• 5 mins Silver Steadies Following Wild Week In Precious Metals Markets
  • 16 hours $5 Million Gold Toilet Vanishes
  • 16 hours Gold On The Rise After Fed Rate Cut
  • 19 hours Oil Trader Loses $320 Million On Derivative Bets
  • 2 days S&P 500 Officially In An Earnings Recession
  • 2 days Miners Are Weathering The Trade War Storm
  • 2 days UK Credit Card Interest Rates Are Skyrocketing
  • 3 days From Frenzy To Flop, The Death Of This Year’s Most Hyped IPO
  • 3 days Are Smart TVs Spying On Us?
  • 3 days Is Fossil Fuel Divestment A Waste Of Time?
  • 4 days A Russian Billionaire’s Space Quest To Save Humanity
  • 4 days Markets Take Breather As Consolidation Continues
  • 4 days Economic Woes Weigh On Copper Prices
  • 4 days World's Largest IPO At Risk Following Drone Strikes
  • 5 days Gold Is Beating Buffett’s Berkshire Hathaway
  • 5 days What’s Behind The Silver Sell-Off?
  • 5 days The Retail Apocalypse Is Accelerating
  • 5 days The Top Tech Stocks Of The Year
  • 6 days America’s Workforce Elderly Workforce To Double By 2028
  • 6 days Toyota Tests Solar-Powered Prius
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

  1. Home
  2. Markets
  3. Other

Time to Retire the 20% Bull/Bear Market Rule

Officially, Crude Oil has had the worst bull market ever.

According to a headline on Bloomberg on Monday, Crude is in a bull market. The headline screamed "WTI CRUDE CLOSES UP 29% FROM AUG 24 LOW, ENTERS BULL MARKET"! On Tuesday, after a 7.7% fall from Monday's close (-100%, annualized), the bull market doesn't seem so...well, ebullient.

Okay, sure, this is a pet peave of mine. I don't know whose idea it was to call a 20% advance from the prior low a bull market, and a 20% decline from the prior high a bear market, but I am pretty sure that they didn't intend for that 20% to be applied to all markets, at all times. So a 5-year Treasury Note is not in a bear market until it falls 20 points (or...is that 20% of the current yield? I guess it depends who writes the headlines!), but energy futures which can move 20% in a couple of days, or corn futures which can double literally overnight if there is a drought, can be in bull and bear markets a couple of times per month. Does this make sense?

Add to this the obvious absurdity of the idea that we can know in advance whether an asset is in a bull or bear market. If you are telling me that Crude rallying 20% off the lows means that it is in a bull market, and that means I can be long Crude comfortably, knowing it is likely to rally from here - then you need to quit telling me anything and go make a fortune trading.

We can only know a bull market or a bear market in hindsight. That is, even if 20% is the magic number (and I can't think of why that would be so), the best we can say is that Crude was in a bull market on Thursday, Friday, and Monday when it rallied about 27%. Does that help us, going into Tuesday?

Evidently not!

 


You can follow me @inflation_guy!

Enduring Investments is a registered investment adviser that specializes in solving inflation-related problems. Fill out the contact form at http://www.EnduringInvestments.com/contact and we will send you our latest Quarterly Inflation Outlook. And if you make sure to put your physical mailing address in the "comment" section of the contact form, we will also send you a copy of Michael Ashton's book "Maestro, My Ass!"

 

Back to homepage

Leave a comment

Leave a comment