UPDATE: Crash of 2014: Like 1929, you'll never hear it coming
By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (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."