In his first publication, Bill Bengen has analyzed the three largest stock-market declines since 1926 which have occured

These sins and defects always originate from financial alchemy. Like how the architects of the South Sea Bubble kept it alive for as long as possible, we have too, but, this time, on steroids. Central banks consume everything, even assets outside their remit. They are one mini-crash away from buying stocks for the first time ever. Most public companies, even high-profile ones such as Apple, artificially inflate their stock price through share buybacks to make up for absent economic growth.,Invented by Bill Bengen in 1994, a financial advisor in Southern California, the 4% withdrawal rule, or the ‘4% rule’ has become the holy grail of those seeking financial independence. It is a calculation that makes sure retirement savings never run out of money by budgeting to spend no more than 4% of the balance of the retirement savings balance in the first year. This calculation has been at the heart of the FIRE movement which stands for Financial Independence Retirement Early. 25 years after his initial publication, Bill Bengen, who has sold his financial planning practise and moved to Arizona, is recommending to change the rule.,This system, though, has created many unfavorable defects akin to the South Sea Bubble. Back then, the original financial alchemists had invented stock promotion schemes nicknamed “Bubbles”: companies that peddled bizarre and outlandish claims ranging from “improving the art of making soap” to “trading in hair” — to this day it’s unknown what the latter company’s function implied.,The modern parallel is the SPAC market which has grown exponentially in past few years. Since SPACs are companies that have bypassed the IPO process by performing reverse mergers, charlatans have exploited this loophole to take stock promotion schemes public. Investigators recently outed Nikola Motor, the poster child of SPAC tomfoolery, as a stone-cold swindle.,Deception is not the only sin we have yet to abolish. Still, when a mania hits its peak, people who have never thought about the stock market suddenly get involved. In the 1700s, it was the ladies of the aristocracy lusting after noblemen who owned South Sea stock. Now it’s your friends, family, and coworkers pitching you Amazon shares via instant messenger.,The South Sea Scheme collapsed because its architects ran out of air to pump inside the bubble, and soon, we’re about to witness a repeat. The asset bubble phase is over. We have forgotten how to value money. We’re floating inside a full-blown, central bank confidence balloon, and all it takes to burst this is a flick of the psychological switch.,Either way, history is about to repeat itself as it has done since the crash of the South Sea Bubble over 300 years ago. Today’s authorities may have created the longest expansion on record, but they have committed financial suicide to achieve it. Grant Williams says it best: “They changed the color of the buttons, they changed the handles on the levers, but the principle’s the same. It’s the same scheme run over and over again.” In the end, all we’ve done is rewrite the history books but with a modern twist. No authority has ever defeated economic gravity, and it has no plan to surrender anytime soon.,It’s this financial horseplay that keeps the economy afloat for longer than critics and skeptics expect. We have overcome all previous bubble-bursting catalysts. We have survived the European debt crisis that pushed the Greek and Spanish financial systems toward near collapse. We have survived the 2015 oil crash. We have survived the Federal Reserve rate hikes in 2018, and this year, a global pandemic and worldwide lockdown.,Individually these functions might look innocent but will definitely come in handy in a Time-limited coding environment in the sense that they offer large functionality in a very short amount of code. The functionalities discussed have very specific applications and act like a Shortcut or a cheat-sheet in competitive coding. Having these useful tricks up your sleeve might just give someone the competitive edge that they were looking for. Thanks for reading this article, you can follow me on medium.,It’s unwise, though, to predict when this will happen, and what will cause market participants to sell and keep selling without fear of missing out on future gains. Who knows when the authorities will run out of juice? The complexity of the modern financial system has made it impossible to grasp.,The incredible longevity of today’s bubble is a testament to its power. It’s the psychology of mainstream perception. The madness of crowds forces investors to front-run monetary and fiscal stimuli while ignoring everything else. When central banks print money and governments spend, investors must continue to buy assets, overlooking dire economic data and multiple economic drags. Of course, this speculative frenzy must come to an end.,Either way, history is about to repeat itself as it has done since the crash of the South Sea Bubble over 300 years ago. Today’s authorities may have created the longest expansion on record, but they have committed financial suicide to achieve it. Grant Williams says it best: “They changed the color of the buttons, they changed the handles on the levers, but the principle’s the same. It’s the same scheme run over and over again.” In the end, all we’ve done is rewrite the history books but with a modern twist. No authority has ever defeated economic gravity, and it has no plan to surrender anytime soon.,The other puzzle is whether we’ll get deflation or hyperinflation? After seeing Venezuela’s stock market soar during a hyperinflation disaster, it’s foolish to assume that asset prices will plunge towards zero in the next crisis. Let’s pray we don’t get a scenario wherein Jim Cramer is shouting “DOW 1,000,000!” while Americans trail dollar-filled wheelbarrows to their nearest Costco just to buy a cup of coffee.,In the first letter, I talked about useless information. But what does that mean? To me, anything that doesn’t have a positive impact on my life is useless. That’s why I love reading books instead of scrolling through social media. Most stuff on social media is like sugar. It might give you a quick high, but it doesn’t have a positive impact on your life overall. But that’s not the only type of useless information. It’s everywhere.,In August 1720, the South Sea Company collapsed when its shareholders decided the business could not support a 50% dividend payment — which it had announced only to entice new buyers. “The fate of the South-sea Scheme has verified much sooner than I expected what you told me,” Pope said failing to escape the bubble alongside Lady Montagu. Shares of the South Sea Company had fallen back to pre-bubble levels, and the mania had ended.