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normally it takes a nearly perfect economy and friendly uh Fred be fed Behavior but this one has managed to do it with a somewhat wounded economy on a global basis and to compensate for that we've had even more spectacular fed liness and government friendliness so we've had for once the joining of fiscal spending with with the fed's behavior and the usual moral hazard that has been going on for since Greenspan arrived in in the 90s and and the result of this is the confidence has risen and risen until finally people are reaching for the greatest demonstration of competence they have had in their investment career they're borrowing more money to throw it into the market their belief in the market is profound the common wisdom is that with the FED on your side how can you lose when they first said that back in Greenspan there were a few doubters and they said it was financhi there were less doubters but some and now finally there appear to be almost no doubters at all the belief is more or less complete that all it takes is the Fed on your side and stops will rise having tripled it then tripled again in the single month of December I can't tell you what it's going to be in January but these are spectacular performances my my own stock in quantumscape it it came into the market at 10 and shot up to 130 at 130 it was bigger than General Motors or Panasonic and this is a a brilliant company but it has no trouble admitting that it won't be producing any batteries for four years so no sales no profits and bigger than GM there is nothing like that in 1929 nothing of that scale nothing like that in 2000.
the ciscos of the world were pretty serious companies but they didn't they didn't get to this level 1929 of course ran into the Great Depression and global trade problems so you really just want to look at the first leg down which was big enough the analogy is much better with two thousand and two thousand it went down 50 and the reason it only went down 50 and and bounced back uh relatively quickly was uh was because the FED came charging in uh to the rescue and you can have a lot of rescues when you start at a 16 long Government Bond in 1982.
you can have a bull market as you go down from 16 to 12 and another bull market from 12 to 8 and another bull market from eight to four but now you're down at two and a half or whatever you have to realize that most of the easy pickings of of saving the game by ramping rates down is behind us at the lowest rates in history you don't have a lot in the bank to throw on the table do you no and and the idea that you know fundamentals the real world doesn't count all you need is money to generate real wealth I think most people can can feel is an illusion you can imagine the situation where you had a much more serious virus the economy really was on its knees and and the Fed was obviously would be doing everything it could would that be enough uh to uh to save the system in the end the system is about the number of people working the amount of capital spending the the quality of Education of your Workforce that's the real world we're talking about the paperwork and there's just so much blood you can get out of that in any case it was unprecedented and the combination was very powerful without covid we cannot know the market had resisted opportunities to Bubble earlier in this 11-year cycle it looked like it was getting pretty close about three years ago and then it just kind of fizzled away the confidence dissipated the market had a decline and those bull markets can go on forever and you don't know how long and you don't know how high they can go the back of every Bear's mind must surely be Japan in 1989 managed to get to 65 time zones it had never previously gone over 285 until that cycle so that is the thing that makes the Bears wake up in the middle of the night sweating so you just don't know how long and how high a market can can go if you avoid the burst of euphoria it's the burst of euphoria that typically brings these things to an end and we are seeing it all around us today most of the great bubbles the super bubbles go below Trend and stay there for quite a while in the Greenspan era that tendency stopped in 2000 yes the NASDAQ came down 82 percent which was fairly brutal Amazon came down 92 but the Federal Reserve raised to the rescue so loudly and strongly that they stopped the decline in the s p a trend line it only declined 50 percent 50 is a hell of a big decline but it was only enough to get it back then to Trent it's not the end of the world but it's going to break a lot of hearts when we're right
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