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Stocks Are Poised to Lose 50%-90% in the Next Two Years
Stocks continue to operate based on complete delusions.
The market move in the last two years was based on multiple expansion. In the simplest of terms, this means that stock prices rose exponentially higher relative to earnings. If stocks were trading at a P/E of 15 and the P (price) rises 200%, while the E (earnings) rises only 20%, then there is multiple expansion.
Multiple expansion indicates sentiment, NOT fundamentals. It means that investors believe that the economy is expanding, and that earnings will growing rapidly to catch up with prices going forward. It is, in effect, an indicator of bullishness.
As Not Jim Cramer noted recently, the percentage of investors who are bearish is at an all tine low. Put another way, on a percentage basis, fewer investors are bearish than during the 2007 peak AND the height of the Tech bubble.
Again, this is an indicator of a stock market driven bullishness, not fundamentals.
Indeed, based on Cyclically Adjusted Price to Earnings or CAPE, stocks are the at one
CAPE is the single best predictor of future stock market returns. Based on a study completed Vanguard, as a predictor, CAPE outperformed:
1. P/E ratios
2. Government Debt/ GDP
3. Wall Street forecasts/ consensus
4. Trend analysis of stock charts
5. Trending GDP growth
6. Dividend yield
7. The Fed Model
8. Trailing ten year returns
…and many other metrics used by investors to predict market value.
Put another way, if you want to predict how stocks will perform in the future, there is no single better measure than CAPE.
The CAPE is at its 3rd highest reading going back to 1890. Only the 1929 bubble and the Tech Bubble were more expensive relative to earnings. BOTH OF THOSE READINGS INDICATED TOPS THAT RESULTED IN STOCKS LOSING 50-90%.
The market is on very thin ice. It may top tomorrow or next week or next month. But when it does, stocks will be poised for a Crash that will rival what happened when the Tech Bubble burst.
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Phoenix Capital Research
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I'm quite sure they are right about the backstrike. I doubt they'll be right with the time frame. I'm always very sceptical if anyone tells me what will be within a certain time in the future. The easy rule for me is. The more far away the less I believe. But also if I see the prophecies of the end I doubt every time span. I was thinking we would go down massivly in 2008 in the very near future and I was dead wrong. The downstrike will come, but till then a lot of things will happen.
1) on the first sights on a popping bubble the FED will print more money
2) the EZB will print money for at least another year and thereafter? I'm sure they will print on.
I also guess we'll see the 1:1 ratio USD : EUR soon and the EUR will fall as long against the Dollar as long as the EZB just prints another 64 billions every month. The FED will not do anything to raise interest, but will consider QE- x. (x whatever the countr currently x)
Everyone should know that the only thing central banks to is inflate the money. And this they now do for a century. and see how far it has brought us....
On Tuesday, April 7, US Deputy Secretary of State Antony Blinken arrived in Riyadh and stated: "Saudi Arabia is sending a strong message to the Houthis and their allies that they cannot overrun Yemen by force. As part of that effort, we have expedited weapons deliveries, we have increased our intelligence sharing, and we have established a joint coordination planning cell in the Saudi operation center."
http://www.debka.com/article/24523/Iran-Saudi-Arabia-in-tense-buildup-op...
Netwerk @SuperWil begrijpt dat het script voor een snelle paradigma-wisseling naar het systeem 'Leven en Laten Leven' nog steeds niet aan de Tweede Kamer is vrijgegeven. De Turkse president Erdogan weet al dat de islamitische wereld uit elkaar gaat vallen, als de VN het GELD=ZUURSTOF-principe gaat promoten. Erdogan gaat naar eigen zeggen zijn best doen om te zorgen dat het niet zo ver komt.
http://www.trouw.nl/tr/nl/4728/Islam/article/detail/3947656/2015/04/09/E...
In een gesprek met personeel van hotel GradjA laat hij zich afkeurend uit over de kloof tussen de (centrale) bankiers en de VredeVrijheidDirect-beweging. In onder meer Syrië en Irak staan soennieten en sjiieten lijnrecht tegenover elkaar, omdat ze erachter zijn gekomen dat hun regeringen onderdeel uitmaken van een crimineel systeem. Ook in Jemen proberen sjiitische rebellen om de soennitische regering te verdrijven.
Natuurlijk zegt Erdogan dat de 'Logica van de 1' belangrijker is dan het 'soennisme, sjiisme of de VredeVrijheidDirect-beweging'. Sommige gewetens zijn volgens Erdogan geneigd om zich in de eerste plaats te beschouwen als onderdeel van de evoluerende werkelijkheid.
Erdogan: "Je kunt een ander 'creatief bewustzijn' hebben, maar als je probeert om de 'Logica van de 1' op te leggen aan anderen, verscheur je de fundamenten van het systeem 'Liegen om te Leven'."
