Has the Stock Market Peaked For A Very Long Time?

My demographic cycles and research have been showing from the beginning in the early 1980s that the U.S. and North America, and Europe for that matter, would peak between late 2007 and late 2037. That is the top and plateau of the Baby Boom Spending Wave on a 46-year lag for peak consumer spending – the simplest and most powerful long-term indicator I have.
 

I am continuing to assume that the top has finally occurred for the greatest, longest and only purely artificial stock boom and bubble in history. Why artificial? It has been fuelled by $27 trillion, and still growing, of fiscal and monetary stimulus since the 2008 Great Recession. That’s going on 16 years now!
 

Wouldn’t anyone wonder what’s wrong if it took that much stimulus for that long to grow at a moderate 2% to 3% rate? And it has been the first “everything” bubble, including real estate and the emerging hot crypto sector. Real estate did not bubble up nearly as much as stocks in the Roaring 20s, and hence, only crashed 26% - a more normal bust. Hence, we are also staring at the greatest real estate bubble and burst in modern history – past and future.
 

And I know some consider Bitcoin the safe haven this time…NOT! It is the lead in the crypto bubble along with AI stocks like Nvidia, Palantir and Reddit. I remind you that such early-stage bubbles are longer-term the very sign that these are indeed “The Next Big Thing.” They just have to shake-out the many marginal companies first. So, see this as the opportunity of a lifetime, not a disaster in the making…But you do have to get out of the way! You simply cannot listen to your financial advisor with the good-old buy and hold strategy this one time!
 

LONG OVERDUE END TO BULL MARKET

And recall that this crytpo revolution has been financed through coins which are in essence “the cheapest IPOs” ever created in history. A brilliant new strategy! Bitcoin, and a small minority of surviving coins, will ultimately be the most attractive buy opportunity for the next boom which will not be as “everything,” nor as long in the U.S., as compared to the present super- and most extended boom of all times: late 1982 to late 2024…42 years. The up-and-coming AI sector led by stocks like Nvidia, will be the other hot sector to first crash the most and then boom strongly in the next boom from around 2028 into late 2037, when the Millennials reach their long plateau of spending from 2037 into 2054 or so.
 

The last, long generational boom was 1942 to 1965/72, 23 to 30 years- depending on the index. However, the broadest interpretation of that bull market from its July 1932 bottom, would have been very close to the same, 42.4 years into the end of 1972 vs. 42.2 for this one into mid-December with a double top in the broader S&P 500 into late January/mid-February, but a slightly lower high in the Nasdaq. Hence, if this is the top, it should go down as being in mid-December 2024. The Russell 2000 small cap stocks are nowhere near their highs of November 2021, which is the perfect divergence signalling such a long-term top!
 

Any way I look at it, this finally looks like a good time to die for this unprecedented bull market since early March 2009 in both length and height!

And good riddance from my view as I don’t consider recessions and crashes a bad thing like most. They’re as essential as day and night, waking and sleeping as I have said many times in the past! And this is clearly the most overdue time for a recess in history by far, ever. If this crash is severe, more like 1929-32, as I would most expect, then it should be a strong lesson for the future:
 

You don’t tell free markets what to do, otherwise they aren’t “free”, and they aren’t true markets. And having a recession when needed is part of that freedom.
 

We will have to see how much they try to manipulate the crash when it progresses, or better, if the economy crashes so hard and fast after being held back 16 years, that they don’t react fast enough… and it just melts down fast. Do you know any kids that are over-nurtured, and under-challenged and disciplined? We call them “spoiled brats.”

This economy is the most spoiled it’s ever been, and the most overvalued, for the longest period… and now most of the time since the late 1990s, for about 26 years. Investors have come to assume that there won’t be major crashes or recessions in the future…a permanent plateau of prosperity, the ultimate dream economy. Irving Fisher, a leading economist in 1929, famously claimed that right near the greatest top in history back then.
 

CAPITALISM MUSTN’T BE CONSTRAINED

The growing paradox is: if this massive economic manipulation continues to happen, we won’t have free market capitalism anymore. And the real truth is: We haven’t had it since 2008. History will likely label this era: “when central banks tried to kill free market capitalism.” It’s not too late to turn back to the principle that has advanced our standard of living FAR more than any other period in history. It is precisely what Adam Smith in the late 1700s meant by his term “The Invisible Hand.” The central banks and governments have instead become very visible with their hand indeed! I stand nearly alone in stating that this is NOT good policy! It violates the very essence of our success, and America’s leadership role in it.
 

I like Jerome Powell and think he’s one of the best Fed chairmen we have had. But his charter should NOT be to prevent recessions at all costs as they are a much-needed cleanser.
 

Things like busting monopolies that manage to encourage more competition, are the right type of policies. Dictating and keeping interest rates below market rates is NOT! Bailing out major companies is not. Printing money to stimulate should not be allowed, except in short-term emergencies like a war, or even possibly in short crisis like COVID. But then it’s short term just to avoid an over-reaction and then the markets are free to wreak havoc if need be. Stimulus, especially as strong as this one with combined fiscal and monetary, should not become an ongoing policy like 2008 to 2024…17 years. The 1995-2000 bubble was a natural one, like 1925-1929, 1866-1873 and 1820-1835. 2009 to 2024 was not!
 

This time it’s not monopolies…it is governments propping up the economy through money printing and non-stop fiscal deficits to prevent slowdowns and recessions. And that prevents the very cleansing and “survival of the fittest” principle behind free market capitalism. Let anyone have a shot, but then quickly weed out the losers!
 

HOLDING U.S. TREASURIES SHORT TERM

The freedom to take risk, and the freedom to fail and wash out the losing ventures are equally required for this powerful system to work. We can’t have one without the other, or we will just have an economy of more and more marginal or loser companies over time…A formula for Guaranteed Mediocrity! Not the unprecedented success since the late 1700s when free market capitalism met democracy led by the U.S.
 

Democracy brings the “inclusion” and buy-into the system as it is perceived to be fair, and everyone has a vote. Capitalism is the opposite and brings innovation through fair competition. And these two opposites bring the dynamic play that men and women do. And yes, in capitalism, that means booms and busts, inflation and deflation, not “a stairway to heaven.”
 

Since I nor you can do anything to stop this bubble, nor its imminent burst…It’s time to get in the safest long-term securities in the world: 10-and 30-year U.S. Treasury bonds. The TLT ETF holds those bonds. They were the one investment that surged 40% in late 2008 when everything else was falling towards a bottom. They are the safe haven, not gold. Although gold will hold up much better than stocks and be amplified longer-term by the coming super boom in India for those that have that.
 

People say, ‘but Harry, these are very long-term bonds’…No, we’re just holding them for the next 2–3 years in a financial crisis, not forever. And they are the largest and most liquid investment market in the world, and hence, easiest to sell in a crisis. Somewhere around mid-2028 or so, I should be advising to buy stocks again longer-term concentrating in the U.S. tech-sector (like the Nasdaq) and increasingly in India and Southeast Asia that will lead the next global boom into 2055+, like China led the last one from 1982–2024.
 

Until then, be safe and not sorry! If we don’t see signs of a major stock crash by later this year, I may modify this very contrary forecast.   EG