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Interviewing John Hussman: "The Market Is Overvalued By 100%"
Submitted by Adam Taggart via Peak Prosperity,
John Hussman is highly respected for his prodigious use of data and adherence to what it tells him about the state of the financial markets. His regular weekly market commentary is widely regarded as one of the best-researched, best-articulated publications available to money managers.
John's public appearances are rare, so we're especially grateful he made time to speak with us yesterday about the precarious state in which he sees global markets. Based on historical norms and averages, he calculates that the ZIRP and QE policies of the Fed and other world central banks have led to an overvaluation in the stock market where prices are 2 times higher than they should be:
John Hussman: What's interesting here is that if you think about equities, they're not a claim on next year’s prediction of earnings by Wall Street analysts. A stock, in fact any security, is a claim on any long-term stream of cash flows that investors can expect to be delivered to them over a very long period of time.
When you look at equities you can calculate something called duration. It's essentially the effective life of a security over which you are collecting cash flows in return for the amount you pay. For the S&P 500 the duration is about 50 years. In other words it is a very, very long-term asset. The only reason you would want to price that asset based on your estimate of next year’s earnings is if you were convinced that next year’s earnings are actually representative of the very, very long-term stream -- and I'm talking 50 years or so of earnings that you're likely to get -- that those earnings are in a sense accurately proportional to the whole long-term stream.
What's amazing about that is that is it has never been true. It has never been true historically. If you look at corporate profits and especially corporate profit margins, they're one of the most cyclical and mean-reverting series in economics. Right now, we have corporate profits that are close to about 11% of GDP, but if you look at that series you will find that corporate profits as a share of GDP have always dropped back to about 5.5% or below in every single economic cycle including recent decades, including not only the financial crisis but 2002 and every other economic cycle we have been in.
Right now stocks as a multiple of last year’s expected earnings may look only modestly over valued or modestly richly valued. Really if you look at the measures of valuation that are most correlated to the returns that stocks deliver over time say over seven years or over the next 10 years the S&P 500 in our estimation is about double the level of valuation that would give investors a normal rate of return.
So right now, we've got stocks valued at a point where we estimate the 10 year prospective return on the S&P 500 will be about 1.6 to 1.7% annualized -- talking right now with the S&P 500 at 2032 as of today’s close.
Chris Martenson: I guess 1.6 or 7% doesn’t sound bad if you are getting 0% on your risk-free money, I guess. But this says that any move by the Fed to normalize -- which means rates have to go up -- any move to drain liquidity from the system is going to have its own impact. If we held all things equal, a normalization effort is going to then basically expose that the stock market is roughly overvalued by 100%.
John Hussman: 100%, yes. I actually think the case is a little bit harsher than that; in fact, quite a bit harsher than that.
The idea that well, "1.7% isn’t so bad" or "1.6% isn’t so bad" ignores the fact that really in every market cycle and economic cycle we have had a point where stocks were fairly valued or undervalued.The only cycle in which we didn’t see that was actually the 2002 low where stocks actually ended that decline at an overvalued level on a historical basis. But valuations were still relatively high on a historical basis in 2002. They got slightly undervalued in 2009, but not deeply.
On a historical basis, what's interesting is that if you look at measures of valuation that correct for the level of profit margins, you actually get about a 90% correlation with subsequent 10 year returns. That relationship has held up even over the past several decades. It has held up even over the past 5 years where the expected return that you would have forecasted based on time-tested valuations turned out to be pretty close to what you would have forecasted 10 years earlier.
Right now, like I say, we are looking at stocks that have been pressed to long-term expected returns that are really dismal. But more important than that, in every market cycle that we've seen with the mild exception of 2002, we've seen stocks price revert back to normal rates of return. In order to get to that point from here, we would have to have equities drop by about half.
This is one of the highest-quality and deepest-diving podcasts we've recorded in the 3-year history of our series. Part 1 is publicly available below. Part 2 can be accessed here (enrollment required).
Click the play button below to listen to Part 1 of Chris' interview with John Hussman (26m:29s):
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YES.
That is what I've been saying since May 2013
And you've been dead wrong on that call since then (like most here).
Eventually, I suppose this bitch is headed way down. But when?
Whenever congress decides.
The longer the decision, the further the bottom
Economy is worsening faster now.
Congess will have to do something as they did in 2008 when they ordered Lehman dead and ordered the trigger of the wipeout
Congress won't decide this. At some point we'll pass a threshold and confidence will be lost globally, and congress will panic but it won't fix anything.
The problem is, and I think bears need to strongly address this, indexes suffer from selection bias.
As such, a market technician who simply calls "its overvalued and SPX: 666 for 2018 will look like an idiot, without providing a breakdown of which sectors he feels are overvalued, and the reason. Like, we see biotech back at 28x forward. Banks are around 14 to 10, PE is down near 10, Pipes & Utes are at 28, Oil is at 7x, Tech is way out at 29 (give or take)...... so to say "the market" is overvalued will without question give a reenforcement bias to Bears, but it's starting to ring a bit hollow, and boring, since we have yet to see much of the deep legwork hit the tape pre-2008 which led to a concensus change in bulls & generalist fund managers.
If you say the market is overvalued, because oil demand is telling a stronger picture than China/EU export numbers, then it behooves you, the ultrabear to get ahead of the curve and back up your technican savvy outlook with forward looking reasoning as to where you see cracks emerging, not where they happened, ie: dont tell us all now AFTER China cut their Copper and oil demand, then started buying again cheaper, you knew this would happen, 4 weeks after it did.
We all know structurally this is a fugazzi rally, but fail to see what will lead to a collapse in Utilities & bonds, which will move capital back to more growth (and job creating ) sectors of the economy. Ditto for biosci and tech which are currently bootstrapping valuations via M&A or share games vs. making the next big thing. Occasionally guys do come up with something cool, like a cure for Breast Cancer or Crohns', but asset valuations on a whole are pretty out there, often pricing in clinical III when the company is just a theorycraft.
Note, we had a full depression, restructuring and recovery in chips:flash & memory device makers, and yet the celeberity bears missed this, despite it happening in 2009-2011. We also had a full-on route in the chemicals sector and are just entering the activist/restructuring phase in the Agricom & Chemicals sectors. So where were the bears with their index calls to identify these rotations ? If every bear was predicting a equity crash, what is their market call on the bond bull ? Or inflation for that matter.
