This page has been archived and commenting is disabled.
Stocks Are Sporting a REAL P/E of Over 30
Stocks eked out a new record high earlier this week on:
1) Extremely light volume courtesy of the holidays
2) The usual bogus economic data that overstates growth in the US
3) The usual end of the month/ end of the quarter performance gaming
We remain in a megaphone pattern. By the look of things, we’ve just failed to break about the upper trendline. We’ll now begin working our way lower.
If one were looking for more evidence that stocks are in a bubble, BlackRock released research suggesting that corporate earnings would be 86% lower if it weren’t for absurd accounting practices/ make believe.
In this scenario, stocks are sporting a real P/E of over 30. So much for all of the talk of stocks being cheap or undervalued. If you want to look at REAL earnings, or the REAL state of the economy, this bubble might actually be even more overvalued than the Tech Bubble.
It’s not hard to believe. If you consider that each successive economic recovery since the Tech Bubble has been weaker and weaker, there is no question that the market move post-2009 has been truly absurd.
The stage is set for another Crash.
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
You can pick up a FREE copy at:
http://www.phoenixcapitalmarketing.com/roundtwo.html
Best Regards
Phoenix Capital Research
- advertisements -
Graham has been calling for a Crash since 2009.
1600 seems like a great target for an EW P4 bottom to arise from this megaphone. Would be a great buying point with multiple things pointing towards it being a bottom.
financial ratios are extremely out of vogue right now.
central banks buy futures - market goes up
central banks don't buy futures - market goes down
I have a buy order waiting at DJIA 2600, which is a good value on price/sales. 18,000, not so much.
The dollar is following this higher therefore NOT a bubble.
There is no more worthless asset in the world than the Bucky. Good luck shorting that thing. Until that thing crumbles...can we get a correction here? Sure. But take a look at Federal Spending.
The post office alone is sixty billion and we don't even need it. They're not delivering food...nor are they picking it up.
"That'll be sixty billion." Bwhahahahahaha.
Somewhere out there is a ship or something too I imagine (or so I'm told.)
"Just monetize it."
The dollar is the oxygen our government breaths. They will crash everything before they crash to dollar, and the securities that represent their good name and reputation. They are making the holding of cash as painful as they can and the purchase of stocks as irresistible as they can. Is this by accident? We know this is the most manipulated economy in history and are supposed to believe that everything we see is an accident or unintentional effect? I don't think so. They are herding us in a direction, and generally being herded is not for our benefit, so I'm inclined to accept the pain of holding dollars and some PMs simply to be the contrarian. Maybe I'm wrong, but I always want to know 'why now'.
P has been supported by 0% financed stock buybacks.
Including the non-GAAP earnings E...the P/E is much higher than 141.
Short accordingly.
This smells like the 1999 to 2000 .COM crash, and underlying Energy commodities are crashing first.
Finance has supported the markets for the last 6 years.
Another bubble popping.
2014 to 2015 crash to normality.
If there is any market force left in nature, this is what should happen.
But maybe the fed will never stop intervening. They've gotten the proles to accept trillion dollar govt actions without so much as a whimper. Will the next move be Tens of trillions?
Shit, they've got the mechanisms now to dump trillions into the economy--without even publicizing it! What's to stop them?
I hope you're right. We need a big reset to get back to something rational. The new political economy will yeild nothing effective except purges, famine, and war. That's what history shows us anyway.
Da Boyz with the free money-Firepower are (in their words) "shooting fish (shorts) in a barrel" every overnight futures ramp, until they don't, whenever that is, these are known as Primary Dealer Bankster Parasites (Fed trading desks)
its the new singularity. mighty it is.
20,000 Ebola cases later…
DJIA
http://www.globaldeflationnews.com/dow-jones-industrial-averageelliott-w...
OIL
http://www.globaldeflationnews.com/oil-light-sweet-crudeelliott-wave-upd...
GOLD
http://www.globaldeflationnews.com/gold-elliott-wave-update-for-week-end...
10 YR UST
http://www.globaldeflationnews.com/10-year-u-s-treasury-index-yieldellio...
USD
http://www.globaldeflationnews.com/u-s-dollar-indexelliott-wave-update-f...
Well, there's a little problem with arithmetic here.
If with a fair accounting a company would just barely break even and make just one dollar in profit, and then due to accounting tricks instead they announce five dollars in profit, then they've inflated earnings by 500%!
But it doesn't really mean anything.
This problem is the worst in cases like are common now, when the real profits are tiny, so that tiny manipulations show a huge percentage difference.
This is roughly the case. In many companies they made a tiny profit $x, and so they did a tiny finagle, and then on top of that they bought back some shares with cheap loans, and now the per-share profit is $5x, except when they pay back the loans they will also have to sell the shares. So, where is the truth?
Truth is they believe shares will keep rising so future sales of them make the current borrowing cheaper ie ponzi. Probably true, until such a time as it isn't, but then it won't matter what they (shares) are worth one iota.
You buy some of your own shares, the remaining public shares go up. The Fed forgives your debt, then buys the treasury shares from you as well, and then tears them up too. You've tripled your worth and nobody is the wiser!
This is just fucking insanity!
I'm beginning to believe that a 'collapse' might actually be the exact opposite of what I expected. Rather than markets being driven to all-time highs followed by a crash, maybe they just keep going up as everything 'non-market' falls apart.
In this scenario, the state will eventually be a majority shareholder in most/all publicly traded (mal-invested) entities, which it will then take over to prevent collapse. The USG will become the owners as well as the customer base for large (failing) corporations. They'll be able to cook the books and make everything look rosy, keeping the shit show in motion, as these entities are run into the ground.
Meanwhile, Main St small businesses continue to fail and the costs of living continue their jagged ascent.
