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View Full Version : The next bust will be great!


JCA433
07-09-2014, 10:17 PM
I warn everyone here to be ready for a great bust that has the potential to be much worse than the financial crises in year 2008. The FED and other central bankers have been printing lots of money and holding interest rates far too low for far too long. This has enabled Wall Street to bundle covenant light junk bonds in structured investment vehicles and then sell them off to investors. They did the same thing with mortgages before the financial crises. When interest rates rise or inflation gets going, these asset bubbles will burst and crash the stock market again. Every dollar the FED prints is a liability. It is NOT free money!


The global credit bubble is over 100 trillion dollars with global GDP only 55 trillion. That is a HUGE bubble that is unprecedented in size and scope. This bubble will certainly burst at some point and the fallout will be tremendous. Get you financial house in order NOW!

The stock market is far from cheap contrary to what you may have heard on CNBC or elsewhere. Valuation metrics which have over 90 percent correlation with future returns are flashing red now. My favorite is Price/Sales, probably the most reliable of all for two reasons: revenues are much less volatile than earnings or cash flow and it is very difficult for those corrupt corporate blue suit management to manipulate and falsify revenue like they can easily do with earnings. Right now Price/Sales is near 1.73 est which is almost two standard deviations above the median of 0.96. This level of valuation has only been exceeded in 14 quarters most of this occurring in 1998 to May 2001 and very briefly in 1929! Another great measure of valuation is market cap/GDP, Warren Buffet's favorite measure of valuation, which is 121.2% and about two standard deviations above the median! This peaked near 150% in March of 2000! Another is Tobin's Q ratio now about 1.15 compared to the median of 0.7. This is strong evidence of a stock market greatly over valued very near bubble valuations. The potential downside is HUGE! Let the buyer beware! It is dangerous to buy or even own stocks now. Punch drunk fund managers and Bots continue to bid up the stock market but it will end very badly.

2woodensticks
08-04-2014, 07:44 AM
and nothing will happen..