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Guess What Happened The Last Two Times The S&P 500 Was Up More Than 200% In Six Years?

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Question Ball - Public DomainJust a few days ago, the bull market for the S&P 500 turned six years old.  This six year period of time has been great for investors, but what comes next?  On March 9th, 2009 the S&P 500 hit a low of 676.53.  Since that day, it has risen more than 200 percent.  As you will see below, there are only two other times within the last 100 years when the S&P 500 performed this well over a six year time frame.  In both instances, the end result was utter disaster. And as you take in this information, I want you to keep in mind what I said in my previous article entitled “7 Signs That A Stock Market Peak Is Happening Right Now“.  What we are witnessing at this moment is classic “peaking behavior”, and there is a long way to go down from here.  So if historical patterns hold up, those with lots of money in the stock market could soon be in for a whole lot of trouble.

According to Societe Generale analyst Andrew Lapthorne, there was an S&P 500 bull market run of more than 200 percent over a six year time period that ended in 1929.

We all know what happened that year.

And there was another S&P 500 bull market run of more than 200 percent over a six year time period that ended in 1999.  In the end, all of those gains were wiped out when the dotcom bubble burst.

And now we are near the end of another great bull market for the S&P 500.  The following is an excerpt from a recent Business Insider article

“Such a strong six year run up in US equities has only been seen twice since 1900, i.e., back in 1929 and 1999, neither of which ended well,” Lapthorne wrote.

It’s anyone’s guess what happens next. But Lapthorne and his colleagues have slanted bearish.

Best Six Year Performance

So how will this current bull market end?

Needless to say, a lot of people are not very optimistic about that right now.

And there was another very interesting bull market that ended in 1987

On Aug. 12, the S&P 500 dipped to 102.42, setting the stage for the third-biggest bull market in stocks since 1929. Inflation and unemployment fell. In 1984, President Reagan would cruise to reelection with an ad telling voters “It’s morning again in America.” By 1987, the stock market had tripled. Shareholders who were able to see beyond the gloom of the early 1980s reaped a huge return.

Of course a lot of those huge stock market returns were eliminated in a single day.  On October 19th, 1987 the Dow declined by more than 22 percent during a single trading session.  That day is still known as “Black Monday” up to this present time.

Markets tend to go down a lot faster than they go up.  So if your stock portfolio has gone up substantially over the past few years, good for you.  But keep in mind that all of your gains can be wiped out very rapidly.  Millions of people experienced this during the last financial crisis, and millions more will experience this during the next one.

And as I keep reminding people, so many of the exact same patterns that we witnessed just prior to the last great stock market collapse are happening once again.

For example, just yesterday I explained that there has been only one other time over the past decade when we have seen the U.S. dollar surge in value in such a short period of time.

That was in 2008, just prior to the last financial crisis.

Another example is what has happened to the price of oil.  Since the middle of last year, the price of oil has fallen by more than 50 dollars a barrel.

In all of history, that has happened only one other time.

That was in 2008, just prior to the last financial crisis.

I could go on and on.  I could talk about margin debt, price/earnings ratios, industrial commodities, etc.

But you know what?  Despite all of the warning signs there are still people out there that are eagerly pouring money into the stock market.

Back in 2005 and 2006, I knew people that were hurrying to buy homes before they got “priced out of the market”.  So they did everything that they could to scrape together down payments and they took on mortgages that were larger than they could really afford.

And in the end they got burned.

Today, people are doing similar things.  For instance, my friend Bob recently sent me an article that I could hardly believe.  It turns out that an “expert” on CNBC is encouraging people “to take out a 7 year loan with a rapidly amortizing asset as collateral in order to buy stocks.”


Let me be clear.  The really, really, really dumb money is jumping into the stock market right now.  Those that are pouring money into stocks today are really going to get hit hard when the crash comes.

And it isn’t just me saying this.

Just consider the words of billionaire hedge fund manager Crispin Odey

Mr Odey is best known for his big macroeconomic calls, including foreseeing the 2008 global credit crisis; piling into insurers in the wake of September 2001 attacks; and picking the recent oil price rout. He famously paid himself £28 million in 2008 after shorting credit crisis casualties, including British lender Bradford & Bingley. Mr Odey’s fund returned 54.8 per cent that year.

