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The Policy Fiasco

Policymakers in most industrialized economies have been on a spending spree during the last few decades. It seems as if governments and central banks want to smooth the business cycle entirely in order to avoid recessions. Despite benevolent intentions, their track record speaks against their actions. Business cycles are a typical characteristic of capitalist economies. The pattern reoccurred reliably throughout ...
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Tulips & Tech

The famous economist John Maynard Keynes recognized long ago that markets can deviate from their fundamental value for an extended period. His insight applies to U.S. equities today. As measured by the S&P 500, the broad-based market trades well above the historical average according to the 10-year cyclically adjusted P/E ratio. Stocks have been only before the 1929 and 2000 ...
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Gold Rush

Gold probably has a final spike to the upside before the bull trend ends. The most recent weakness counts best as a fourth wave of minute degree. The upside trend remains intact as long no sustained break below 1,860 occurs. Nonetheless, the trend is mature and probably ends after one more push up. Minor wave 5 will probably target the ...
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Party Like It’s 1999

Run, Bull, Run, was the cover story of Barron's magazine in January 2000. The story presented arguments for "another record-breaking year for stocks". Today, we know that it didn't happen. Instead, the bull was a bubble and burst a few months later. Source: Deutsche Bank, EPFR, Haver Analytics Tech(no) There are striking similarities between investors' behavior around the millennium change ...
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The S&P 500 Caught The Flu

Capitalist market economies have the best track record for growth and prosperity. While the system is not perfect, no other market system performed better throughout history. Moreover, some of the shortcomings of capitalist systems can be mitigated by external intervention. A reliable set of rules and laws is, for example, indispensable. However, there is also a big gray area of ...
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Speculative Bubble

Equities puzzled investors lately. A market crash led to a v-shaped rally that carried the broad market near all-time highs. It was the sharpest recovery for U.S. equities throughout our entire dataset that spans over 150 years. Moreover, that happened during the most significant economic crisis since the Great Depression. This write-up discusses the reasons behind the most recent rally ...
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