If you think that these ridiculously absurd stock prices are sustainable, there is something that I would like for you to consider. The only times in our history when the cyclically-adjusted return on stocks has been lower, a nightmarish stock market crash happened soon thereafter…
The Nobel-Laureate, Robert Shiller, developed the cyclically-adjusted price/earnings ratio, the so-called CAPE, to assess whether stocks are likely to be over- or under-valued. It is possible to invert this measure to obtain a cyclically-adjusted earnings
Since the market bottomed out in early 2009, the S&P 500 has been on a historic run. If this rally had been based on a booming economy that would be one thing, but the truth is that the U.S.
And the guys on Wall Street know what is coming. For example, Joe Zidle says that this bull market is now in “the ninth inning”…
Joe Zidle, of Richard Bernstein Advisors, is arguing that the bull market has entered the bottom of the ninth inning.
“This is a late-cycle environment,” Zidle said on CNBC’s “Futures Now” recently.
“In innings terms, they’re not time dependent. An inning could be shorter or they could be longer. It just really depends,” the strategist said.
This bubble has lasted for much longer than it ever should have, and everyone understands that a day of reckoning is coming.
In fact, earlier today I came across an article on Zero Hedge that contained an absolutely remarkable quote from Eric Peters…
“We are investing as if 1987 will happen tomorrow, because it will,” said the CIO. “But we need to be long, or we’ll be out of business,” he explained, under pressure to perform. “So we construct option trades that are binary bets.” Which pay
“What you do not want is a portfolio whose losses multiply depending on the severity of a decline.” That’s what most people have today. “At the last stage of the cycle, you want lots of binary
“Are we at the start or the end of the ‘Don’t know what I’m buying’ cycle?” asked the same CIO. “No one knows.” But we’re definitely within it.
“When their complex swaps drop 40%, and prime brokers demand more margin, investors will cry ‘It’s not possible!’ But anything is possible.” The prime brokers will hang up and stop them out.
In case you don’t remember, in 1987 we witnessed the largest one day percentage decline in U.S.
When it finally happens, millions upon millions of ordinary Americans will be completely shocked, but most insiders know that the other shoe is going to drop at some point.
In particular, watch financial stock prices very closely. Last month, Richard Bove issued a chilling warning about bank stocks…
One of Wall Street’s most vocal bank analysts is troubled by the rally in
The Vertical Group’s Richard Bove warns that the overall market is just as dangerous as the late 1990s, and he cites momentum — not fundamentals — as what’s driving bank stocks to all-time highs.
“If we don’t get some event in the economy or in politics or
It isn’t going to take much to set off an unstoppable chain of events. Our financial markets are even more vulnerable than they were in 2008, and the right trigger could unleash a crisis unlike anything we have ever seen in modern American history.
Unfortunately, most Americans keep getting fooled by the artificial boom and bust cycles that the central banks create. Right now most people seem to have been lulled into a false sense of security, and they truly believe that everything is going to be okay.
But every time before when the market has looked like this a crash has always followed, and this time will be no exception.
- Source, Economic Collapse Blog