It takes a long time to build a house of cards. The house of cards collapses at a much faster rate. Since 2011, the market buying has been funded with lies and deception. Efforts to stabilize the market are ongoing. That will continue until panic sets in. It can happen any time. I have gained a little more confidence that the sell off will continue through mid-October. I have increased my short exposure again to about 40% up from 20%. Be cautious of abrupt short killing bear market rallies. They can be orchestrated of they can happen naturally.
Again, I am the only economist in the world that sees the Federal Reserve policy as totally political. The members are not stellar citizens doing their best to right the economy. Any sane person knows that central economic planning transfers wealth and income only, and guarantees a disastrous outcome. Janet Yellen and her crew have no honest bones in their collective bodies.
The corporate buybacks that supplied orchestrated stock market gains are litterally going to kill the corporations that participated.
When the current round of manipulation began in 2008 and then in 2011, those bear markets were not complete. One of the values of a complete bear market is that a countries assets are very efficiently allocated when it is over. This bear market will probably end at a level lower than was seen in 2009 and certainly lower than what occurred in 2011. Why? Those bear markets were not complete. Instead, they ended when government started supporting stocks. Reallocate resources is a natural function of falling stock prices. Currently assets are at least as miscalculated as at the top in 2007. This is going to get very bad. It will probably be a mistake to flip long before a considerable amount of time passes.
Folks with stocks in their IRAs will get cleaned out. Most will be unwilling to take penalties and will take bigger losses than they would by paying the penalties and closing the accounts.
These thoughts and opinions are based on sound economic principles on which numbers cannot be attached in the present. That is the nature of free market economics. People cannot be observed behaving in the present in ways that economic principles guarantee that they will. So, most economists ignore these things and look for numbers instead. That is to their disadvantage since the present is where the action is and where the principles apply.