I suspect this is why guys like Taleb, Hussman and Shiff are falling out of favor. It's very easy to call for a technician top, but none of these guys really have a clue about how to reconcile their views with the bottom up sector-by-sector calls. Ironically, I think this is also why many a macro manager is massively underwater since macro policy is decoupling with micro economic growth that, like 1970, is starting to become immune to wild swings in market expectations (via the multiple effect) and is simply retrenching into high-grading capital at the expense of labor and earnings.
Fed will just follow the BoJ example and print for the next 40 years. It'll be fine, don't sweat it.
Listen giraffe.
Could you imagine? ZH would be selling girl scout cookies by then.
But you're right. I'll take a box of thin mints please.
Actually I found an error in his calculations.
It should read: "Overvalued by 100 percentage points."
Don't be so sloppy next time, Johnny boy.
Overvalued by 100 percent.
On a long enough timeline,...
WHEN is paper worth less than paper? After you use it to wipe your ass(ets).
If the various governments involved in all this had any competence at all, they'd realise that there's no escaping the inevitable. Then they'd do everything they could to collapse it as soon as possible, take the knocks and move on - since it's obvious by now that the longer the can is kicked, by ever more desperate and devious means, the worse the end result will be.
The stupid, greedy fuckers don't want to take the hit, though, so they keep on trying to prolong the end. The smarter ones have already quietly cashed out, by the look of it.
I am not wrong on the call as far as value.
But I can't read the minds of congress.
This is not a free market. Fundamentals and technicals are absolutely irrelevant.
This is a centrally commanded system, identical to Sony Playstation network
care to speficy the date the USA famous "so called free market" system stopped being free market? Serious question.
2006 when HFT was introduced
Listen EKM1.
He was baiting you. There has never been a "FREE" fucking market. Ever. Trading is a fucking game, the game is rigged, always has been. Sometimes you're the bug, sometimes the windshield.
That TeeVee fuck Cramer has been the windshield more often than not. He get's it. He should "GO" first when the time comes. Ex-Goldmanite. We'll peal his skin off and cauterize with acetone, then auction Cramer skin jacket to the lowest bidder. Yes, sure he'll pass out from the pain but we will quickly revive him with smelling salts and a tazer.
Year 2006 is the official death year, the year when it could actually be instantly controlled.
Listen Bangalore... That was pretty good!
This has always been a rather manipulated market. Does the term "Greenspan put " means someting to you". But for me the real manipulation started in 2003 when the FED lowered its real interest rate to minus 2%. Since then it got worst a lot with other central banks chiming in. Of course behind the central banks are politicians.
"care to speficy the date the USA famous "so called free market" system stopped being free market? Serious question."
December 23, 1913.
When we all decide it's time to go all in on the next big dip
People like Adam who claim to know actually know less than you do. They're just trying to get money out of people.
my roomate's sister makes $80 hourly on the internet . She has been fired from work for 6 months but last month her paycheck was $14750 just working on the internet for a few hours. check it out... www.yelptrade.com
I made zero dollars drinking beer for the last 2 hours and still consider that a better return than buying into your stupid fucking scam.
I make $100 hourly by nailing your sister.
Does she have a hot sister?
I would gladly pay her $100/hr for her 'services'.....and I will pay her $10 because that is more than enough time than I'll need.....
when I was 16 many moons ago, (the 1960's) the store manager where I worked asked if I wanted to make some nice money on the side. I was a money runner for the mob. I picked up money and delivered it faithfully. Made a couple of hundred for a few hours work. paid for college.
How can a market be overvalued by 100%. Does that bring it back to zero?
We are kaput anyway, Just want to hang around long enough to see how this works out.
It's double what it should be, so cut it in half. I know, math sucks.
Deflation. But first, inflation!
You got it backwards, T-Replacement.
Might we have had the threat of deflation followed by an attempt at re-inflation? (Like Greenspan said recently QE has resulted in "spectacular asset reflation). Now might we be seeing the beginnigs of real deflation? If so then what can we expect to see from the CB's? (Hyperinflation)
If ever I have seen a time in my life as to what to invest in it is now. Everything deflating, (including housing), except for equities/Bonds. WTF? Any advice from any of you ZHs is greatly appreciated.
health care stocks. hum, uhn, ect.
And John Hussman has been saying it for years. As a result his fund has only been top quartile once in a decade and in the top half only twice. If I look at bloomberg ranking where high numbers are good, we see 1mth (4), 1 year (2), 3 year (4) and 5 year (6). That is the bottom 6 percentile as the best stat over 5 years. The last 9 calendar years go 3,6,68, 5, 18, 88, 43,4,39,27. Basically the guy had a relatively good 2008 (he only lost 9%) but has been dogmatically underperfroming for you ever since. Total return on 5 years, -24% and on 10 years some good divireinvested list the 39% loss on price to -12% total return (all according to Bloomberg). Give the guy his due, he is a great salesman to keep almost $1bn with those sort of stats.
Hussman
a) there are plenty of people who have done worse than -12% total return over that time span
b) be sure to juxtapose his figures with most funds after the impending crash (and no, it won't be long now)
That is what I've been saying since May 2013
saying what, that 9 zero = trillions ?......
/facepalm
and the markets will not stop and the manipulation of the PM markets continue eventhough there are no metals in the markets to buy!!! long live paper salvation
I agree. More than 100% overvalued. Forward prospects do not exist. Nothing looks good. Even another QE is an elixir whose diminishing returns have been unmasked. Best case, Yellen will be Abe and we will be Japan.
A 100% overvaluation means that it is worth absolutely nothing.
And I also agree that it is worse than that because that which some may believe to be an assets are in fact LIABILITIES.
How much of that Stock Market valuation is created from DEBT? (ALL OF IT.)
What is the outstanding liability if the Stock Market realized the true intrinsic value of ZERO?
Theyre not liabilities when the US taxpayer will just bail you out
Many of the sheep whom invest ARE THE TAXPAYERS.
So you bail yourself out like that proverbial Tail Eating Snake, eh?
LMAO.
In this case its more like the proverbial Deep Throating Snake
Missed your sarcasm before.
Not now.
LMAOAM
No, I think this means that the market is valued at 200% of what it's actually worth. If it goes down to half of where it is now, it would be at 100%, in his opinion.
He means exactly what he says. These people are not stupid.
Your 50% of current valuation is what you believe.
Deleted duplicate.
its all in the wording.... I am sure that 100% overvalued = a 50% correction... said another way, if you double your you money you have made 100% return, if you go back to start you have lost 50% off the double
And you invest without understanding Grade School Percentages?
Okay. They always need sheep to fleece.
Now I am getting even a better laugh...At least seven people cannot understand rudimentary arithmetic.
