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Tuesday, May 21, 2013

It's Different This Time...But Not for the Reasons I've Heard

The argument that I've heard repeated ad nauseam as a reason why stocks should simply go up "until the Fed takes the punch bowl away" (even at current market all-time highs) has been, "It's different this time." I even heard a comparison today that we're in a market environment like the mid-90s.

I'd just take a minute to remind traders that Baby Boomers, who were heavily into acquiring all kinds of assets/products/services/loans for themselves and their growing children/teenagers in the 90s, are now facing retirement and are no longer "spending like there's no tomorrow" on the same kind of stuff. To illustrate this point, I'd direct you to my post of July 17, 2011.

We also know now that it's been difficult for young people to get jobs, in spite of (what appears to be) a lowering of the unemployment rate since 2011.

Just once, I'd like to see a solid, quantifiable presentation of what it is (and how much) that consumers are now buying, and who those consumers are, that would support such "It's different this time" theme.

The only reason that it's different this time is the one I've presented above. And it does not support the theory that markets should keep going up because the "Fed has your back." If that's the case, and based on my earlier post today (Tuesday), then markets would be operating on a casino-like mentality, not on sound economic, fundamental, and technical reasons. And, how long can that last?