There once was a bunch of bulls who were bored with a market that had been trading sideways for 5 months after a nice two-year run. They knew that they had to do something to shepherd the market to new heights. But faced with the facts of oil at $55 per barrel, higher commodity prices, housing bubbles, record trade and budget deficits, and a flattening yield curve, it would be a challenge. In the late spring, they heard FOMC member Richard Fisher on CNBC say that the central bank may be nearing the end of its tightening cycle. To amuse themselves, they took a great breath and sang out in unison, “One and Done! One and Done! The Fed is done with rate hikes!”

Investors bought into this story and pushed the market higher for a nice rally. But when they arrived at summer’s end, oil had increased over 20% and the Fed rate hikes in June and August had made them look a bit silly.

“Don’t cry ‘One and Done!’ you bullish shepherds,” said the bears, “when there’s no proof that rates will stop increasing.” Once again, investors had paid up and got stuck in a flat market.

Then a devastating hurricane named Katrina hit and oil prices spiked even higher. Inflation fears would be certain to follow – wouldn’t they? The bears had a strengthened case but the bullish shepherds really know how to spin stories to their liking.

When the storm cleared they would have another chance to rally the market before the next FOMC meeting. Pundits and economists suggested that the Fed would recognize the hurricane’s impact on the economy and change their course. The bullish shepherds sang out again, “One and Done! One and Done! The Fed is done with rate hikes!” To their naughty delight, they watched investors help them drive the bears away and got a 2% bump in the market.

When September 20th came, the bears listened to the Fed raise rates one more time. They sternly said, “Save your optimistic song! Don’t cry ‘One and Done!’ you bullish shepherds when there’s no proof that rates will stop increasing.” Once again, investors had gotten suckered into paying higher prices and were still stuck in a flat market.

But the bullish shepherds weren’t embarrassed or apologetic. They just grinned and laughed at how easy it was to convince investors to buy this market and used the same refrain in January and March. Despite the fact that rates actually went up in November, December, January and March, oil was spiking and the market was moving sideways – investors were still believing this story. When dovish comments by FOMC member Janet Yellen prompted another cry of “One and Done! One and Done!” - a 2% move was the prize.

At some point in the future, the bullish shepherds knew they would be right – the Fed would actually be done. But what would they tell investors then? Sometimes when you use up all your lies by telling them too often, there aren’t any good lies left when they are urgently needed.

The moral of Aesop’s “The Boy Who Cried Wolf” was “Nobody believes a liar…even when he is telling the truth!” But that doesn’t seem to apply to the “One and Done” story. It used to be said “once bitten – twice shy” not “fives time bitten – no times shy” and so much for “fool me once – shame on me…”

Every fable has a moral – but not every fable has a happy ending. Morals are nice, but I am more concerned that you find a happy ending.