An item cost X Dollars. If I mark an item up 100% and then I cut its price by 50% then what is the item's price?
It is X Dollars.
Here is the arithmetic...
X + X = 2X
50% of 2X is (.5)(2X) = X
If I mark down an item by 100% then the item has Zero for a price.
X - X = 0
I do not believe that I just had to regress to teaching Grade School Arithmetic on a Financial Website.
If you are investing and do not understand percentages then you are just prime to be frauded.
My God. There is no fucking hope. We are fucking doomed.
Marking an item down by 100% is not the same thing as saying it's 100% overvalued.
100% overvalued means if it's current price is X then it's fairly valued price is X/2. If it's 200% overvalued it's fair price is X/3, etc.
I understand your reasoning.
But it is fallacious.
If something is overvalued by 100% then it needs a reevaluation. A devaluation by 100% brings it to parity.
For instance if the Market were overvalued by 70% then it would need a 70% reduction to bring it to parity...
The equation is as follows...
{(Current Market Value - 0.7Current Market Value)/Current Market Value}(100)
= 30%
which means that the Market is worth 30% of its current value.
Likewise if the Market is overvalued by 100% the equation is as follows...
{(Current Market Value - 1.0Current Market Value)/Current Market Value}(100)
= 0%
which means that the Market is worth 0% of its current value.
And as I pointed out I do agree that it is worse than that because much of the current valuation of the Market is backed up by debt and leverage.
The people whom have borrowed to purchase shares, if and when the Market declines to its true intrinsic value of ZERO, would still owe that debt.
If something is overvalued by 100% then a devaluation by 50% brings it to parity.
If I give someone twenty cents for a dime, I overvalued the dime by 100% (2x). What is 50% of twenty cents? A dime.
When you overvalue something and then desire to bring back parity that is correct.
However if it is currently overvalued and you wish to bring it back to parity then I am correct.
Let suppose that the current valuation of that dime is not worth a dime but it is actually worth a Nickel.
Again my equation...
{(Current Valuation - 0.5 Current Valuation/Current valuation)}(100) = 50%
To bring the Current Valuation to parity I'd have to give you 50% and thus a Nickel for your dime.
(Hey. I like that trade :-) )
Seriously this equation is published in every Sixth Grade Math Text in the country.
Hell I ought to know. I have taught it.
Thanks. I might need this, to study this. I was a poor student as a kid... although I have strong background as an adult, I need still need orientation at this point.
He said overvalued by 100%. Meaning, if a stock's real value is $1, its current propped-up price is $2 (100% overvalued). Due for a 50% correction down to real value of $1.
lmaol
2x-x =x and 2x/x =1 and 1 =100%
must be all the retail markup up/ markdown math- 50% markdown is a 100 % markup
Your sarcasm is unwarranted and your analysis of a simple percent calculation betrays your lack of understanding. Let me help. An overvaluation of 100% does NOT mean the original value is zero. It means the original value was increased by that same measure. 100% of value (x) = (x). Therefore the overstated valuation is (x) + (x), or 2(x). It's not zero. And thus, a correction of that 100% overvaluation takes said value back to theoretic value (x). Hope this helps.
Tall Tom answered a math question correctly a while back so I think it was a reading comprehension error. Here's the equation as I see it:
.
F = fair price
F*k = current price
Overvaluation % = 100*(F*k-F)/F = 100*(k-1)
That is not the correct Equation...but close.
The Divisor is F*k and not F.
Then it is f - F*k for the numerator.
And k- 1 is unnecessary
I tried to keep it simple but failed.
Read my explanation above please.
This conversation reminds me of this...
Okay so 3 friends go to a hotel. The room is $30 for the night. They each pay $10 and go and chill in their room. The hotel later realizes that they have made a mistake and the room was only $25 for the night. A bellboy is sent up to the room to return $5. He figures, since you can't split $5 between 3 people, he will take $2 and make it easier. So each friend gets $1 dollar back (equalling $3) and the bellboy keeps his $2. Now, instead of paying $10 each they pay $9 each. If 9 x 3 = 27 and then + $2 the bellboy had = $29, where's the extra dollar?Hotel gets $25, bellboy gets $2 for a total of $27. 3 guests pay 3*9 or $27. There is no missing dollar.
.....
Back to the original question, regardless of what you or I think of the meaning of 100% overvalued, Hussman meant it's twice what it should be. If you read his other weekly essays that's clear. BTW, this week's article of his is more informative than this interview.
Good answer on the Hotel Room.
Did you read my explanation above? (I am sure that you did.).
But from what I understood Hussman to say is that the Market is bolstered up by debt.
It is a fraud and a sham.
Actually you know that there is no Market.
Do you have a link to this week's article?
I like to read rather than listen. Listening is non-participatory and I do not get as much out of that.
Math lesson in plain English ... this mother is going to tank one of these days.
No. This mother is already tanked out.
The people whom do not understand percentages are the idiots whom are keeping it aloft.
Now you may understand why the Market can remain irrational longer than you can stay solvent.
Amazing trolling, Tall Tom. Even ignoring the context of the article and the common sense interpretation that this implies things should drop 50% to be fair value, and insisting that the author actually believes that markets should reflect absolute zero value. Well done.
No. If you had bothered to LISTEN to the video the author does believe that the Stock Market is worthless.
The Stock Market is a fraud and a sham. It is bolstered by debt.
Chris Martenson is quite clear about that in his Crash Course.
Have you ever bothered to listen to the Crash Course?
No?
Look, if I own shares in a company, even if its up to its eyeballs in debt, someone is going to get 5 cents on the dollar on the sale of their machines when it liquidates. No disagreement that the stock market is a total sham. All I'm saying is that no one would claim its worth NOTHING, you can always get a few cents on the dollar in any liquidation, there are ALWAYS physical assets.
The value of any non performing contract is ZERO.
Physical assets? What are the Physical assets of Farcebook? How much are you going to get out of that?
LMAO.
Physical assets which do not produce are worse than worth nothing.
They are a LIABILITY. There are costs of storage.
What does Farcebook own?
How many other Shell corporations out there like that?
How much equipment is leased?
Your system is BANKRUPT.
Martenson exposes it so well.
So wait you're shifting now from trying to discredit Hussman because he believes, according to you, that the market is worth absolute zero, to trying to take his position that the market is indeed worth absolute zero? Nice.
You speak Truth. I can learn. Though I no longer invest.
