Tuesday, June 1, 2010

Will history continue rhyming?

  • Sometimes history seems to repeat itself.

  • 2007 saw the collapse of the largest housing bubble in U.S. history, the lead up to this collapse is shown in chart #1.

  • The U.S. reflation trade of 2009 and early 2010 also was fueled by a massive amount of liquidity, creating another bubble in the U.S. equity markets. This can be seen in chart #2. Notice the similarities in the rise of 2006/2007 to 2009/2010.

  • What if the collapse of this bubble mirrors the collapse of 2007/2008? Check out chart #3, we could be in for another bumpy couple of years.

2006/2007 Market Rally

2009/2010 Market Rally

What could happen from here

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