It seems obvious to say that the past 18 months or so in the U.S. stock market has been an historic period for investors. Most observers may go so far as to say uniquely historic.
But take the time to read even a few excerpts from the many financial histories of the United States and of Wall Street. They're not as boring as you may think. Some chroniclers were writing histories of that kind even before the Civil War (1861-1865). Many of the older volumes are free for the browsing on Google Books.
If you try my suggestion, well, my guess is that you'll conclude something like this: The past 18 months in the stock market have been neither unique nor historic. What happened instead is merely a repeat of history in virtually every respect -- including the notion that our experience is in any sense unique.
None of it is new, and I do mean none. Lots of little banks fail, big banks get merged or bailed out. Bondholders of securities from major financial institutions are made well, other bondholders get screwed. Real estate plummets. Lax regulatory enforcement is uncovered. Cries for new regulation become deafening. Politicians demagogue the issue, pass meaningless laws, and/or put the fox in charge of the henhouse. Scapegoats are found and sent to perish in the wilderness. Immense scams are uncovered. And so on, etc, ad nauseum.
A few sane voices speak the obvious truth, but can't be heard above the commotion:
"There are times when the whole community, not merely city people but also storekeepers in country towns, even farmers, even domestic servants, interest themselves actively in share speculations."
That was penned in 1888, by an Englishman who had observed America during the various panics of the 1870s-1880s. He could have been describing how stock ownership rose to some 50% of U.S. households in the year 2000, dipped briefly during the three-year bear market, then returned to 50% by 2007.
King Solomon got it right three millennia ago in Ecclesiastes: There's nothing new under the sun.
Collective psychology really is patterned, and those patterns really do repeat themselves. Elliott wave analysis identifies those patterns: once you've identified where prices are in the trend, you can make rational forecasts for what's next.
Obviously, some junctures in the trend are more important than others. This past Friday, Bob Prechter identified a juncture so important that he issued a rare Special Interim Update to his subscribers. You can read that Update -- and our complete analysis and forecasts for what's next -- with a subscription to the Financial Forecast Service.
Click here to learn more.