Oh wait wait I get it, you think Hussman is godly, and he is delivering these prognostications from his divine pulpit, that the stock market is worth zero, in spite of every common sense interpretation disagreeing with that and instead understanding what he wrote to be a 50% decline. You are "reading between the lines", go get em tiger.
Again, excellent trolling. Big fan of your work.
How does it feel when the fraud is being exposed and control is slipping through your fingers?
It is like any fluid. The harder that you grasp at it the more fleeting it becomes.
How does it feel to lose control?
It is the apocalypse...the unveiling. Do you like the corruption, the fraud and the ugliness which has been sown?
You shall reap that which you have sown.
And I will be laughing my ass off while it happens.
Collapse baby collapse.
The financialist deserves the hellfire which awaits.
Their days are numbered as the writing is upon the wall.
The Day of Reckoning approaches rapidly. Are you prepared?
You need some more slack? Let me feed you some more rope.
Man, it feels terrible. Your rope is like a fluid, and the harder I grasp at it, the more fleeting it becomes.
It is not the fall that kills. It is that sudden stop at the end that tears your head away from your body as it crushes the vertibrae in your neck.
That rope does feel like fluid, and physically behaves as a fluid as it flows, until that terminal shock at the end.
I prefer to use the British Noose as it also crushes the larnyx.
Are you saying you kill people? I am alarmed by this violent turn in rhetoric. Perhaps you are a hitman-banker in disguise, acting as a subversive agent here to confuse our understanding of percentages and thereby destroy the market?
Listen to John Hussman in this video.
http://youtu.be/U00NTtAEMco?t=11m10s
My math is solid and so is my reasoning.
And yes the Bankster and Fraudster will be tried and executed post collapse. They have murdered millions.
Am I subversive? Yes.
To the financialist I am one of the most subversive people that they will ever come across. To the people whom practice fraud and dishonesty...I am their worst nightmare as I celebrate the Truth.
In fact my boss is a Jewish Carpenter.
I have not killed anyone. The Banksters have killed MILLIONS.
Tom, legally, when you declare bankruptcy or go into liquidation, your assets cannot stand at negative. You typically write off the lion's share of the debt, and then you figure out which creditors get to claim on any assets which remain. Often, due to the nature of bankruptcy, this is very little, because smart creditors take security over specific assets and "ring-fence" those from bankruptcy. But there are always some scant assets remaining. Now, you may only get half a cent per dollar, in a horrific scenario, when you are a shareholder of a firm that goes bankrupt. But you can not have negative value, unpayable debts are ultimately simply written off.
You cannot squeeze blood from a turnip.
After court costs and attorney's fees there are usually no assets left.
To those whom purchase the assets they are left with storage fees.
Furthermore some of the creditors whom got stiffed have BORROWED MONEY at ultralow Interest Rates in order to invest.
They are still liable to their creditors...regardless if they get one half cent on the dollar.
That is a Negative Value on anybody's spreadsheet.
Think of this like wrecking a BRAND NEW CAR, realizing a TOTAL LOSS, a car which you have financed.
You may have the vehicle underinsured. The insurance company pays the insured value. So you are still underwater and have to make the payments on a car which is destroyed and...the deductable.
That is a negative value on anybody's spreadsheet and a LIABILITY. Your responsibility does not vanish because of someone else's, or your own, misfortune.
"In short, an informed view of market history easily admits the likelihood that the S&P 500 will lose half of its value over the completion of the present cycle..."
http://www.hussman.net/wmc/wmc140818.htm
It will lose more than that. We are in the End Game. Hollowed out.
But thanks for the link.
Hussman: "the S&P 500 in our estimation is about double the level of valuation that would give investors a normal rate of return."
We know what he meant by 100% overvalued. He's not saying the markets are worthless. Maybe he dropped out before 6th grade.
He said something different here...
http://youtu.be/U00NTtAEMco?t=11m10s
My sarcasm is more than warranted.
I tried to keep it simple.
See my explanation above.
You cannot read a Sixth Grade Text???
LMAO.
Like I said, restating the clearly incorrect premise merely proves YOU haven't read 6th grade text. Please stick to things you may actually understand. I'm guessing masturbating.
Let's all face reality here....it's never going down. EVER!
S&P 666 true valuation in more ways than one.
John's presentation about mean reversion:
http://www.youtube.com/watch?v=wmUCjOjOeCo
It's rather interesting.
2/3 of the market gains was done overnight jumping the futures and squeezing short positions
the charts looks like Swiss cheese with all the open gaps
Value? There is no value, the Fed says what the value is. Until they are taken out of the equation, markerts will do what the Fed says. I gave up valuation long ago, the fucking thing is manipualted by oceans of fiat, and a Fed determined to push the "wealth effect" recovery for thetop 1%.
Were real valuation and price discovery to return. I say over valued by 200% + !
There is NO VALUE.
In fact it is a LIABILITY.
You have got it.
Almost correct, the FED says what the dollar denominated price is .... there fixed it for you
Yes. Low expected real returns is destruction of future spending ability (savers for retirement). To make up the difference -- if expected real returns have fallen -- one would need to save more out of current income to consume the same in the future. Since most Americans are under saved for retirement, this pulling forward of stock prices without increasing future expected returns (asset inflation), it is no surprise that there has been a very weak impact on spending. The only benefit to the pulling forward of these prices are existing holders of stocks/real estate who have excess savings (they can monetize). Since saving out of current income is "required" for retirement, low real returns vs historic norms does destroy future purchasing power and should be an adjustment to CPI -- it is an opportunity cost. If one makes the proper adjustment (assuming a required savings rate of 5%) core CPI is running over 2 percent.
Sorry miss yellen, qe did produce inflation but the wrong kind of inflation. The money was created and will either be destroyed thru asset price declines or a currency crisis.
Indeed, Since I have no idea when all the "rules" change yet again, (twisted, bent rules of distorted free market economics., or lack therof), I am forced to save roughly 75% of net income. I spend nothing unless its through Craigs List or heavily discounted "rummge sale" type items. We drive 2 over 10 yo vehicles. I have zero debt and have a net worth of about $800k (including home which is paid for). I save 75% of net income to try and attain a $1,000,000 net worth (excluding home), when reaching 65. (Im 47 now)
I have enough junk silver to call that great insurance. Beyond that I would love some advice from ZHs. I welcome all comments as I have a deep appreciation for all that attend this websight:-)
Thanks all.
Well, since you're silly enough to ask for advice on the internet, I'll be silly enough to give an opinion. Hoping others more knowledgeable will contribute.
We are looking to come into a small sum of money shortly - just 5 digits, not even high ones at that - and we are pretty poor. We are hoping to use this small sum to buy some land sometime in 2015.
