The fear industry, which goes hand in hand with the hate industry, is alive and thriving in the United States. So many people are down in the dumps and so easy to manipulate. Call it low-hanging fruit and call it big money too. It's an amazing backdrop for people looking to sell books, movies, or even so-called news.
In the end, it's often dishonest and a disservice to people.
A stock chart making the rounds is yet another example of how people are being told to hide in corners and brace for the worst. If everyone takes the bait, "presto," the crash happens. If only a few take the bait, there will still be period crashes in markets, economies, and life. Challenges can be mitigated but only avoided for so long, from time to time as part of this grand adventure called life, we stumble. In that sense, the fear merchants are always poised to say "I told you so." But there is a big difference predicting doom and gloom and another trying to trigger doom and gloom.
The two year chart comparison is incorrect. From January 1928 to the crash in 1929, the Dow was up 92%, right now the index is up 29% from January 2, 2012.
But it's really a silly comparison because it doesn't paint the proper picture of the market's climb during the Roaring Twenties where the Dow climbed 500% from 1921 low of 63.90 to 381.2. A similar move now would mean the Dow has to rally to 39,600 before those eerie similarities match. This cottage industry of doubt will only become more prevalent the higher the market goes as it means we are even closer to that fateful day. I'm not worried about the chart from 1929 (charts have a role in analysis but mostly as near term gauges on supply and demand and fear and enthusiasm levels).
The larger problem is the fact that so many fear that merchants have spooked the masses into missing a great stock market rally and given up on America. My father in-law was alive when the Dow hit 63.90 and $1,000 would be worth $254,000.Adjusted for inflation, the Dow 63 in 1931 would be $965 right now instead 15 times higher-the greatest hedge against inflation and poverty, but still beaten to a pulp by ideology from left to right.
Pulse of America
In the meantime, there is actually good news out there. News that doesn't get the kind of coverage it should even by the financial media. Corporate earnings and management guidance gives me a better glimpse of trends, potential and risks. There are three earnings reports from yesterday morning that point to a kind of burgeoning confidence in the economy not seen in opinion polls or government surveys.