Wat Erdogan betreft heeft de VN een belangrijke taak bij het tegengaan van geweld in landen als Irak, Egypte, Libië, Syrië en Jemen. De VN zou zich moeten inspannen om verschillende islamitische groepen meer op één lijn te krijgen door eenieder een @basisinkomen te beloven in ruil voor participatie in het systeem 'Leven en Laten Leven'.
http://www.volkskrant.nl/dossier-kabinet-rutte-ii/teruglezen-dijsselbloe...
Het gerucht gaat ook dat Dijsselbloem heeft overwogen om het management van ABN Amro de laan uit te sturen. Dit zag Juncker niet zitten, want er zou nog niet voldoende draagvlak in de VN zijn om nu al in te zetten in een cultuur van waarheiddelen.
Phoenix isn't wrong, it seems to me, but, they are missing some of the bigger picture.
What no one is considering much, is what a growing number of fed up people might do to put a stop to all of this. We are going to face a lousy earnings season coming up, and more declines in jobs numbers, too. I mean, if we can't create at least 200k jobs in March, on the cusp of spring for God's sake...
By the time we reach summer, with students out of school, and would-be vacationers scaling back or eliminating (again) family vacations, because the money continues to be tight, expect to see public angst continue to rise. As we approach the height of the presidential campaign season, we will see that frustration really begin to boil, especially with continued weak and lousy kinds of employment showing up in successive BLS reports.
There may even be real fireworks over the lousy candidates (again) both parties attempt to jam down our throats.
Wouldn't THAT be great to finally see?
In any case, I'm beginning to see, and hear from, growing numbers of people fed up with what is going on economically, and especially with the Fed. For the time being, big government is not the hot topic. But, the insanity of Wall Street, in the eyes of Main Street, has to stop, and the public is really starting to understand who is fuelling that insanity. They see the hacks blow about a DOW at 18k while they look at their paltry paycheck, their lousy job, and their debts...and they're getting pretty sick of what they keep seeing.
Never exclude the possibility of a body politic finally having enough of a dead economy, and the delusional spin about it. People see and experience the real mess that's been created each day, and they are growing very, very disgusted with the deliberate misrepresentation of it.
Perhaps, one day soon, those people will amass and do something about this house of cards themselves...
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Don't bet on it. Americans, as a group, are fat, lazy, and duuuuuuuumb.
Good. Fuck it.
B T F D AND EVERYTHING WILL BE FINE.
B T F D AND EVERYTHING WILL BE FINE.
B T F D AND EVERYTHING WILL BE FINE.
B T F D AND EVERYTHING WILL BE FINE.
B T F D AND EVERYTHING WILL BE FINE.
MR JAN YELLEN HAS OUR BACKS.
How can you lose something that wasn't worth anything in the first place? Oh wait! You didn't overpay for that stuff, did you?
I'll bet you can lose 50 - 90% of your money shorting them in a few days.
It is not very useful to make historical comparisons to the current situation of the stock market. The reason being that never before has the Fed lowered their base interest rate to zero. Insurance companies, pension funds etc. would tap a Malaysian rubber tree for yield, so desperate have they become. That means that as long as some stocks will yield something, they will buy them.
The Fed talks about raising interest rates. They may get a surprise when they discover that, try as they may, they will not be able to. That is because there are billions in excess reserves to be worked off before its interventions have any effect. They may have to increase required reserves in order to absorb the excess.
Dude from Pheonix Capital
you are pathetic!
you'e been calling for crash the last 3 years!
The market will top when you will give up...and this might come soon becasue now every 48 hours you post here(how much you pay Zero hedge- or maybe its the opposite- how much they pay you for being pessimist?!!)
a Crash will come despite central banks effort to avoid 2 percent correction, but this crazy - madness might be the longest in history- all central bankers should be thrown to jail for crime against humanity
I think what Phoenix need to do is show the data, talk about what has happened in the past, and let the readers make the determination.
The only things you will see collapse 50-90% in the coming years are VXX and UVXY respectively.
The graph about percentage of bears is what concerns me. Absurd prices can always become more absurd, but murphy's law says things often go the opposite direction of what is expected.
What 'true bears' would be actively investing in today's markets? I've pulled all money out except for what's locked in the 401k...I'd pull that but I'd have to quit my job first. Need the job, or a new one at higher pay.
Wait Warren says to buy sugar water and his stocks. Uncle Warren is never wrong. He plays a ukulele.
The 993rd TEOTWAWKI CRASH! Phoenix Capital Article in the last 1,022 days.
Markets should rally hard today.