We put a lot of thought into where to keep this small sum of money safe.
Into stocks? Only if they continue marching upward from their current ALL TIME HIGHS. (Frankly if that happens I'm even more worried about hyperinflation.) Pretty risky.
In the bank? Where it is subject to bail-ins and confiscation, capital controls, management fees, and of course devaluation. Pretty risky.
In the mattress? Then when we go to buy the land, we come in to the bank (or property agent) with a big suitcase full of cash, and since we are not hugely rich criminals, the bank boyz immediately hold it all for 'clearing' until we can prove the money is not from drugs. God knows how long that will take, and that's if we aren't relieved of it en route by the local constabulary. Pretty risky.
Can't put it in 'bubblicious' stocks, can't stick it the bank, can't put it in the mattress, not if we want to make a major purchase with it in the near future. (Or just to keep it safe thru the next couple of years.)
So, we thought about bullion. Subject to premiums, and paper devaluation -- but bullion's pretty low these days, and God willing, going lower this year. If it breaks below $1,000, then we won't hesitate to put the whole amount into bullion, but probably will do the same even if it doesn't. The benefits of this plan are a few:
1) Bullion's downside is pretty limited these days after all the price dives (thanks bankster boyz! keep it going down, please), but its upside potential is looking better and better; and that's without considering 'de-dollarization'.
2) We can either trade this particular bullion directly for the property, or change it into whatever fiat the property sellers want, since gold is easily exchangeable for any fiat.
3) With gov tracking bullion purchases, any gov spies will see that our bullion purchase went right back (eventually) into supporting the sagging property market - so gov's happy too, which reduces the risk of 'gold confiscation'.
Back when we first bought gold, it was a few hundred bucks an ounce, and silver was just a few dollars. No matter what the price did for years after that, our profit was 'locked in' because we bought low, and that bullion financed a lot of things we really couldn't have afforded had we saved in fiat. So then as now it comes to buying what was LOW. (This BTW was when I understood for myself why gold is the most reliable money.)
So... my crappy internet advice to you is, buy whatever is LOW, and has a good upside potential. For me, that's bullion. And it's not so much for insurance, as saving for a particular purchase that we're not under the gun to buy, but will buy when the price is right. Yeah, I'm foreseeing a property price dive in 2015, and a bullion price rise then too. But if those things don't happen, then we can afford to wait awhile with the bullion. I don't think investments should be rushed.
TL/DR: Buy whatever you see that is LOW (and preferably ignored), and has a good upside potential. To me, that's bullion, but the buy-low (sell-high) principle is never more important than today I think. The only thing that would make me happier at this time, is to see gold well below $1,000 before we get this little sum. Then my comfort would be complete, greedy as I am.
LMAO! You might want to re-read this
http://www.zerohedge.com/help/disclaimer
Silver is a great speculation instrument for a Hyperinflationary Inferno. It is not an investment.
However Silver performs terribly in Deflationary Meltdowns. In 1933 it was so bad that you could trade 0.2 Ounces of Silver (in the US Silver Quarter Dollar) for an ounce of .999 Fine Silver. That is correct. In 1933, in the depths of the Great Depression, a Deflationary Meltdown, Silver was trading for $0.25/ounce troy.
It got so bad that the US Government stepped in and started buying up Silver to support the market.
The outcome for us has not yet crystalized. Our current Economic Depression can manifest as a Deflationary Meltdown or a Hyperinflationary Inferno. Currently deflation seems to be winning out yet deflations always precede hyperinflations.
(It seems as if Japan has chosen the Hyperinflationary Sepuku in a last ditch means of escaping a 30 year old Deflationary Depression.)
You may want to diversify a bit and own some Gold...offshore as well as domestic holdings, concerning your Precious Metal portfolio.
While domestic ownership of Gold Bullion was illegalized in 1933, offshore holdings of Gold were not illegalized until 1959...Nineteen Fifty Nine...by the Executive Order of President Dwight Eisenhower.
(And you thought that Republicants were on your side? LMAO. Just as bad as them Democraps.)
Then of course Nixon DEFAULTED and repudiated the Bretton Woods Agreement and terminated Gold Backing of the US Dollar altogether. (But then he did do us a favor and legalized Gold Ownership. That law took affect on December 31, 1974. So he had ONE REDEEMING QUALITY. OKAY. You got me.)
(But I regress...Just wanted to demonstrate the RED TEam/BLUE TeAm BuLLsHiT.)
Anyway if you owned Gold offshore in 1933 then you stood to realize a 75% overnight gain in 1933 with those holdings. Offshore holdings, thus, are strongly suggested.
Furthermore some Numismatic Coins and all Gold Jewelry were not subject to any confiscation in 1933. Therefore a substantial amount of your Gold needs to be held as Karat Gold Jewelry.
You can pick this up at Pawn Shops for a small premium over Spot in quantity. They will be thrilled to sell this to you as they get paid back of Spot at the refineries.
Get some Gold.
That is what I would do if I were in your shoes which I am not.
BTW...I am not a Professional Financial Advisor and I am not responsible for your gains or losses. Consider the source.
I think you are confusing price with value.
idiots chase price, investors seek value. Idiots are buying, investors are selling and buying tangibles.
Most stocks are purchased because the the buyers have to as a function of the gerbil wheel that they are on. Corp. and institutionals are trapped. When the wheel stops there will be no winners at the table, the winners will be watching from the bubble camera above the poker table.
A fool knows the price of most everything and does not understand the value thereof.
The wise understand value thereof and are not so concerned about the price.
Value is the measure of the utility of anything. Value and utility are generally synonyms.
People seem to forget what happened in the late 90's. This shit could go on for a very long time. So long as companies are using every penny of profits to buy back their own stock and there is implicit central bank support under this market, we could just keep going higher and higher. Betting on a collapse is proving to be very expensive for those trying to do so.
Not so expensive, really- I can afford to lose on the short side longer than profits will continue to exist for most of these companies- once liquidity (free Fed money) gets sucked out of the system, the profits will dry up, and all this stock that got back at the highs will be re-issued at ever-lower prices in a glorious race to the exit.
What "went on in the late 90's" has already gone on longer in this cycle.
Who can resist a headline like "Stocks are overvalued by 100%"?
If that's true, then perhaps gold at $1200/oz is 100% overvalued (doubt it). Perhaps silver at $16/oz is 100% overvalued (doubt it).
