Guest piece from Tom Beck of Portfolio Wealth Global
The FIRST chart I’m about to show you, if you spend 15 minutes dissecting it, will lead you to understand that unless there’s a MAGIC FORMULA to continue making superior returns, we are NEAR a market event that is akin to being thrown off a raging bull.
Bank of America tracks 20 metrics, going back decades, which show whether or not stocks are expensive and overvalued.
At this point, only ONE of the twenty is not screaming BUBBLE, while a total of nineteen, or 95% of measures, are SHOUTING to beware.
Take a close look:
Some of these metrics go back to the 1950s, so we’re looking at valuations from the time of the gold standard, the cold war, the Vietnam War, the oil shock, the 1990s bubble, the 2000s real estate nightmare and anything in between; this is INSANITY!
What the bulls continue saying is that the jobs market is still healthy and that there’s no incentive to be invested in commodities, since tech is where the growth is.
While that may be true, the VALUATIONS have reached such disproportion that you’re simply asking for it, if you’re not managing risk by diversifying and trimming down positions.
It’s clear to see that there’s a PROBLEM with the bullish stance, then. After years of upward momentum in the employment numbers, we’re seeing the seeds of a hiring slowdown, which don’t signal the end, but forewarn that it is CLOSE BY.
Job openings plummeted by the biggest number since The Financial Crisis and just had their worst year since 2008.
The thing is that the RICH simply have an INCREDIBLE amount of wealth to deploy. As a whole, they don’t know what to do with it. The financial recovery, fueled by easy money policy, has allowed the wealthy to accumulate so much money that even after they have put all the money they’re willing to risk in the markets to work, they STILL have billions to send in the way of bond funds!
While the average person is gasping for air, trying to find comfort in the fact that he even has a steady job and is able to provide for his family, the wealthy are clueless as to how to make their excess funds work for them.
That disparity will reach a boiling point in a slowdown, where the rich continue to flock to vacation spots and go out to fancy dinners and buy exotic cars, while the majority are out on the street.
If you want to point the finger, send your complaints to 33 Liberty St, New York, NY 10045, United States, where the Federal Reserve is scheming away.
We are under the impression that the Federal Reserve will NOT be tightening their interest rate policy, nor shrinking their balance sheet in a material way EVER AGAIN!
The world’s financial system simply cannot withstand a recession; it has become dependent on central banks and never-ending credit. It is in a DANGEROUS position.
It reminds me of the movie Speed, with Keanu Reeves and Sandra Bullock, where the bus had to stay over 50 MPH for the bomb not to explode.
That’s the way things are right now. You can’t slow down the bus, but you also can’t unload the passengers, since this is not a Hollywood action flick; it’s real life.