NEW LOW OBSERVER

As we repeatedly say, based on the work of Charles H. Dow (co-founder of the Wall Street Journal and the respected Indexes), markets can be manipulated in the short term.  However, in the long run, everyone learns the truth.

"...manipulation in a stock cannot be permanent, and, in the end, the investor learns the approximate truth."

- Charles H. Dow, Wall Street Journal, October 18, 1901.

But the question is constantly asked, “how do you know?” and “what is your proof?”

Our favorite example is the aggressive actions of Japan from 1989 to 2009 in an effort to stem the decline in the economy.

The above graphic outlines rate cuts, stimulus, and QE for over 10 years and contrasts that with the stock market.  These are all tools of manipulation aimed at restoring the economy.  The natural reaction is, “well, of course the stock market and the economy are two separate things and are completely unrelated.”  This is an important distinction because while all of the above policy was directed at the economy, it is possible that a recovery might not be seen in the stock market while the economy recovers.

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