One might think that natural disasters, man- made disasters or man’s inhumanity to man would have nothing to do with the bull market started on March 9th, 2009 and still continuing to today. On the face of it you would be right. However, when you look below the surface, there are great similarities and therefore a great lesson to be learned.
79A.D. was the year when peace had finally come to the Roman town of Pompeii. After all of the wars, taxes levied, and overall economic disruption, I am certain the citizenry were looking forward to a time that would bring a degree of normality for all. Unfortunately a temperamental volcano changed the lives of 20,000 people not only for the year ahead but for all eternity. They just weren’t expecting it.
At 5:12 am April 18, 1906 certain plates in the earth’s crust shifted. Four hundred and ten thousand people who, less than twenty four hours earlier, were not even aware of what a seismic reading meant, saw their world change forever. The San Francisco earthquake potential had been discussed by many. Most however believed that possible and probable were simply words in the Knob Hill lexicon. They just weren’t expecting it.
December 7th, 1941, “a day that will live in infamy.” The Empire of Japan attacked the United States of America and thus thrust us into the Second World War. On December 6th most Americans were doing their Christmas shopping, planning parties, or thinking about who would be taken off the Christmas card list this year. The sinking of the Arizona and the deaths of thousands of soldiers and sailors was the last thing on their mind. They just weren’t expecting it.
Three hundred thousand people were evacuated from the area surrounding Fukushima Daiichi nuclear plant on March 11, 2011. It was perhaps the greatest nuclear accident since Chernobyl. The finest minds had concluded that such an event was not only unthinkable but also almost impossible. Therefore, the locals simply went about their business, until they couldn’t. They just weren’t expecting.
The markets continue to defy logic. Or do they? As the usual gravitational pull seems to be missing, there is something that is happening right on cue. The so called professionals are exiting in droves only to be replaced by the man in the street who has finally come to the conclusion that it is time to get in. Of course, right on cue, the clueless citizenry will look up to see lava pouring down, plates shifting, bombs dropping, and a core reactor melting down. All of which will happen simultaneously as the markets finally give way to one of the greatest man- made Keynesian disasters of all time.
He of course will once again be decimated and will respond “I just wasn’t expecting it.”