Been Wrong for Two + Years!

I have predicted a significant stock market pull-back for over two years, with no such result!

I have been short, and missed the Trumpian "Greatest Economy Ever!!!"

The predictions have been based on the Shiller P/E Ratio, which has been signalling "bubble" for years - see here...

http://www.multpl.com/shiller-pe/

It has also been based on the Q Ratio, which has signalled the same thing - see here...

https://www.advisorperspectives.com/dshort/updates/2018/09/05/the-q-ratio-and-market-valuation-august-update

The fact that the USA started raising interest rates about 2.5 years ago was what I thought would be the signal for a market pull back. 

Basically, I agree with some writers who think that we do not really have business cycles anymore. What we have are more like central bank cycles, where the economy is a planned thing, and where rising rates mean bankers have decided that it is time for a slowing economy and market pull back.

I did not think the economy and markets would have been as resilient as they have been. The Trump tax cut which added hundreds of billions of dollars to stock buy backs this year also helped keep the good times going.

And so....what to do?

The indicators above cannot tell you when, they only tell you what. The US Fed will raise rates again this week, and the tax cut cash for buy backs must run out at some point. I think we had a precursor of what is to come in February, when the DOW dropped 1000 points in a single day.

But staying patient is hard when you are on the wrong side of a trade. And, compounding this is the fact that I not only see a pull back, but also significant stagnation after that, which will crush passive investors. I may be the only one out there predicting this!

Please see previous blog here...

https://mewetree.blogspot.com/2018/08/different-this-time.html

Predicting a market pull-back also feels unseemly, as this will hurt tens of millions of people. 

And yet, I see no reason to change course.