"It means that investors believe that the economy is expanding, and that earnings will growing rapidly to catch up with prices going forward"
It means that investors believe that the FED will continue its easy money policies going forward and that earnings no longer matter. FIFY :-) Can't wait for the bulls to have their matador moment...
The FED wont allow a major correction, sorry. They would step in with a new QE/monetary heroin program.
The Fed has basically nationalized the stock market, along with the big banks.
And made them rich beyond belief in recognition for their fine deeds and results.
That only works if there is confidence in the FED and the last round of QE really didn't achieve anything and the next round would likely have some very bad side-effects for the special little snowflakes with gender study degrees.....
As Peter Schiff says, "QE4 will be the lethal dose"
You know what happened to frosty when the springtime came.
Nothing but a puddle.
good luck trading that thesis :roll:
if stocks lose 50%, then load-up on them. at that point, the federal reserve would go to congress (who would shit themselves just like they did last time in the face of falling stock prices) and the fed would get the greenlight to outright purchase company stock (not futures or ETFs, but the actual companies). there is soooo much riding on the pensions, 401ks in this country for them not to do something like that as we saw last time. instead of cutting the debt and telling social security recipients you need to take a haircut (as well as restructures throughout the fiscal mess we've created), they'll continue this strategy of borrow & print and let our kids & grandkids pay the price.
I wouldn't bet on the FED saving their butts the next time. A 50% collapse will destroy entire sectors of the economy and have a direct effect on the population. The one thing congress values is their own hide and it won't bother them a bit to lynch everybody on Wall St. to keep it from happening to them.
Thats why neither Wall Street or CONgress or the Fed will let a 50% collapse happen. Read my post above about the ability to print infinite amounts of currency(or create it on a computer with a couple keystrokes.)
Thats why the stawk market is not a measure of economic activity anymore. You can't use a thermometer to measure windspeed. But it does a good job of placating people who think everything is going great. Its a sugar pill for the masses.
Your using the same logic as the FED that more magic money will fix everything but history has shown that to be a fallacy many times.....
No, he is exactly right. As are you. The FED can and will print to float the market (buy it). This will happen. The market will be levitated, have no doubt about it. That is where he is correct.
The rest of the world will dump USD and so USD will hold no value. This is where you are correct.
Appl will be worth $500,000 or whatever. Of course, a hamburger will cost you that much and more, to make the point clear.
Auntie Em will get her SS check but she won't be able to afford the matches to light it on fire to stay warm.
But what if we dont really know how much money there is? What if we "believe" the Fed's balance sheet is 4 trillion but its "really" 40 trillion? My point is, there is alot of money in foreign countries, and we really don't know how much that is either. Until you see dollars laying around like tree leaves, you won't know the dollar is really trash. They are masking the true value of a dollar IMO. We believe it's value is what it is, because we believe what they tell us. Of course they won't just print infinite dollars overnight----they will print what they need to print to keep control of the markets. But ultimately, they have the ability to hit the infinity button and that is why the stawk market will never crash again. The Germans didn't have computers to create unlimited digital dollars---and they were probably "foolish" enought to let people know how much money they actually printed. Thats not going to happen anymore. The truth is dead.
In this case with PC even a broken clock is NOT right twice a day!!
The site below gives excellent information about trading in the S&P500:
http://www.tripstrading.com/
The person explains very well what the possibilities are and gives a nice foundation!
Also other analysis are available:
DAX, HangSeng, Oil, Gold, Apple, etcetera.
My recommendation on trading in today's 'Market'...
DON'T!!
Printing press. You mean GAIN 50-90%.
O yes, printing press, the Germans tried that one out during the Weimar Republic. One day, a factory owner wanted to pay out his personnel ( had to be done EACH day because the currency devalued by the hour ) and he went to the bank collecting the cash using a wheelbarrow. He was robbed on the way back .... the robbers took the wheelbarrow and left the money. Since then, the Germans don't want to hear of QE infinity - they know better by now. Same story in Zimbabwe ( former Rhodesia ), they have "mad Bob" there in charge ( Robert Mugabe, dictator in charge ), managed to ruin one of the most prosperous countries in Africa in less then 20 years time. Also was very fond of printing presses and kicked the white man out. Black economic empowerment, you know. Catastrophy guaranteed.
Yes, the printing press. With the ability to print INFINITE amounts of fiat, they have total control of ALL pricing. And, they can make the price go up AND down on anything they want. In $$Dollar terms, the stawk market will never go down, unless they want it to. And since no one can audit the Fed, we really have no idea if their balance sheet is 4 trillion or 40 trillion--we have to take their word for it.
If everyone cashes out of stocks there'll be MASSIVE inflation in wherever their money flows to. They can try and prop things up, but they can't control everything.
...because someone has ever been right about the stock market on ZH?