Greg Guenthner

The old Wall Street saw says you’re supposed to buy when there’s blood in the streets.

But I have to ask — do you have the guts to pull the trigger?

Think back to a couple of recent market bottoms…

Were you buying stocks in spring 2009 when it looked as if the whole world was falling apart?

Were you a buyer in late 2011 after Europe hit the skids?

Few can answer “yes” to these questions. That’s understandable. During times of crisis, it’s all too easy to get sucked into the negative feedback loop. It takes incredible confidence and foresight to buy when others are fleeing the market in droves.

It’s no secret that the market’s been stuck in one of these anxiety-ridden cycles for years now. The suits in Washington have fumbled every pass since the credit crisis, injecting historic levels of stress on businesses and citizens. Record spending, health care reform, the debt ceiling and a fiscal cliff standoff are just a few of the uncertainties we’ve all endured.

Luckily, a research group called Economic Policy Uncertainty has quantified these concerns. And when you line up the spikes in the U.S. Policy Uncertainty Index (times when “business uncertainty over government policy” was at its highest), you see how policy worries led to long-term buying opportunities:

High Levels of Government Uncertainty Spur Market Rallies

Since 2009, we’ve waded through a river of political dung of historic proportions. Political ineptitude has sparked record anxiety in the uncertainty index, culminating with an off-the-charts reading during the 2011 debt ceiling dispute. Current readings continue to hover above historic spikes from the first Gulf War and the Sept. 11 terrorist attacks.

Despite looming all-time highs, blood is still very much in these streets. The lost decade is slowly (and sometimes painfully) coming to an end.

Greg Guenthner
for The Daily Reckoning

Greg Guenthner

Greg Guenthner, CMT, is the managing editor of The Rude Awakening. Greg is a member of the Market Technicians Association and holds the Chartered Market Technician designation.

  • Capn_Mike

    So, is the “Economic Uncertainty” coefficient called the “Higgs Boson”??

Recent Articles

Extra!
The Greatest Challenge Facing America’s Economic Dominance

Alasdair Macleod

Next month, for major countries will become full members of the Shanghai Cooperation Organisation (SCO). That will increase the population of SCO member states to 3.05 billion. But why should you care? As Alasdair Macleod explains, this move could have a very important impact on the US dollar. Read on...


On Sale: A Precious Metals Play with a Reliable Dividend

Dan Amoss

Precious metals get a bad rap from most investors. But in the midst of so much central bank money creation, they still provide an excellent hedge against inflation. Dan Amoss relays one great investment idea in this sector with plenty of upside potential as precious metals look poised for a significant comeback. Read on...


An Early Stage Opportunity in the Next Phase of 3D Printing

Wayne Mulligan

Over the last two years, few innovations have had as big of an impact as 3D printing. But as important as this technology has become, one new tech story is about to leapfrog over it. And as Wayne Mulligan explains, early investors in this new innovative technology could make a fortune by getting in early...


Laissez Faire
How to Get Free Airfare to Almost Anywhere in the World

Chris Campbell

Traveling the world can be expensive. Between airfare, dining costs and hotel accommodations, travel expenses can add up quickly. And the last thing you want on your vacation is to be stretched too thin. Chris Campbell explains how you can eliminate one of the biggest travel expenses entirely, with one simple trick. Read on...


1990s Flashback: A Blueprint for the Current S&P Rally

Greg Guenthner

The S&P finally closed above 2,000 yesterday - a new all-time high. And that has some investors comparing it to the heady days of the late 1990s, when the S&P soared through 1,000 and didn't bother to look back. But as Greg Guenthner explains, that run up wasn't without its pitfalls, and this one won't be either. Read on...


5 Min. Forecast
“Neofascism” in 2014 America

Dave Gonigam

The fall of the US dollar-based monetary system will happen much like Hemingway's description of how one goes bankrupt: "gradually, then suddenly." And, as Dave Gonigam explains, when the inevitable finally happens, there's one group of investors who will be happy they listened to folks like Jim Rickards. Read on...