Charting The Stock Market “Melt Up,” & The Fed’s Naivety
Charting the stock market “melt-up” in prices, and the Fed’s naivety of the laws of physics may be of benefit to younger investors. After more than a decade of rising prices, accelerating markets seem entirely normal, detached from underlying fundamentals. As a result, new acronyms like “TINA” and “BTFD” get developed to rationalize surging prices.
However, a more extended look at price history suggests the current market environment is anything but typical. More importantly, the “moral hazard” created by the Federal Reserve’s continuous bailouts have put individual investors at significant risk.
A Long History Of Poor Outcomes
In the short term, like above, charting stock market prices may not seem extraordinarily stretched. However, this is because the chart lacks context from a historical perspective. Once we look at the market from 1900 to the present, a different picture emerges compared to its exponential long-term growth trend.