dailyreckoning.com.au / By Greg Canavan / August 30th, 2013
Before we get stuck into today’s Daily Reckoning, just a reminder to watch out for a special report from Gowdie Family Wealth editor Vern Gowdie tomorrow. Vern makes some pretty big claims. We won’t go into it here, but if you think we’re bearish, check out Vern’s well-reasoned analysis for a comparison.
Not that we’ve gone soft or anything. In fact, we’re just putting the finishing touches to our latest issue, wherein we make the case that a 50% fall in the S&P500 is not only possible over the next few years, it’s entirely probable.
That may sound extreme, but it’s happened plenty of times before. It happened after the 2000 tech bubble and after the 2007 US housing bubble. It also happened after the long post-Second World War boom ended in the late 1960s.
Amid investor euphoria following two decades of solid gains, the market topped out in December 1968. While most market players were completely ignorant of the coming six year decline that wiped 50% of the value of the S&P500, there were a few people who could see what was coming.
One of them, known only as the ‘Gnome of Zurich’, saw rumblings in the gold market as a sign of things to come. He was ringing the bell for the top of the market while Wall Street investment whizzes continued to trade bits of paper with each other.
So is another washout likely? We reckon it is, and there are rumblings in the gold market too. Although we’ve been saying that a big correction is likely for a while. On the other hand, our mate Kris Sayce over at Money Morningreckons the market will keep going up. He says there will be corrections from time to time, but the general trend is up.