According to the mainstream financial media, money managers, investors, timers, scholars, historians, analysts, advisors, academics, economists, and just about everyone with their foot in the door on Wall Street ---- 2008 marked the start of the bear market.
"This downturn," reveals a recent news source, "which is now 12 months old, has already lasted longer than the two last recessions in 1990 and 2001… This bear market has taken no prisoners." (Dallas Morning News)
They're ALL wrong.
As the January 2009 Elliott Wave Financial Forecast explains: "2008 was the year the bear appeared in everyone's living room and could no longer be denied." Until then, the grizzly had been openly grazing on the U.S. economy's grasses since January 2000 -- eight years, not 12 months, earlier.
I repeat: The bear was born in January 2000. That year, the dot.com boom went bust, the tech-bubble burst, and the "nominal" Dow Jones Industrial Average (as measured in U.S. dollars) turned down from its (then) all-time high in a violent 60%-plus sell-off before pausing in October 2002.
The usual suspects widely acknowledge that three-year slump as the beginning, middle, and END of the first, 21st century bear market. That is a mistake.
See, even as the "nominal" Dow took off to the upside in 2002, the bear market NEVER left. How do we know? Because the "REAL" Dow -- as measured in the only genuine fixed value -- ounces of gold -- continued to plummet from its peak.
Here, a year ago the January 2008 Elliott Wave Financial Forecast presented the following, three-paneled chart of the DJIA from 1980-2007.
In an authentic bull market, all three of these measures must rise together. One look at this Financial Forecast’s chart and that’s exactly what happened during the synchronized rally leg from 1980 to 1999-2000. The major divergence that took place in 2002 with the "Nominal" Dow's rally betrayed the ultimate bear in bull's clothing.
The five-year advance since 2003 was not the product of currency inflation, but rather CREDIT inflation. Stocks flew too high on the "borrowed" wings of every debt-related vehicle under the acronym-esque sun: ARM, ARS, SIV, CDO, and on. And, once the confidence in that elaborate system of leverage evaporated, the entire system collapsed.
So, now that we have the FACTS in order, the next question is simple: Is the EIGHT-year old bear market finally going back into hibernation?
Well, you can ask the mainstream pundits, OR, you can trust the insight of those who saw the birth of the grizzly long BEFORE it made its first growl: Elliott Wave International's team of experts.
Case in point: As the Dow Jones Industrial Average was nearing its (then) all-time high of 11.750 on January 14, 2000, we said:
- December 1999 Elliott Wave Financial Forecast: "Upside Target 11,360-11890."
- December 9, 1999 Elliott Wave Theorist: "The evidence of a major, indeed, historic downturn [and bear market] has piled up to the ceiling. It's better to be early, even years early, than one day too late."
As the tide began to turn in earnest, we followed up with the following:
September 2005 EWFF explained “Why the end is near” for the entire system of risky credit tools and the banks that use them. In our words: “The lending rug will get pulled out from under the economy in a hurry.”
January 2007 EWFF: Introduced “2007” as “The Year of the Financial Flameout.”
And, days ahead of the autumn peak in the DJIA, the October 2007 EWFF went against the bullish tide. “Despite the renewed enthusiasm of investors, there remain many subtle signs that the market is losing steam.” On October 9, 2007, Short Term Update stepped up the urgency our analysis with this message: “Odds have increased that a market high is in place. The structure, coupled with turns in the other markets, suggests a top is in place. The potential, at the least, is for a large selloff.”