A recent analysis by economists featured in The Wall Street Journal draws some eerie parallels between the stock market behavior in 1928 and 1929, versus the market’s movement since 2012.
Our Miami foreclosure defense lawyers see this as an ominous sign, particularly because most major outlets are droning on about how the economy is on the rebound following the housing market crash. We fear this may be creating a kind of false sense of security. It may be tempered somewhat by the economic hangover we’re still suffering following the recession, but we must careful to learn from the past.
Analyst Mark Hulbert points to a recent pattern discovered by Economist Tom DeMark, which was first reported by the McClellan Market Report. From this research, a chart emerged showing virtually identical stock market activity from July 2012 through April 2014 as what was seen between 1928 and 1929.
Hulbert calls the finding “significant,” adding that if the economy continues to follow along the same chart, we are likely to see an especially difficult period over the next two months, starting in early March.
To be fair, the comparative chart, first published in November, has a fair number of critics who say the recent data has been retrofitted to line up with the past figures. However, as Hubert points out, the economy has continued to follow the same market patterns since then.
Of course, there is no guarantee that the market is going to follow every single step of the 1929 pattern, though if it did, we’d see a significant and serious economic decline by May. What exactly this might mean for consumers – particularly those who are continuing to struggle with an underwater mortgage – isn’t exactly clear.
Economists say that investment history doesn’t tend to repeat itself, but “it does rhyme,” meaning that similar patterns from the past are likely to be a strong indicator of what we can expect in the future.
Hulbert isn’t the only one to make this prediction. On the contrary, Google, “2014 market crash,” and you will find scores of results, many from credible, respected economists and market analysts.
A Business Insider piece published last year quoted fund manager John Hussman, “one of the most disciplined, knowledgeable and fact-based investors around,” as saying that the market will “probably” crash sometime in 2014, most likely by 40 to 50 percent. A big part of the problem is not only the historical context, but also indications that the current market is highly overvalued, meaning we are headed for a period of low returns.
Similar predictions were also recently made by Mark Spitznagel, author of the recently-published book, “The Dao of Capital.” Citing the Misesian Stationarity Index, he minces no words in saying, “We have no right to be surprised by a severe and imminent stock market crash,” adding we should unquestionably expect it.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.
Scary 1929 market chart gains traction, Feb. 11, 2014, By Mark Hulbert, OPINION, The Wall Street Journal, MarketWatch
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