“Makes you feel like a tiny child in a world you have no say in whatsoever,” writes reader John O after watching our Session on bank runs. “This was the reason people ‘dropped out’ in the sixties to live their lives totally divorced from establishment activities. That didn’t work either. Ignorance is bliss, but only until you get hungry.”

The people are hungry. For answers, for stability.

“One of the things I try to do is be the person who entertains extreme scenarios,” our guest Dan Ferris says, “Extreme risk scenarios– because I don’t think enough people do. I try to think about systemic risk and big cycles.”

Imagine perhaps that we are living through an historic period. That people will write about this time later and will reminisce “Oh yeah, that’s what happened at that time.”

If you can extrapolate forward historical periods and make decisions in the now, that’s how you make money. A lot of money. Or just not lose it.

It’s common sense, or as the American orator Patrick Henry– of “give me liberty or give me death!” fame: “I have but one lamp by which my feet are guided, and that is the lamp of experience.”

(Source: USAGold.com)

“People say it’s different this time,” Ferris continues. “It’s not different this time.”

If you understand that it’s never different this time it really helps. We never have massive financial mega bubbles without serious pain for quite some time afterward.

I think it is time for the United States to have its ‘Japan moment’, where the market goes sideways and doesn’t make a new high for 10 years at least, if not 20. Japan is into more than three decades of a sideways market now… still it hasn’t returned to its 1989 levels.

Ferris emphasizes that a “run of the mill, garden variety bear market after a massive bubble” would take the S&P 500 down 75% from the January 2022 peak.

If you do the math, even 30% would mean massive turmoil for most 401K holders, most IRA holders, most people that say they don’t really care, “just put my money in the market” or someone who “buys the dips.” A drop of 30% would drain $1,000 from your account every month.

Seventy-five percent would be more than twice the pace. Ferris:

There’s big potential to make a certain mistake here: to look at all bear markets and to try and average them out, and say, “Oh, well we’re probably there. It’s not much worse than this.”

But not every bear market is preceded by the biggest financial mega bubble in all recorded history. Did I say that enough times yet?

Maybe, once more for the people in the back.

Follow you own bliss,

Addison Wiggin
The Wiggin Sessions

P.S. My son Henry called and said he made a small investment through a brokerage last night. He put $10 on First Republic just for fun, hoping that “Yellen would go through with bailouts,” and prop up the regional bank with its assurances.

Today, his trade is down 30% and Yellen made it all too clear that she would not be helping out FRC. Henry is down about 3 bucks, or “two Costco hotdogs,” as he put it.