When the chips are down, the Fed will PRINT. If that means hyperinflation, so be it. They will NEVER allow deflation. If you think buying bonds and MBS via QE4 was crazy, wait until they start buying stock in companies directly a la Japan. Hell, they could buy REITS, they could directly buy real estate, Accounts Receivable directly off Fotune 500 companies' balance sheets. There's no end to what you can buy when money can be created directly, instantly and in whatever amount is needed.
The nominal terms are, however, near-meaningless. The one thing you can depend on is that most of the US (and the rest of the developed world) will keep getting poorer in real terms as long as financialization is the path into which all energies are focussed and not into productive ends.
"They will NEVER allow deflation."
Richy Rich and his buddies are FOFR's (friends of Federal Reserve) and while their wealth is sitting in financial assets, those assets will not be allowed to fall - even if it means destruction of the economy. And the average investor, will help them to get out of their poisitions by buying high (expecting it to go higher) thus becoming the bag holder.
When the wealth of Richy Rich and the political class ("It's a big club and you're not in it" - G. Carlin) has been converted to STUFF at a good price (gasoline, propane, water, food, islands, defensible/inaccessable land, paintings, sculpture, jewelry, antiques, pm's etc), only THEN a sudden deflation will occur as bag holders begin to realize what is happening. The very wealthy are preparing. They're not stupid, they just pretend to be.
When the hyperinflation/black markets/controls that will follow come, you'll wish that YOU had bought STUFF instead of Richy's financial assets!
When the value of your $100k home levitates to $1M, and your weekly income is $50k, and you are paying 89% in income taxes, you should be a little suspiscious that something is wrong.
Wouldn't one presume that even the most obtuse pothead would lose confidence in the fiat when has to to pay $1,000k for a dime bag of pot.
Starve The Beast.
I know for a FACT (from reliable sources) that Silver is not 100% overvalued. It is only 60% overvalued....because you can dig this stuff out of the ground for $5/oz.
Thats cool and all but Mr. Hussman has failed to account for one key factor; this time is different.
This is all great and everything but, you can't talk down a market. Yes, it's crazy, but it is what it is.
Way OT: A few thoughts from an old guy. I'm not a "bitcoin" person and know nothing much about it except the value of bitcoins can vary in relation to dollars. Is it backed by anything solid like gold or silver? If not, why would anyone want virtual bitcoins (virtual fiat while at least FRNs are paper good for something) when you can buy gold or silver with dollars? Someone bought silver at ~$40 a couple years back and now that it is ~$16. Did they lose more than half their money?
I spent my money differently. I am a well armed trades person prepper and have a well with a hand and solar pump, food, a complete machine wood shop but I also have all the hand tools required to make wood products. I try to be a community person.
I understand a Carrington Event and/or "One Second After". For the last several years I keep hearing collapse will happen soon, peak oil, financial collapse, ebola, ISIS, chemtrails, whatever. I only wish I were younger to see how this all washes out. I guess I'll leave that to my grandsons and granddaughters and a couplle greatgrandkids to figure out.
You had me until chem trails.
Passengers on airliner told to close window shutters during daytime while chemtrails are turned on.
https://www.youtube.com/watch?v=f2G6TB2LyEs
I have seen them, I have seen them chemtrails begin (turn on) and turn off. In my area, there should be but a few flights to and from the major cities near me in Central California - Fresno to Bakersfield that I can see yet the sky is covered with up to 5 trails at one time.
I have better things to worry about than getting sprayed like an insect. I have watched the skies for 40 years and this is not common. I have seen planes spray crops and they are no farther than 100 feet above the ground when the chemicals are let loose, and they turned them on at the end of the field and turned them off at the end of the field.
You are dismissing a fact that has been proven and if you are too lazy to research it, the least you can do is STFU about it asshole.
Whaddaya talk, where d'ya get it?
What it is, is with ZIRP still going on, stuff is priced properly relative to ZIRP.
If and when ZIRP goes away we may need to reconsider equity valuations, yield curves, and all that old-fashioned stuff.
The fall will be so epic they cant let it happen
The fall will be so epic they cant let it happen
Huh???
The fall will be so epic that they can't stop it
FIFY
+1.
But then they can re-direct focus: war, pandemic, vortex(es), or aliens from outer planets.
On the last one, google "NASA Mars rover photographed high-pressure valve".
Oh, that's valve, not value. Hehehe.
I looked at this at this link...
http://www.examiner.com/article/mars-evidence-of-intelligent-design-earth-valve-found-nasa-image-report
The article states.
If the image was scaled then I'd have more information to make an educated decision.
But we tend to anthropormorphize images.
For instance what was thought to be the Face on Mars turned out to be some shadows on a Butte. This was made clear with the Mars Global Surveyor Mission. The Pyramids also turned out to be mountains.
But that video raises some questions.
It is not unexpected that the Fed continues to shovel money through "backdoor" channels, the Fed is far from transparent. If the economy was healthy and balanced we would not be experiencing slow growth while massive amounts of money are being printed and poured into the system. The crux of our problem remains in the fact that both people and governments have lived beyond their means by taking on debt they cannot repay.
Over the last several decades we have created entitlement societies built on the back of the industrial revolution, technological advantages, capital accumulated from the colonial era, and the domination of global finances. Promises were made on the assumption that the advantages we enjoyed would continue in both Europe and the US. Ever greater prosperity and entitlements were to be sustained through debt financed consumption growth.
In that eerie fantasy world, debt fueled consumption was to be the catalyst to bring about evermore growth. Debt does matter and the following article delves deeper into why kicking the can down the road will ultimately fail to bring about growth and in the end destroy the system.
http://brucewilds.blogspot.com/2014/08/modern-monetary-theory-is-wrong-d...
It might soon become apparent the economic efficiency of credit is beginning to collapse and the additional money poured into the system coupled with lower rates can no longer drive the economy forward. When this happens we are at the end game.
At some point the return on loaning money is simply not worth the risk! Why do you want to loan money if most likely you will never be repaid or repaid with something that is totally worthless? When this happens the only safe place to store wealth will be in "tangible assets" and the only lenders will be those who print the money that nobody wants.
The collapse of credit can pose major problems such as what we saw when many sellers were forced to demand payment up front before shipping goods in 2008. More on this subject below.
http://brucewilds.blogspot.com/2014/06/the-economic-efficiency-of-credit-can.html
This market is "different", until it is not. It could stay "different" for a lot longer, and to a much higher price. Someday, it will not be "different" any more, and the reversion should be epic.
Hussman does great work (I hold positions in his funds), but he applies logic and rationality to an irrationally priced and traded market. It is always a matter of trying to call both the "what" and the "when". Not easy to do.
