This time it’s different.
The quote, “The four most dangerous words in investing are: ‘This time it’s different,'” is attributed to Sir John Templeton, a renowned investor and mutual fund pioneer.
As his name alludes to, this is not a recent quote.
Templeton was born in 1912, just before the Federal Reserve was created. He went on to be one of the most successful investors of his time.
So this quote carries some weight to it.
And with it being a top line repeated these days, this time it’s different, it is worth diving a bit more into it and why this time, in fact, is not likely going to be different at all.
Let me explain…
You’ve seen this before.
Mainstream media hyping up a central angle.
It usually ends badly, and as I’ll explain today, it likely does again. But that doesn’t mean you have to suffer too.
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For starters, what is it that is different this time.
Why does that keep coming up?
Well, the biggest area I point to and hear this is when it comes to the Federal Reserve and interest rates.
I am starting to sound like a broken record, I get it.
But, it’s why interest rates are still creeping higher – the Fed wants to slow down the economy. And when they succeed in that, a recession and stock market crash will follow.
That’s when they will begin to slash interest rates, to again support the economy and find some sort of balance in rates after that adjustment. We haven’t hit that yet though. And that’s where all the talk about this time is different is coming from.
With the Fed still increasing rates and rates remaining elevated, many investors are calling for a new, red hot bull market in the making. This is the early days of the next great run.
It’s not.
Not until the Fed cuts rates.
As long as the Fed has its hand in the market like this, expect a crash.
Sir John Templeton was Ahead of his Time
Think about.
1930s or so and the same type of misconceptions of the market are being played out.
The quote demonstrated Templeton’s skepticism about the notion that prevailing market conditions or trends will always persist without significant changes. He believed that investors who blindly assume that the current situation is fundamentally different from previous market cycles can make costly mistakes.
This is key.
The market is cyclical. The ups and downs, or ebb and flow as some call it, is a natural state. Not the exception, but the norm.
It’s why the relative rotation graph (RRG) I study and implement is so powerful. It is working with the cycles in the market.
Templeton cautioned against complacency and the tendency to ignore past lessons, emphasizing the need for prudent analysis and an understanding that market cycles and human behavior tend to repeat themselves over time.
So I ask you, is it really going to be different this time?
Is the Fed going to fail at their number one goal?
Only time will tell.
I’ll make money either way, it’s why I play both sides of the market.
But a crash is coming and I want you to be prepared. Not scared or shocked. Just prepared.
Regards,
Chad Shoop, CMT
Editor, Bank It or Tank It ELITE