12 Year Bull Trend

12 April 2021 By PDSNET

On 6th March 2009, just over 12 years ago, the S&P500 index made an intra-day cycle low at 666.79. It was the end of a 17-month bear trend which had seen the S&P fall by 57,4%. The world was in the teeth of the sub-prime crisis and negativity abounded. Investors were terrified.  The response to the crisis was massive and world-wide. An unprecedented flood of cash was poured into world markets. Interest rates were dropped to around zero and fiscal stimulation was the order of the day.

This response to the combination of an economic crisis and a collapsing stock market was, by 2008/9, the standard procedure. It had been used very effectively to avert every recession and stock market bear trend since it was pioneered by the then newly appointed Governor of the Federal Reserve Bank, Alan Greenspan, way back in 1987. Each successive recovery, however,  required ten times the cash injection of the one before.

In the 1980’s, after the 1987 crash it took just tens of billions of US dollars to turn the US economy around; in the 1990’s it took hundreds of billions and in the “noughties” it took trillions. In fact, recovery from the 2008 sub-prime crisis took such a large injection that the central banks of the world, led by the US Federal Reserve Bank, were forced to “print” about $12,5 trillion to recover the situation – and even then, it was touch-and-go for the next five years.

Eventually, however, confidence levels did begin to return, and people slowly began spending again. In fact, spending only really got going in 2019 - just before the COVID-19 shock. Faced with the pandemic, central bank governors, led by the US, once again resorted to Greenspan’s tried and tested remedy – massive fiscal and monetary stimulation. In this they were encouraged by the extraordinarily low levels of inflation world-wide. Persistently low world inflation rates over the past twenty years have been predicated by the massive increase in productivity which accompanied the spread of the internet and smart phones combined with the sharp drop in energy prices in the second half of 2014.

Now in 2021, a new round of monetary and fiscal stimulation, necessitated by the pandemic, has had the effect of compounding and amplifying the previous sub-prime stimulation which the world economy was still digesting. The effect has been dramatic. Asset prices have exploded. Stocks and bonds have reached record levels. Property is not far behind.

The point is that asset prices, especially equities, are rising exponentially.

It took 41 years until 3rd February 1998 for the S&P500 to reach 1000 points from its inception in its current form on 4th March 1957. It then took 16,5 years for it to reach 2000 on 26th August 2014. After that, it took 5 years to reach 3000 on 23rd July 2019 and, finally, it has taken just 21 months for it to reach 4000 on 1st April 2021. After reaching 4000 it took just 5 trading days to reach 4128 last Friday.

S&P500 Index: September 2008 - April 2021. Chart by ShareFriend Pro.

Bearing in mind that this chart has a semi-logarithmic scale, what you are looking at is whip-end of an exponential chart.

The S&P is rising more and more quickly. We are of the opinion that it will ultimately rise to an amazing 10000 points in the next few years. But then, what goes up exponentially must also, somewhere in the future, fall exponentially.

The point is that this asset bubble is being financed by unprecedented increases in national debt and combined with massive quantitative easing. The US national debt was under $900 billion in 1987 when markets crashed. It reached $28 trillion this year (https://www.usdebtclock.org/) and it is expected to rise $50 trillion in the next 4 years - by 2025. That is surely unsustainable.

We believe that at some point inflation, which has been nascent all these years, will suddenly erupt forcing central banks to raise interest rates rapidly. The result will probably be a deflationary crash and the almost immediate collapse of equity and debt prices. The question really is not if this will happen, but when.

As a private investor you need to consider and prepare for the probability that in the not-too-distant future the world will face an unprecedented collapse in asset prices. It is exceedingly difficult to know exactly when that will happen. In our view, it is still at least a few years and maybe as much as a decade away. So, you should “make hay while the sun shines” - but be ready to withdraw into the security of cash when you become nervous. In a deflationary crash, cash is king.


All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

Share this article:


The Confidential Report - May 2021

The US economy grew at an annualized rate of 6,4% in the first quarter of 2021 – which was much faster than expected. Gross Domestic Product (GDP) was $19,1 trillion – which can be compared to the $19,3 trillion of the December quarter of 2019 - before the pandemic took hold. This shows that the economy is now virtually back to pre-COVID-19 levels. The

Top of the Market Signs

In last week’s article, 12-Year Bull Trend, we pointed out that the bull trend was rising exponentially and ultimately that could only end with an exponential collapse. We said that the exact timing of that collapse was very difficult to assess.

You may also recall our article of 23rd January

The Confidential Report - April 2021

The S&P500 index closed above 4000 for the first time on Thursday 1st April 2021 at 4019.


You can see the impact of the COVID-19 V-bottom, which we regard as an extraneous non-economic factor, and the subsequent acceleration of the S&P. Obviously, the


Hammerson has been listed on the London Stock Exchange since 1945. It is a real estate investment trust (REIT) and owns “flagship destinations and premium outlets in key cities across the UK and Europe”. Most of the company’s properties are shopping malls like Brent Cross in London, The Bullring in Birmingham and Dundrum Town Center in Dublin. Obviously,

Afrimat Revisited

On 25th May 2020, ten months ago, we published an article on Afrimat in which we said we liked what the company was doing and considered it to be undervalued. At the time Afrimat shares were trading in the market for R29. In the past ten months they have risen to R46 – a gain of 58,6%. Consider the chart:



The relationship between technical analysis and fundamental analysis is the relationship between the reality and the perception of that reality in a company. The fundamentalist searches for the share’s real value by studying the company’s financials. The technician studies the impact of investors’ perceptions as they are reflected in the

OBV and Mpact

Joseph Granville, talking about the share market, famously said, “volume leads price”. By this he meant that the volume traded in a share tends to begin increasing before the price rises. He encapsulated this idea in his “On Balance Volume” technique (OBV). If you are not clear on OBV go back and re-read On

The Confidential Report - March 2021

The major change that has come about in America since the advent of the Biden administration has been a broad shift towards “risk-on”. The uncertainties associated with Trump are fading. American investors have welcomed the economic logic and sanity of the new administration with a desire to generate returns which are well above those offered by US Treasury


Naspers is the largest share on the JSE with a market capitalisation of R1,67 trillion. Naspers was founded in 1915, as a printer and publisher of newspapers and magazines. It has since evolved into an international social media, entertainment and gaming company.

This share has the problem that it is undervalued in relation