It can keep being overvalued to 300%. It doesn't matter with the Fed buying billions in stocks daily.
This market is totally controlled by the Federal Reserve.
it's not overvalued in Federal Reserve Notes - look at the German market 1919-1924
Holy close!
http://www.showrealhist.com
http://www.showrealhist.com/RD_RJShomes_PSav.html
100% overvalued
means
drop by 50%
The MAIN ENABLER of sizable asset price bubbles is keeping these real histories out of sight.
http://www.showrealhist.com
THE PUBLIC BE SUCKERED!!!!!
Who knows what the real PE of the S&P is.
http://www.multpl.com/shiller-pe/
Shiller's PE ratio many be too low due to massive stock buy-backs from ever-flowing cheap Federal Reserve money.
Very nice to have something good to listen when my eyes are tired from reading.
Mental retardation causes a lot of pain and hardship for a lot of families.
The only major problem I can see with that logical, rational analysis is... markets no longer exist, only manipulations.
YES!
http://www.showrealhist.com
a great post. This has succintly distilled the core issue.
i like Hussman, though sometimes he does think the tail wags the dog, for instance he blames the new accounting rules for most of the expansion in credit. which is like saying the repeal of glass-steagal caused 2008. there are always historical revisionists who do this by the way. making the assertion that earnings are not predictive is like saying having NO EARNINGS (1st tech bubble) is a problem. it isn't until it is. as long as Mr and Mrs Fed give free money to tulip bulb investors things are just fine
The repeal of Glass-Steagall was at least a proximate cause of the crisis though, no? I mean, there are always a multitude of "causes" that create the right environment for a crash, like the sort of financial alchemy behind derivatives and all these bizarre packaged exotic securities issues eliminating retail investor ability to evaluate what they're buying into, or the explosion in subprime lending (likely related to the creation of all kinds of obscure and opaque securities issuances), or the dilution of credit ratings over time (what is now an "AAA" would hardly have been "AAA" in the 70s or 80s, just look at default rates at each rating level from each rating agency over time --- they, just like Harvard and Yale, are giving A's now to what should be getting a B- or a C), and then a Black Swan event to actually make the crash happen.
Why do you say that? I'm asking, I'm curious. I would not say it was a proximate cause. It's hard to say what would have happened if Glass-Steagall had stayed in place (as it should have!) and the rest of the bad stuff happened. There probably would have been less threat to the banking system, the federally insured side would have been nearly untouched, but OTOH the investment banks outside of the FDIC would have been nuked - unless again Treasury and the Fed intervened, but we have to guess they would have.
So I just don't know.
I do wish they would reenact Glass-Steagall, and until they do, nothing really has changed since 2008.
I don't have the best answer for you but here's my attempt. I guess I view it as a proximate cause because it added more fuel to the fire (the fuel being deposits funnelled into risky investments). On the FDIC point, as far as I know, FDIC is horrificly undercapitalized, not that these things matter in this central banking economy, but in theory if the FDIC actually had to fulfill its obligations due to a major crisis driven bank run I'm skeptical that it could have, without more printing or other sort of scam solution.
I suppose you could say that the repeal of Glass-Steagall directly contributed to making the banks "too big to fail", by encouraging a flood of new, speculative investment that was not as easy to accomplish without the big pool of available depositors funds and in that sense would be a proximate cause. This, at a time when the economy was already somewhat "frothy" and likely the worst possible moment to do this, in terms of how it likely encouraged further speculation and reckless behavior. Perhaps without this pool of available funds, things would have come to an end sooner, rather than building the bubble up as badly as what we saw in 2008 (and probably now as well).
you get it, the market was taking off, and who oh who wants to be responsible for taking away the punchbowl, and everyone gets into the bull market mantra (sure those regs were important but now we have REAL economic growth, nothing wrong here, let out some rein and let this horse run) lets not be the guy who cashes in the chips too early! the psychology of mania markets is that it enoourages everyone to forget their sanity,a nd take off their clothes and run naked through the streets. it is remarkable that it should work the other way, but of course it doesn't
He is a statist shill whom celebrates the fraud called the Stock Market. He does not get it.
There has been no REAL GROWTH for a very long while.
GDP is a fictitious number. It is based upon fraud.
See John Williams at Shadowstats.
The abandonment of the Gold Standard, engineered by Paul Volcker, and implemented by Richard Nixon on August 15, 1971 is the direct cause of this.
Without that abandonment the Federal Reserve would be disciplined as to how much the money supply could be inflated.
I listened to the interview. Seems to me that he left out the FEDs software applications that were connected to the indexes at the end of 2011 and the siphoning off of the wealth of the US by banksters, and the buildup of DHS and surviellance systems, drones and the like, after 2008 when the bankers went and met with Bush to tell him if he didn't cough up 785 billion dollars the ATMs would not be working within as little as 12 hours.
Maybe my point of view is wrong and market analysis should be done like it was in the 20th century. But I don't think so. The markets have been taken over and according to Hussman a 50% drop in stock prices or a little more is the worst to expect. No bitchez the markets are going to stop dead and they won't come back until Mad Max gets the power back on. The banksters didn't move all the money into their hands and build up a military against the U.S. Citizens for nothing. Show time is right around the corner M'Fers.
have admired Mr. H's work for a long time. Used to call him from time to time way back. His work is exemplary. Problem
is he, and many other bears including me, grossly underestimated the G'span put. In fairness, how do you measure animal spirits? That
and CB printing, dark pools, shadow banking, algo's etc. etc., and the impact of 1.4B Chinese, 1.2B Indians...tough to
measure I'd say, let alone prognosticate. His record proves it.
I have been coming here for years, the story is always appear negative. That is how this site makes money, appealing to those of us who know things aren't quite right. It would be nice to hear Zero Hedge come out with something they see as positive for a change, after all, it can't be all bad. You can't take the articles too seriously otherwise you would be pointing a gun to your skull. I look at the comments, sometimes I learn, sometimes I am disgusted and sometimes someone has me laughing.
The stories appear negative because they are contradictory in nature to the statist-driven propaganda elsewhere. What do you expect when the financial system is rigged, the political system is rigged, and your natural laws are not protected?
To me articles like this ARE positive because it shows that we can still discuss the manipulation somewhat freely, although TPTB are moving to try and take more control of the internet.
Therein lies the rub and one of the strategies of the status quo. In order to fix something, one has to understand the thing that needs to be fixed and then develop a consensus on the action plan.
