Cult of the Bear, Part 1

Mind you, all four engines are working at peak efficiency, and have been burning high-priced jet fuel prodigiously. The pilot and crew are experienced, and everyone wants the jet to go higher.

Yet it cannot seem to make any upwards progress. Odd, isn't it?

Now consider this: What happens if something goes wrong? What if one of the engines flames out? What if we start running low on fuel? Or if there's a human error? This doesn't mean the plane will plow into the ocean -- but it is likely to lose some altitude.

That's the situation we have found ourselves in. Despite the many positives we have seen in the market, we have been unable to make any progress. And, if any of the positives falter slightly, markets will feel the impact in a big way.

Tomorrow: Long-term cycles, trading ranges, and P/E mean reversion.

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