By MN Gordon
An endearing quality of a late stage bull market is that it expands the universe of what’s possible. Somehow, rising stock prices make the impossible, possible. They also push the limits of the normal into the paranormal.
This happens almost every time Bigfoot is in front of a camera. [PT]
Cartoon by Gary Larson
Last week, for instance, there was a Bigfoot sighting near Avocado Lake in Fresno County, California. But it wasn’t just one Bigfoot. According to a local farmer, there was a family of five or six Bigfoot running across his ranch in the middle of the night. Paranormal expert Jeffery Gonzalez offered the following Bigfoot sighting anecdote:
“One of them, which was extremely tall, had a pig over its shoulder. And the five scattered and the one with the pig was running so fast it didn’t see an irrigation pipe and it tripped, with the pig flying over.”
What to make of it? Bigfoot sightings, no doubt, are pro-growth. They’re bullish for stock prices. So, too, are warnings from North Korea that nuclear war “may break out at any moment.”
How do we know these two unrelated events are bullish? Because if you plot the S&P 500’s price movement since their occurrences, you’ll find that the market is up. There is a direct – albeit false – correlation.
And these days a correlation of any kind is what matters. No one cares that correlation does not imply causation. Such a pesky detail doesn’t matter to Phillips Curve adherents. Why should it matter for anything else?
Indeed, there are plenty of things that used to matter, which no longer matter. For example, stock valuations don’t matter. Profits don’t matter. Most of all, deficits don’t matter.
Occasionally, Bigfoot will allow people to make photographs of him, but there are certain conditions: for instance, the camera used for taking the picture has to be the absolutely crappiest camera in use on the entire planet at that moment. Leave your Hasselblad at home – it’s not going to work. [PT]
The Greatest Fools of All
The point is an eight-year run of rising stock market indexes has suspended, if not eradicated, the natural laws of the universe. What was once considered rash or ridiculous is now shrewd and savvy. Conversely, tried and true investment principles, including evaluating business fundamentals, are for losers who lack imagination.
The proof of the pudding is in the eating, goes the maxim. Certainly, investors are lapping up this market like boysenberry funnel cakes at the county fair. They can’t get enough of it.
They will stand in line in the hot sun for hours to buy Amazon stock at $1,000 per share at a price-to-earnings ratio above 250. Because in this late stage bull market, growth and revenue are where it’s at. That’s what today’s savvy market participants want. They don’t care if, like farming, the attainment of growth and revenue comes at a loss.
To be fair, Amazon no longer operates at a loss. Last …read more
Source:: Acting Man