“The market’s reaction to all of this is leave it to the professionals, leave it to those great guys, the central bankers, because they saved the day in 2009,” he said. “These guys are kind of relying on central banks pulling a rabbit out of a hat.”

The risk is that this time, monetary policy may be ineffective: “We need the crisis to reformulate policy. Central banks are not all singing and all dancing, they cannot basically avoid the natural consequences of what we are doing.”

An inadequate supply-side response to the plunge in commodity prices as the resources industry declines to reduce production was in effect stimulating supply into falling demand.

“The trouble is today the players, whether they are the miners or the oil companies or the Saudis or anybody else, they are not doing the right things. This is the first time in my career where economics 101 doesn’t work at all.”

But it was also true that the world has not had a major recession for 25 years and thanks to frequent interventions, “there is a sensation we don’t have a business cycle”. Stocks are enjoying a six-year bull market but he also hinted at liquidity issues bubbling under the surface.

I just think that you and I have got grandstand seats here [to an imminent market shock] and my point is having found myself in the second quarter of last year selling a lot of equities and starting to go short, I found out just how illiquid it all was. You never actually see it until people try and get out of these things.”

It was unclear to Mr Odey what central banks could do to prevent a crash.

The warning signs are clear.

Soon the time for warning will be over and the crisis will be here.

I hope that you are getting ready.

  • Ray

    I sold all my equities / calls last week and will begin building a short / put position in the upcoming months. Rates are going up and it’s going to be very painful. Don’t fight the Fed.

    • Revolt to save America

      they can’t raise rates without all hell breaking lose, so who knows if it’s just talk for now. we can’t do it, also we are at a cross roads because we sit in stagflation. We will see, They can’t raise rates or we will have hell to pay. ANY other bullets in their back pocket ? we have ran out of options…

  • Paul

    I made the following preparations.
    Have a nine month supply of food. Some food items include canned beef and green beans.
    Bought a number of books on survival. There are a couple of very good survival books by Cody Lundin.
    Enrolled in an outdoor survival class. Learned how to make fire and primitive shelters.
    Have a planned escape route to a safer area of the country in case of societal collapse.
    I think silver will eventually rebound. Therefore I invested in silver while the price is reasonable. The Fed manipulation cannot last forever.
    Finally learned home defense techniques. The veneer of civilization is thin. There is the saying “We are only 9 meals away from anarchy”
    I recommend watching the show “After Armageddon” which can be found on U tube.

    • “I think silver will eventually rebound. Therefore I invested in silver while the price is reasonable. The Fed manipulation cannot last forever. ”

      Gold, silver, or for that matter the US Dollar will be infrequently used as they will be in short supply for purchase of necessaries. Rather, as has always happened, systems of community credit will arise in which goods and services are accounted for in dollars but in which debts are ordinarily settled in kind. Gold, silver, and dollars will be used only for transactions between communities.

      • alan

        Its on sale now, but I have a feeling it will go lower.

        • MichaelfromTheEconomicCollapse

          Like I always said, gold and silver are in for a WILD rollercoaster ride of huge ups and downs.


    • anotherhuman

      If collapse is coming, you are better off storing liquor and cigarettes as your means of exchange than silver. Just saying.

  • big Al

    tomorrow will be Friday the 13th of March and there will be a shaking (the first)
    as predicted also it will herald in 7 Months until the big shaking in September, are you al ready?!

    • KCFlash

      Whoa big Al that’s quite a claim but I sure hope it happens can’t find a job…ISIS running around crucifying children…fukashima unit 2 leaking was covered up for more than a year now.I’m done seeing suffering.Let me suffer and die now so We can end this.

      • Flippah

        You aint seen nothing yet.

    • alan

      Is that like earthquakes or like Parkinson’s kind of shaking?

  • “Let me be clear. The really, really, really dumb money is jumping into the stock market right now. Those that are pouring money into stocks today are really going to get hit hard when the crash comes.”

    Of course, given our current economic system we hardly have a choice. Debt is the only way that money can come into the economy due to the way that bankers have arranged things.

    The best end to this is that we end up like Japan, a country that is slowly being eaten alive by its debt repayments. Unlike Japan, we are lucky enough to not be in the midst of an immediate demographic crisis and so we have time to adopt a sovereign monetary system, give workers control over the corporations for which they toil, and dissolve the empire in a largely bloodless and beneficial fashion.

