"Once upon a time I was falling in love
But now I'm only falling apart
There's nothing I can do
A total eclipse of the heart
Once upon a time there was light in my life
But now there's only love in the dark
Nothing I can say
A total eclipse of the heart."
--Bonnie Tyler, "Total Eclipse of the Heart"
It very well may be different this time from the standpoints of markets, valuations, U.S. corporate profits, central banks and economic, political and geopolitical goings-on.
I will be brief in my points, but that brevity should not diminish how different 2017 is than almost any other time in modern market history:
* Markets: The dominance and popularity of passive investing -- most notably ETFs and volatility-trending and risk-parity strategies -- are relatively new to the market's picture. I contend that the lack of price discovery from these influences may have spoiled stock charts and partially ruined the ability of some to rely on technical analysis.
* Valuations: Most valuation metrics are at least in the 95% decile, an occurrence that typically has coincided over history with the end of maturing bull markets or in the ninth inning of speculative eras.
* Corporate Profits: With the largest spread between GAAP and non-GAAP earnings in history, never has such liberal use of accounting standards been accepted by the masses of market participants.
* Central Banks: With $19 trillion ($1.5 trillion added in 2017 alone) in central bank assets, monetary authorities never have had such influence as they have in the past few years. Like quantitative strategies, the outsize role of central banks is new and its impact is great. It also has diminished price discovery. As I recently wrote, the "Debt Opioid Addiction Could Turn Ugly Fast."
* Economic: As the years go by it is increasingly clear that, despite the unprecedented role of central bankers reducing interest rates, secular global growth prospects have been reduced relative to the last several decades. Moreover, The Screwflation of the Middle Class has resulted in an income and wealth gap that has not improved over the last three to five years.
* Politics: The Orange Swan is a new factor, as articulated here and here. Like him or hate him, President Trump is unlike any POTUS in history. Another aspect of politics that is different is the degree of animus in Washington, D.C. There has never been such partisanship. Ever.
* Geopolitical: Markets have never been as exposed to such geopolitical acts and risks. Specifically, it has been 53 years since we faced a nuclear risk.
And then we have a total eclipse of the sun this afternoon. That's different, too, as we haven't seen one in years. The last total solar eclipse in the contiguous United States was on Feb. 26, 1979.
As quoted in "The Four Pillars of Investing: Lessons for Building a Winning Portfolio" (2002) by William Bernstein, Sir John Templeton famously said that the four most expensive words in the English language are "this time it's different."
And different the world is, this time:
"Ladies and gentlemen, I've looked into the future and you will not believe this sxxt." pic.twitter.com/MRhKWgXAYI- Super 70s Sports (@Super70sSports) August 20, 2017
I remain manifestly bearish for a host of fundamental reasons and I reside at my highest net short exposure in several years.
It is not only different this time -- it's very different this time!
(This commentary originally appeared on Real Money Pro at 7:58 a.m. ET on Aug. 21. Click here to learn about this dynamic market information service for active traders.)