PAUL B. FARRELL: The 3rd Stock-Market Crash of The 21st Century Is Coming And Mr. Market Will Soon Lose $10 Trillion of Your Money, Repeating 2008 And 2000. How Much Will You Lose This Time Around?
By Paul B. Farrell, MarketWatch
March 27th, 2013
How much will you lose this time around? Four years ago, on March 30, 2009, our column headline announced:“6 reasons I’m calling a bottom and a new bull.”
The Dow fell from 14,164. Hit bottom at 6,547. And Wall Street lost over $10 trillion of America’s retirement market cap. You lost lots. But it’s back up more than 100% since. We forget.
Time for another crash? Oh yes. Remember: Investors Business Daily’s publisher, Bill O’Neil, wrote in his classic, “How to Make Money in Stocks”: “During the last 50 years, we have had 12 bull markets and 11 bear markets … The bull markets averaged going up about 100% and the bear markets, on the average, declined 25% to 30%.” And “the typical bull market lasted 3.75 years and the classic bear market lingered only nine months.”
Today’s bull is over four years old, in dangerous territory.
Yes, you are facing an aging bull. Ready for pasture. But Wall Street’s still gambling with your money. Remember, Wall Street casinos have already lost roughly $10 trillion twice this century. Twice. And soon Wall Street will do it again.
But exactly when? Here’s how to figure “exactly” when. In his classic, “Stocks for the Long Run,” economist Jeremy Siegel studied all the “big market moves” between 1801 and 2001. Two centuries of data. Conclusion: 75% of the time there’s no rational explanation for “big moves” in stock, not up, not down.
So stop asking, maybe some technician, quant or high-frequency trader can predict short-term swings. But the “big market moves?” Never.