    The worst scenario is a Soviet Union-style scenario, but without the bloodless collapse of empire. The bankers and corporations will fight to the last to maintain empire and do all the destruction that they can to global infrastructure and productive capacity, that they can re-emerge as gangland dons in a new lawless and violent world.

    • alan

      I agree with the last scenario. However it could fly apart if some strange event happens and things spiral out of control fast.
      People that are in power will not give up that power at any cost. Now that millions of people have 401k’s they are held hostage to the stock market. Do you want to retire, then you better do what I say…bla bla bla.

      • none

        GOOD NEWS alan:
        Did you notice, after Michael wrote an article about the ammunition ban. President Obama backed down on it?
        Wal-Mart decided to increase pay after it was featured on this web site.
        And now this.

        • MichaelfromTheEconomicCollapse

          I wish that this website was important enough to have that sort of an impact. 🙂


          • watchmanonthetower

            The value of the concept of ‘important’ is in the spying eye of the beHolder, Michael. You and your valuable (to us, anyway) website ARE on a list somewhere in the farmlands of Virginia; no doubt. But it is a badge of honor, if one can survive the pinning, so to speak.

            We hear there is a Spring sale on Kevlar starting soon. 🙂


          • Mondobeyondo

            A sale on Kevlar? Think I’ll follow the masses of sheeple and order some from Wal-Mart!

          • watchmanonthetower

            Look for the Made in USA label, Mondo; that stuff from China is shotty, er, shoddy.

          • CharlesH

            Michael, your website is PLENTY important in this one man’s life – believe me. Thanks so much for all you do.

          • MichaelfromTheEconomicCollapse

            You are very welcome Charles.

      • watchmanonthetower

        “… could fly apart if some strange event happens and things spiral out of control fast.”

        The month of March has no shortage of events, both typical and ‘strange,’ for which to trigger inconvenient occurrences:

        March 18, 2015 – FOMC statement – At the Federal Open Market Committee hearing, Yellen may remove the word ‘patient’ from the Federal Reserve’s policy which could trigger a sink in
        confidence and concern for a rate hike; no matter what the spike may be, the result will be fear.

        Sometime between March 15th & 20th, 2015-
        the Large Hadron Collider will be re-started…expected result lands somewhere between a pedestrian, but whopping electric bill, and opening the gates of Hell (which would surely put a crimp in our collective day.)

        March 17, 2015 – Israel election – no telling whatthe consequences will be if Bibi loses – or retains his title for that matter – too many variables; the region is already on the edge…

        March 20, 2015 – once-in-a century total solar eclipse, followed by the 3rd of 4 Blood Moons two weeks later…who knows what this portends?

        Nearly double the percentage of a M8.0 quake on the U.S. West Coast, rapidly rising odds of a foreign hostile attack on the CONUS, pending decisions regarding Barry’s Unavoidable Care Act that could inject confusion and anarchy into an already unbalanced system, precious metals values in the dirt, the Euro tanking, Greece threatening to capsize the EU, Ukraine and Russia duking it out, Syria and the start of WW3…and so much more.

        The point here is that whether these events have a direct, tangible negative global consequence, or whether people in general react violently because of them, the bottom line will be the same: total chaos.

        There are more events soon; perhaps you can think of a few additional ones…

        …in any event:

        Prepare…or perish.


        • “the Large Hadron Collider will be re-started…expected result lands somewhere between a pedestrian, but whopping electric bill, and opening the gates of Hell (which would surely put a crimp in our collective day.)”
          We’ve observed cosmic rays with energies over 100,000 times greater than that of those possible within the Large Hadron Collider without any ill effects, so the LHC is not going to be anything more than a large electric bill. On your other analyses you are spot on.

          • watchmanonthetower

            “…not going to be anything more than a large electric bill.”

            haha…I know; but sometimes it takes the ridiculous to highlight the sublime. I think it was Jacques Cousteau who said it’s not how bright the light is; it’s where you shine it that matters. Don’t quote me on that. Coulda been Bugs Bunny for all I remember.

            But if we’ve learned anything from our observations and investigations regarding the unseen machinery that currently moves our world towards a global governance system, it’s that we rarely see the truly important events that cause great change as they happen; we’re lucky enough to percieve the effects they cause in time to absorb the changes. So, we’re not looking at CERN, still…

            Thanks for your reply, Really – it’s appreciated.

        • CharlesH

          If not in March – just think Shemitah in September.

