Crash Of 2014: Like 1929, You’ll Never Hear The Crash Coming …Then Suddenly It Blindsides You

By Paul B. Farrell, MarketWatch

Imagine, you’re in the exciting new 21st century. Civilization still exists on Planet Earth. Wall Street’s still in business. But you’re still asking: Why can’t we hear the next crash? Are we deaf? No. The warnings are always long and loud. So why can’t we “hear” them? In fact, it’ll get worse. Here’s why …

Yes, crashes will keep coming: History lesson: The 1929 crash led to the Great Depression. On March 20, 2000 we warned: “Next crash? Sorry, you’ll never hear it coming.” Few listened. The 1990’s dot-com mania led to Wall Street losing $8 trillion in the 2000-2003 bear-market recession. Nothing changed. Another round of warnings roared from 2004 into 2008. Few listened. Another crash. Wall Street lost even more, $10 trillion.

Through much of 2013, pundits warned how bad the market really was. Then in December the Wall Street Journal revealed that after 13 years in negative territory, Wall Street’s “Lost Decade” (which lasted from the 2000 crash to the end of 2013), finally broke even on an inflation-adjusted basis.

Fearing 1929, investor sentiment swung wildly through holidays

And here we are panicking again, fearing that 1929 will repeat in 2014: Wall Street, Main Street, tens of millions of Americans, the Fed, SEC, all of Washington. Yes, outward calm. Inside? You guessed it, total Panicville. Especially following Mark Hulbert’s thought-provoking: “Scary 1929 market chart gains traction.”

But even scarier? That “consensus,” the “predictably irrational” defense the bulls countered with in “Consensus on ‘scary’ 1929 chart: Enough already, it’s not happening.” For one thing, that so-called “consensus” actually proves Hulbert’s point: Investors really are worried he’s onto something, afraid the market may indeed be close to repeating the 1929 crash.

Never trust a “consensus,” they invariably miss the mark, prove nothing. Any so-called consensus of “predictably irrational” readers and some professional traders must be suspect. Remember Profs. Terry Odean and Brad Barber’s research conclusions: Most traders lose money more than 80% of the time? You can’t trust a “consensus.”

Stop playing musical chairs in an unpredictably irrational casino

We’ve been tracking cycles, trends, waves, patterns and charts for a long time, since publishing our Future News Index back a couple decades ago. And noticeably since early last year they’ve been riding wide, wild and acting unpredictably irrational:

• Just before Halloween, after months of bearish predictions in the first half of the year, we reported: “2014 ‘Year of the Boom!’ Bet on the bulls now,” picking up the shift to a bullish sentiment reflected in the Leonardo DiCaprio movie about the pre-1929 “Great Gatsby” era of the Roaring Twenties.
• Then before Thanksgiving, the spotlight shifted to the “Roaring Katy Perry” market in “Shiller’s hot P/Es powering a ‘Roaring Bull’ till 2017.” We focused readers on the 2004 panic and crash that never happened: “While P/E ratios were over 26 in early 2004, the bubble did not pop. In fact, with tongue-in-cheek, billionaire Ken Fisher dismissed the bears in his Forbes column; ‘The market’s a great humiliator’.”
• Shortly after, in early December, this strong positive energy accelerated. We highlighted opportunities in “12 get-rich sectors for a hot 2014 bull market.”Investors were in cloud nine with “optimists dreaming of another 22% return in the New Year.”
• Then, a bear warning: Just before Christmas we reported a shift back to bearish sentiment in “Doomsday poll: still a 98% risk of 2014 stock crash,” harking back to “the dark warnings from last January through the fall when even the Fed saw an ‘unsustainable bubble’ … Bill Gross: ‘Credit Supernova’ … Nouriel Roubini: ‘Prepare for perfect storm’ … Jeffrey Gundlach: ‘Kaboom Ahead’ … Charlie Ellis: ‘Don’t own bonds’ … Gary Shilling: ‘Shocker’ … Peter Schiff ‘doubling down’ on his ‘doomsday’ prediction … and InvestmentNews’ dark warning to 90,000 professional advisers: ‘Tick, tick … boom!’

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