Those in power simply create a false reality through their lies and the lies of the complicit cronies such as the media so that they never, ever under any circumstances admit the truth. If they do not admit the truth then they never have to relinquish power.
Yes, ZH voices a second side to the dialectic that keeps us divided (those who serve the power and those who do not know of its existence). There really is no point to it, and yet for those seeking truth it is a gateway that provides one teensy tiny piece of insight... but by no means is it all. ZH does not scratch the surface of what is behind the dialectic. It only takes one side.
What gets me is: IF THE MARKET(s) ARE BEING ARTIFICIALLY INFLATED/MANIPULATED WITHOUT RESPECT FOR FREE MARKET DYNAMICS SO THAT CERTAIN PEOPLE OR A CLASS OF PEOPLE GAIN A LOT OF MONEY ISN'T THAT THE DEFINITION OF FRAUD and theft from those who rightly determine what the value would be in a free market system and invest accordingly.
It is theft, pure and simply and should be prosecuted and any profits made should be disgorged and those who were cheated should be reimbursed with all due compensation.
The law and regulators seem to PRETEND that the system is a free market so that they do not have to admit they allow outright theft and fraud. Well Greenspan admitted it.
... unfortunately stock market fraud and theft is one of our lesser problems.
@ cherry picker
Have you not read the stories over the last several months on banker suicides?
They've been fairly positive don't you think?
And as I mentioned, some comments make me laugh. I was laughing out loud when I read this one :)
The market is overvalued by 100%? OH NO!!
http://www.safehaven.com/article/35742/the-financial-repression-authority-with-chris-martenson
Dr. Chris Martenson Talks FINANCIAL REPRESSION in clear and simple language that we can all follow. A professional educator, he makes the complex easy to grasp. Elements of Financial Repression require this skill to make clear the stealth game governments are taking against its citizens in the name of preserving the financial stability of the state.
Financial Repression
"When governments get into too much debt there are only so many ways to get themselves out from under the debt." There is:
1. Austerity,
2. Default on the Debt or
3. Financial Repression
In reality, the third is the only politically viable solution. Financial Repression " the cornerstone involves taking a little from everybody and giving it to a couple of favored parties". To do this involves three basic elements:
1. Negative Real Interest Rates,
2. Ring Fencing via Regulatory Controls,
3. Elimination of warning signals such as gold appreciation.
Japan as an Example
Let's consider Japan as an example. The Yen is down 33% over the last year as a stated policy direction of the government's Financial Repression implementation. As a direct consequence, imports are higher therefore making consumption items like energy more expensive for the average person in Japan.
Real wages and savings for the middle class in Japan are falling. However, if you are a corporation like Toyota it is better for business. Chris argues that Financial Repression is nothing more than a transfer from the people to companies such as Toyota . The government effectively believes it knows better through central control and planning where the public's money will be most effectively utilized.
Central planning never worked in Russia and after more than 20 years the proof can once again be confirmed in Japan. This is the stealth game being played against the public, not only in Japan but by countries practicing policies of Financial Repression around the world.
The Coming Crisis
True wealth NEVER gets destroyed, it only gets transferred!"
Chris points out that wealth is never destroyed. but rather it is the claims on wealth which are destroyed during a crisis. "A profound currency accident is coming" according to Chris where he "would not be surprised to see the Yen be completely obliterated just like the the Zimbabwe dollar." His strong recommendations are:
1. Understand the problem,
2. To importantly, take action,
3. Be in Productive Assets,
4. Make sure your money is managed by those who understand the new reality and today's true risks.
Wealth can no longer be stored in paper currency or "paper" claims in a Fiat Currency System.
Price and Value are separating and people forget that price is what you pay, but value is what you get. We soon will see an event where it will be perceived that great wealth is again destroyed. However, what investors MUST fully comprehend is that wealth is not destroyed but rather only transferred.
True wealth is the land, the property, plant & equipment, productive enterprises, raw resources and the people who fashion it all. That is the real wealth. Everything else is nothing more than paper claims on the true wealth. These claims can be made worthless overnight but wealth never is.
http://www.youtube.com/watch?v=V0eSCECnqrw
John Hussman????????
You ever seen this guys funds? I mean he has LOST so much money over the past 6 years! I don't care how articulate he is...go be a college professor...not a mutual fund manager.
He is sitting there, looking at the world go by and saying....No...no!...thats not right...this is not right...this is how it has to be...in the meantime he led alot...over $1 billion worht of investors down a jackass path.
John, look at the world as it actually is, not how you think it should be, be practical, not insane. Be aware of the danger, don't constantly act on it!
Another "great" post on zero hedge. Next, zero hedge will post an interview with depression ward patients from the mental asylum to get a "true" picture of the world.
Oh, but "someday" John Hussman will be "right."
The bears got their asses handed to them.
The recovery might all be fake, but that doesn't stop the big boys from living large.
Meanwhile, the "stacker" has his $100 mosin nagant in his trailer out in the woods preparing for a shtf scenario that'll have a 99% chance of NOT happening.
Which investment route turned out better huh?
It's obvious to me the guys that bought stawks performed much better than the metal bugs.
In the short run the thieves do live high on the hog.
In the long run they do not do so well.
So you justify theft by living standards?
Now really I'd expect more from you than that.
But I am used to having spoiled expectations.
The question remains...
Are you able to handle spoiled expectations?
I guess you found out that when you begin a post with italics you can't get downvoted.
Nice.
I wish you guys would stop telling ZH contributor chicken littles that they are wrong.
The day that ZH and its followers decide to throw in the towel and go long is the day I go massively short.
What better barometer is out there that has been so consistently wrong.
Most of the time I check in here to see if ZH has 'gone green' so that I can dump everything, best contraindicator in the world and it's free!
This is the same thing that happened in late 1990's and mid 2000's. Mark these words; the Hussman's of the world were right the last 2 times, and will be right again. The fact that any dumbass can make money hand over fist in anything is a sign there is something wrong. I do agree with you th hough, you have to be practical and when it is obvious that everything is completely fucked up, you have to go with it.
For the 99%, you do not play now in rigged markets of steroid papers. Worry about physicals that you directly control that can be confiscated later. How much more basic than the preys need to get it.
If the US equity markets are overvalued by 100%, they have stayed overvalued for a long time and continued to increase in their overvaluation. In other words, the valuation mechanism that John Hussman uses isn't a reliable predictor of stock prices in the short and medium terms. Since few "investors" hold the same stock for decades, his valuation mechanism has no practical use.
Trying to predict what happens to manipulated markets using tools relevant only in markets where no player has the ability to manipulate them is silly.