    • Mike Smithy

      We do have a demographic crisis. It’s called the Baby Boomer generation.

      • Tim


      • Fair enough. Not nearly as severe and immediate as the one that Japan currently faces, though.

  • alan

    These markets are paper driven and thats easy to create. Want the markets to go up send out a positive story to the CNN/Fox/CNBC network, want them to go down need to put out some bad stuff, but it will go down.

    Anyway, look at all the great empires, Rome, Spain, Portugal, the UK they all are still around but now hollow shells of what they once were. We will join them.

  • JustanOguy

    “So if historical patterns hold up, those with lots of money in the stock market could soon be in for a whole lot of trouble.”

    The market makers are going to make a killing when they start hitting the sell buttons. And then get back in on the cheap after all of the rookies panic…

    Buy Low, sell high. Rinse and repeat…. it’s been going on for decades.

    Great chart to share Michael… doesn’t take a rocket scientist to figure out what’s going to happen soon.

  • MaxHotness

    Ummm…what goes up must come down. Get used to it and stop whinning.

  • nekksys

    The only economy which I foresee withstanding the coming collapse will be China; not because of their manufacturing prowess or raw materials stock piles but because of their intended shift to a gold-backed yuan. If they delay their return to the Gold Standard, they could be caught in the devastation that will follow our fall. No matter how it turns out for the Chinese, we Americans will be in for a dramatically wild time.

  • DJohn1

    I do not see how anyone wins in this situation. Other than someone with an army of lawyers behind them.
    If I had bet short to the tune of it falling to 650 last time, the securities exchange would be saying that I had inside information.
    The only inside information is that based on public articles it was fairly obvious that a crash was about to occur.
    We, as a nation, are subject to courts and laws based on how much money you have to back yourself with.
    It might as well be based on the combat of two professionals. Winner take all.
    Until that situation is resolved the country will continue down the path it is all ready going.
    The best thieves in the world are stationed right here.
    The common herd of people is fleeced on a regular basis by any number of factors.
    I used to believe that hard work could get you someplace. That the harder you worked the better the chance of succeeding in accumulating wealth.
    Everyone likes to have money to spend.
    I have since found out there is really no relationship between how hard you work and what you receive in the way of compensation for a living.
    The next fleecing is well over due.

  • Soothsayer

    Caesar, Beware the Ides of March.

  • Richard O. Mann

    One gun, two bullets if things get really bad.

    • Mondobeyondo

      Or, as the Greenpeacers would say:
      “One fish, two fish, red fish, dead fish”

  • Mondobeyondo

    One thing is for certain: This bull market will end.
    Why? Because no bull market lasts forever.

    What will the end result be? UGLY..
    How ugly? Well…. let’s just say, Mick Jagger and Keith Richards on the front cover of “Seventeen” magazine. That ugly.

    • CharlesH

      Damn…now that’s UGLY!

  • Mondobeyondo

    The same mistakes that were made 7 and 8 years ago are being made now. It’s almost as if 2009 – 2012 never even happened,

    Houses are being flipped again. The stock market (minus a few hiccups here and there) is soaring again. People are singing “Happy Days are Here Again”. Ahhh, ignorance is bliss.

    Let Me Be Clear*… most people are showing their insanity. Doing the same thing over and over, and expecting a different result.
    *(C) and ™ 2008 Barack H. Obama. Uh-huh.

    • “Doing the same thing over and over, and expecting a different result. ” Albert defines that as what?

  • Always Tomorrow

    Taking the ostrich approach to the current trajectory of our
    country is certainly not the right approach, but trying to guess and
    interpret what is going to happen and when, will take away from the
    “living” part of life today.

    You mentioned
    two dates. October 19th 1987 and March 9th 1999. Stop and think where
    you were in your life during these two periods of time. Now think how
    it affected you. Me personally not much, in fact not at all.

    then there wasn’t an abundance of information like there is now so we
    were not as well informed. But that may have been a good thing. Those
    dates came and went and are barely remembered by most of us.

    Plan for tomorrow but live today.

  • GSOB

    In a state of trial and probation, the glorified Redeemer will be out of sight, because we must live by faith in Him.

  • Jim Clark

    They aren’t bear markets, they are buying opportunities. The equivalent of pit stops in an auto race.

  • GSOB

    Wealth in and of itself does not deserve honor.

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