Amygdalotomy: Surviving the intentional demolition of warning signs
“Market lows associated with U.S. recessions have generally occurred at valuations that were about 40% of those prevailing today – and sometimes even less. If investors assume that valuations will never again approach historical norms, they must also accept that future investment returns will be dismal compared to historical norms. To say that ‘low interest rates justify high valuations in stocks’ is also to say ‘low interest rates justify low future returns in stocks.’ If one wishes to protect overvalued prices, one also has to accept meager long-term returns.”
USAGOLD note: A lot of sound thinking in a short space plainly spoken … “[T]he Federal Reserve,” says Hussman, “has performed an amygdalotomy on the investing public.” An amygdalotomy is a surgical procedure to disconnect the area of the brain that produces “the ability to detect, observe, and immediately respond to the fear.” Oblivious, all’s well for Humpty sitting on his wall …… This piece is highly recommended reading.
Repost from 5-21-2020