their senses but that reality was false. Only by transcending the Matrix could our heroes Neo, Trinity, and Morpheus really understand what was happening and try to save the world. While us private investors can't save the world, we can zealously try to transcend the real-world Matrix of popular opinion on the markets. Rather than living in the confusing world of Wall Street lies and perpetual promises of "the bottom is in" or the profit recovery will roar forth "next quarter," investors can seek to understand the markets as they really are. The markets could not care less about you or me, they just exist. Only by understanding the markets in their actual strategic historical context, with mighty cyclical overvaluations giving way to gaping cyclical undervaluations over decades, can investors successfully beat the market year after year. The few investors outside the Matrix are the contrarians, who fervently strive to understand greed, fear, valuation, and history and do not buy into all the hype and obnoxious lies that mainstream investors eagerly lap up like famished kittens. Like the movie Matrix, only a relatively small number of contrarian investors truly seek to understand the markets while the rest of the investors are trapped inside, by their own choice, and have no hope of escape, blinded by their own delusions. I now declare in no certain terms that the great bull market has ended. The bear market will come in 3 phases as described above and only those smart enough to short and buy puts will survive. On Weds, July 18th, a great panic will take place as the news of Bear Stearns multi-billion dollar hedge fund blowup grips the street. Subprime chaos in the streets!!! The top in the market is here, the top in the market is now and next will follow the waterfall selloff while Steve Tvardek is safely away in Prague. Oh the humanity!
That's a bold call. Are you going to put your money where your mouth is and short the market? If so, what stocks?
Bullshit. Sounds like you're desperate to find a reason for a short position. Monitor. React. Don't predict. opm8
Michael the board is beginning to look like your personal blog. Why don't you start a blog and spare us all the bullshit.
Right call, but your timing is way off. Check back in 2008 and say that and I may be closer to agreeing with you. You either get it or you don't! Valid issue, but not enough of an effect to kill the market. Correction maybe? YES. Bear market? Not even close yet. Bear market will begin in mid/later '08. Sub-Prime is just a blip in the now world market that will help incur a correction well needed. This is not your U.S. market anymore for that theory is dead. Learn global or think local and pay for being on the wrong side of the '''overall''' market. As much as I HATE to make this statement it is no longer the United States of America. It is now the United Continents of the Earth. (as far as markets go) I will stop here so I don't scare people any further.