Dies Natalis Solis Invicti
– Birthday of the Unconquered Sun
BALTIMORE – Today, we celebrate two important events.
First, and without a doubt, we will raise a glass to the victorious sun.
Second, the Dow rose within 25 points of the 20,000 mark yesterday. Most likely, it will hit the milestone today.
Both of these events are cyclical, not permanent.
Where’s the Pin?
A reader writes, “Hey, you’ve cost me a lot of money. I could have been in the market… Instead, I’ve been on the sidelines, following your advice.”
And yes… it is true. We have been cautious, and for a very long time. We see the whole financial system as fake, fragile, and dangerous.
As long as prices continue to rise, an investor could make money by going long stocks. But for us, it has not been worth the risk.
We choose to wait until after the pin finds its bubble.
When will that happen? Today? Tomorrow? Five years from now? The typical bull market lasts 52 months. This one is 94 months old. In other words, a bear market is already nearly four years overdue.
And stock prices are clearly near the top of their range, not the bottom…
The S&P 500 currently trades at 28 times cyclically adjusted earnings. That’s nearly twice as much as the usual 17 times.
In order to get down to a more ordinary level, the stock market would have to lose more than a third of its value – or nearly $7 trillion.
Yes, stocks could go higher. The bull market could go longer. But the risk increases with every day that passes and every dollar of gain.
Since Donald Trump’s election, stock owners have been rewarded.
Mr. Trump famously offered to set things right for the middle and lower classes. But so far, he has filled key posts with more billionaires than ever before. And the rich have gained more from his election than from any election in history.
But give him time.
And remember… what goes up… also goes down!
The Birth of the Unconquered Sun
We’re talking about cycles, and today is the end – or the beginning – of one cycle. It is the shortest day of the year in the Northern Hemisphere. It is the end of the ancient “dark passage,” when the days have grown shorter and shorter.
Our European ancestors – huddled around open fires, dressed in skins, shivering in the cold – must have learned early on that trends only continue… until they come to an end.
If the trend towards shorter and shorter days had continued indefinitely, life would have been extinguished in constant night. Trondheim, Norway, for example, only gets four hours and 31 minutes of daylight today.
But tomorrow, something amazing happens. The trend reverses. The days grow longer again. The sun is reborn.
And thus did ancient man discover cycles.
He gave thanks, celebrating the Birth of the Unconquered Sun. Bonfires were lit. There was dancing. Drinking. Gambling. Pagan Germanic and Scandinavian communities called this mid-winter festival the Yule. The Romans called it Saturnalia.
For them, it began on December 17 and ran through the 23rd. Roles were reversed. Masters waited on their slaves. Gifts were exchanged.
Broadly, these festivals celebrated cycles. Things go in one direction… then they go in another.
By the 21st of December, the days have been getting shorter and shorter for so long people begin to think they will get shorter forever. They fear the end of the world. Then the cycle reverses.
Six months later, the days have gotten so long, especially in the northernmost latitudes, people begin to think they will live in an era of endless summer, no longer troubled by chilly winds and frosty mornings.
Winter Is Coming
And now there are signs that this cycle, too, is approaching its end…
Just today, we read about a group of millionaires who got together to discuss financial matters.
It came out that the average participant held only 12% in cash. And this, they said, was because they wanted to be ready with “ammunition” to hunt for bargains when prices go down. They’re ready to “buy the dip!”
After so many years of rising prices… and so many times when the Fed came to their rescue when prices turned down… the rich are convinced that a break in the stock market is nothing more than a passing cloud.
We just hope we’re around to see the looks on their faces when a hard winter finally comes.
Woe to those who have not prepared.
BY NICK ROKKE, CFA RESEARCH ANALYST, BONNER & PARTNERS
Foreign central banks have long been one of the biggest holders of U.S. Treasuries. But last year, that changed.
Starting in 2015, foreign central banks started selling their U.S. Treasury holdings… Now, they’ve accelerated that selling to record levels.
Without a slew of bond-hungry foreign banks, the feds will need to do something to entice a new breed of buyers.
That means the interest rate increases we’ve seen this past month may be just the beginning… And the rout in bond prices will only get worse.
Another Front in the War on Cash
Venezuelan President Maduro announced the end of the 100-bolivar note. What’s more… the banks will only swap a “rational” amount of notes, leaving some Venezuelans out in the cold.
Next Biggest Bull Market of All Time?
Bill discusses a disorganized, corrupt, and dangerous country that might just be poised for a bull market… one that could rival the latest one in the U.S.
Millennials Made Terrible Investments After the Election
Once Donald Trump was elected president, millennials committed two heinous investment decisions: 1) a purchase based off a gut instinct and 2) invested in these very risky securities.
Some insightful comments from your fellow Diary readers in response to yesterday’s essay, “Fake News? It’s All Fake!”
But first, one reader wants to tell Bill why he’s wrong about the election…
Dear Bill, I love your blog and especially the antics of your family. In this case, you are wrong about “The Donald.” He did not get out the vote of the disaffected as you suggest. The demographics of his voters are nearly identical to the last two Republican candidates. No, the difference was that Clinton’s base did not show up. It was her election to lose, and she lost it. After giving excuses for the last six weeks, Obama finally came out today and admitted as much.
– Tim R.
And now, your comments on Bill’s discussion of “fake news”…
Bill is usually the one reminding us of “old wives tales” that are (mostly) true. His Diary today brought forth an old one: “History is written by the victors.” Thankfully, today we have alternative sources, Bill’s Diary among them. Keep up the good work!
– Pat I.
People who pat themselves on the back for voting for Trump because Hillary is so odious should rethink their premise, namely that Trump is less odious. Voting for a bigoted liar over a Deep State lackey hardly seems like a sane activity. This the real problem of taking as a civic duty the responsibility to vote for “someone.”
– Dave H.
Bill Bonner seems to enjoy throwing rocks at Trump and his maybe simplistic ideas. The problem that really exist is that we are all on the Titanic and we are all swimming in ice cold water without life jackets. Most of us will be effected by the future events and Bill will also be in the water. The trouble is that if we think only of ourselves to get through this calamity, what kind of world will we have with all the suffering minions? Some people are at the point of hoarding supplies and the rest of the world be damned. Will the politicians and elites who caused this mess go scot-free?
Your comments about the infinite number of events, and the selection of what is published in the news, matches some my own thinking and writing. First, if one understands the system, then one knows whatever is presented is not what one needs to know. The material is either false, misconstrued, diversionary, or irrelevant. I have never been one to read the paper and rarely watched TV or news, but in the past few years, I stopped watching or reading news altogether. After some time away, even for a person who never put much stock in the news, watching and reading news becomes intolerable.
It is a sick comedy filled with meaningless diversions, lies, and propaganda. I look at it the way Kissinger spoke about foreign availability in trade. The media acknowledges what is known in order to gain the credibility to recast the rest according to some agenda. My conclusion has been that we will not have a louder voice, bigger footprint, or brighter colors than the media, but we can steal their audience. Teach people what is true, and the "news" is no longer palatable.
– Shane C.
Are you a “fake news” watcher/reader, too? Write to us at [email protected] and let us know how you get your “news.”
In Case You Missed It…
Today, we want to share a message from our friend Jim Rickards. Recently, he’s learned of a “trigger event” – just 10 days away – that will trash the U.S. dollar just like the Fed wants.
As an ex-adviser to the CIA, Jim is privy to all sorts of information the average American never hears about. And he says this event could completely gut the U.S. stock market… wipe out U.S. jobs… and vaporize your retirement savings. Click here to find out what it is and how to protect yourself.