The USG is essentially doing this with the real estate, pensions and health care industries. Also with the MIC, transportation, and education.
There is no way to roll back govt intervention. The USG is the biggest consumer of dollars. What would happen if the USG stopped? What would happen if govt demand for/consumption of dollars dropped?
Is it rediculous to say it looks like an inflationary economy (the 'markets') and deflationary economy (local economies) are present simultaneously, using the same currency? Could this be how economic failure manifests itself? The rich get richer (becoming the new aristocracy) while the poor are driven into oblivion (becoming the new serfs). Everything in the middle disappears and the gulf between the two widens with ever-greater intervention.
Is this how the classes separated as the Roman Empire declined?
I believe they are ramping the stock market to suck up all the sideline money they can and are keeping bonds and gold cheap so they can acquire it cheaply with the ill gotten gains of the stock selling. The deflation that will result from a market collapse will benefit those with real assets greatly. People are being sucked in by greed for the easy money of "yield" that they just can't get anywhere else. Like they say, when its too good to be true it usually isn't. Every Ponzi is operated on the same basics. Ramp values with returns unavailable anywhere else, and then dump and run when the new money finally dries up. When the side line money stops coming in and QE is determined to have truly stopped, the bankers will have rotated out of their stock positions.
This is what I've been thinking, too. I got out of the 'market' a few months ago to wait for the next big plunge, or get a homestead, whichever presented first.
But real estate is stupid. Lots of unoccupied inventory that's 20-30% higher priced than peak market in 2006 (even 20 acre rural properties). And we all know that stocks are going crazy.
I agree with the Ponzi analogy with one exception--a typical ponzi scheme can't produce it's own currency. To make matters worse, the people are so brainwashed that they do not believe the govt is a ponzi, even if you white-board it out for them and show that govt and a ponzi are identical. They'll simply say 'a ponzi is illegal but the govt is legal'. OK, so govt is a 'legal ponzi'.
They dont get that it's not about the legality, but the integrity of the model. A ponzi model is doomed to fail, even with unlimited resources, because it doesn't produce anything.
Guess that will be the check on the system. The govt will keep feeding it with currency until the resources are consumed and the real hardship starts.
But this could mean that stocks never suffer a serious decline again. The govt will keep elevating them to ensure pension funds, real estate (and property taxes), and financial institutions don't fail. Govt will keep investing until it owns controlling shares of everything, then it'll bleed it dry.
Hope I'm wrong.
Yes - and since 2009 lots of people have been fighting the Fed - not at least due to websites such as this - and hastened their own financial demise. Put out the voodo thru the world wibe web and get the zombies to continue giving away everything they have to oligarks and government while waiting the doom that won´t arrive any time soon (except their own doom).
How´s that for social engineering?
The rich get richer (becoming the new aristocracy) while the poor are driven into oblivion (becoming the new serfs). Everything in the middle disappears and the gulf between the two widens with ever-greater intervention.
And, eureka, you have classic communism with only 2 classes - the wealthy ruling class, and everyone else.
Those that have managed to 'cross the divide' as members of the new royal court will see their wealth, salaries, and benefits increase with inflation (at the expense of anyone with resources). It's already happening with politicians and government employees. It'll include those in the corporate world that remain compliant and keep the game of scharades going.
I've seen this happen first-hand. People that support a perspective they KNOW is bullshit, but they play the game to keep their jobs.
The divide is widening. I've swallowed the red pill and won't be able to get back.
Thomas Jefferson supposedly said this;
Probably.
Those who "worked hard to get where they are today" and the children of those who "worked hard to get where they are today" are not going to simply let go of their ill-gotten gains without a fight.
As I have said before, I think it works like this:
If TPTB like you then they lend you money. If they don't like you then they make you pay it back.
Only weak ugly people have to make the maths add up. Those with beauty, charm and violence on their side just get what they want for some reason. The nuts and bolts are sorted out by someone else.
Lend money to idiots. The idiots bid prices unreasonably high. Everyone else either pays too much or does without. If a steak costs $1000, the idiot puts it on his credit card. Sure, the idiot might go broke next week but he'll be replaced by another idiot. Or the banks will just lend him more money in order to keep the lie alive. The banksters can get free money anyway, or they can dump the risk into someone's pension fund where it won't be noticed for 40 years. What are you going to do about it?
Exactly, then wages, (min) go up and any savings is lost due to inflation. Anything done is to remove wealth from the non Elite. Holding stock (dyodd) may be the only saving grace as long as there is value in your holdings. Equities that are used/needed . JMHO. I hope the FED is AUDITED then the truth may come out , even if it's silenced due to American National Security...............The Fed's experiment is a fail and those who profited should pay.....in weath and in JAIL TIME.
I don't think so. We could be exactly like Japan. It took 30 years for Jap savers to use up principal and saving rate just went negative, maybe this indeed fits your scenario though, without a revolution to stop it.
Americans don't have the Japanese's patience.
Nor do many Americans have resiliance. The US also has a huge population of completely brainwashed lower classes that are accustomed to a high standard of iving relative to their productivity.
Japan doesn't have some of these severe cultural deficiencies. The people won't fight each other for superficial reasons. They are also accustomed to living very simple lifestyles and will live this way if it's for the good of everyone else.
Ever read the disclaimer on I-Shares IWM? ! IT'S A legal FRAUD ALSO >
Each holdings' P/E is the latest closing price divided by
the latest 12 months' earnings per share. Negative earnings are excluded, extraordinary itemsare excluded, and P/E ratios over 60 are set to 60
How about a link to the Blackrock report?
What are your other two wishes?
https://www.blackrock.com/corporate/en-us/literature/whitepaper/bii-2015-investment-outlook-us.pdf
pg. 15 has the 86% content