BROAD US STOCKMARKET update - NO NEW PARADIGM - GET OUT NOW!!

Welcome to the New Year, and to the “New Paradigm”, where stocks go up in perpetuity because, well, because they’re going up, and because the Fed stands behind the market likes a towering Father Christmas ready to pump more money whenever the markets shows signs of flagging, and to maintain interest rates at zero forever. It couldn’t look better, and therein lies the problem. I’ll tell you a little story. I was staying at a hotel one night in Philadelphia, en route to Ithaca, NY, after a flight from Germany, back in 2005. I couldn’t sleep so I switched on the telly and browsed the channels until I came across an amusing infomercial by some dubious looking smooth talking guy going by the name of Carlton Sheets. He had a small studio audience of get rich quick wannabees assembled in a neat square seating area that reminded me of a sheep pen. He was proceeding to give them – and viewers – the benefit of his wisdom about how to make a mint out of property speculation, and was talking about the leveraged buying of entire blocks of properties. The only problem was that this was at about the time the market peaked. The naïve greedy enthusiasm of the wannabees was palpable and they worshipped the ground this guy moved over, but of course, they must have ended up being fleeced when the property market crashed soon after. I tell you this little story because this is exactly the atmosphere that we have surrounding the broad stockmarket right now – nothing can go wrong and all you have to do is load up and enjoy the ride. We have seen this “New Paradigm” stuff over and over throughout history, but the most important thing you can learn from history is that people don’t learn from history – you only have to look at China and Japan squaring up for a war over a worthless group of largely uninhabited little islands. Thus we had Professor Fisher in 1929 saying that the stockmarket would stay high for ever just before the crash, the promoters of the NASDAQ tech bubble talking the market higher just before it crashed spectacularly, the property market con artists in the mid-2000’s etc. It never ends and never will until the world runs out of greedy mugs – and it never will – and now we have the stock pumpers. Complacency is now rife. “Don’t fight the Fed” is the mantra with the widespread belief that it is second only to God in its all-pervasive power. So if the Fed says it will keep rates at 0 un...

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