This video quickly explains how it's highly possible that we could experience a Stock Market correction any time within the next few months. The scale of this is likely to match that of the 2011 crash, but there is scope that it could escalate into something as large as the 2008 sub prime mortgage (housing bubble) collapse.
This would force the UK into the commonly used 'triple dip recession'. Could this be the start of the huge Bond market bubble popping? Could be, but I don't think the currency/bond bubble will pop just yet. It's probably got another year or 2 before we see that happening...
Seeing the Cyprus fiasco has me worried, I have shifted out of blue chip into precious metals. Currently everything riding on SSRI and uranium miners, which have good upside potential. SSRI did crash in 2008 but recovered within 4 months... what is your opinion on this strategy? Thank you for the analysis. Very helpful especially the charts showing triple peak predictions etc.
ReplyDeleteGlad to have helped. I'm completely out of anything paper related. No stocks or shares, just physical Gold and Silver. Not ETF or allocated, real stuff in your hands. However the mining stocks are rather undervalued at the moment...I'm also shorting the market using Spread trading...
ReplyDeleteBrilliant. Such Truth.
ReplyDelete(Please mercilessly debunk and demolish the following thesis so I can sleep again.)
ReplyDeleteI've been waking up in the middle of the night screaming lately because I am convinced that we are capital "T" Toast; and I mean way beyond "substantial market correction" Toast; I mean total market meltdown/total credit freeze/total wheels-of-commerce-stop-turning/social chaos Toast!
Why? Because I believe that this is exactly what was averted in 2008/2009 only because the Fed came to the rescue with its "magic money" printing press. And any Ben Bernanke BS to the effect that the current record-breaking run-up of the stock market is supported by "sound growth fundamentals" or some such is, well, BS.
Please look at this "gorgeously revealing" graph:
http://blogs.stockcharts.com/chartwatchers/2012/09/quantitative-easing-and-the-sp-500-since-2008.html
Any reasonably bright 7th grader could read this graph and definitively discern the absolutely lock-step, direct correlation between the Fed's wildly irresponsible money-printing binge and the doubling in value of the market since 2009.
Ok, so the stock market is irrefutably the biggest speculative bubble in history of history; that's scary enough because if it doesn't burst it will also be the first speculative bubble in history not to; ain't gonna not happen.
Compound that danger with the "D" word and it's not just that a crash is inevitable ("crash" connoting a gravitational free-fall), the derivatives-fueled deleveraging time bomb will actually "propel" the market downward. http://www.switchyourbank.org/dangerous_derivatives
And if that compounding weren't enough, now you've got the "Big Four", JP Morgen Chase, Citibank, Bank of America and Goldman Sachs, holding 93% of US derivatives, that is an enormously frightening concentration of highly leveraged risk, and since most are hedging interest rate risk, what happens when the Fed finally raises rates as it eventually must to curb the inflation that its QE insanity is itself creating?
So a la 2008/2008 the stock market will crash, only this time around there will be no bugles-blaring Fed printing press galloping over the hill to the rescue, so credit will freeze up for good, commerce itself will seize up forever, and that means, gulp, no food production or deliveries to our local supermarkets or restaurants. And which point the idea of our being Toast will serve only to make our mouths water.
So please, Siam, where has my febrile mind gone wrong in its concoction of this apocalyptic scenario?
Hi Anonymous
ReplyDeleteThanks for the message. I cannot fault your message one bit. You're completely correct in your analysis and 99% of the population are completely oblivious to what's unfolding behind the curtain. Welcome to the 1%! Although I do think we're in for a 1929 style Great Depression but amplified greatly due to the global interconnectivity, I don't think it'll happen just yet. The stock market is due for a correction, but the big calamity will come when the bond/currency bubble pops. Remember, the bond market controls the world. It's vast. And even though this bubble is the biggest in human history, policy makers still have enough room for a bit more inflating. No one has a crystal ball but I'm guessing we've got 18-36 months before this all kicks off. And when it does, I just hope I've stored enough food for my family!
Hope this doesn't make your sleepless nights worse!
Hi Siam,
ReplyDeleteI believe your worries about a future crash are well founded on economic fundamentals. However, I am having trouble planning for it. I am a Spanish citizen who would like to eventually live in Spain. I am currently paid in dollars. I believe that when quantitive easing ends, interest rates will rise in the US and the US $$ will appreciate (along with a bond price collapse). In your opinion, will this simple mechanism be eclipsed by the collapse. Would it be smart to Short an etf that follows bonds? Or just short treasury bonds. I want to maximize my capital in Euros and I think the Euro is highly over priced (every one is printing money except Europe). I am basically considering betting on the following: 1) US Bond price drops, 2) Dollar appreciation versus the Euro when interest rates rise. I would really value your opinion. I do not know where to put my money to leverage a crash.