The Shiller PE comparison to 1929 is sobering. What strikes me is the concentraton risk with Magnificent 7 accounting for 36% of the index. When seven stocks drive half the gains, thats not a broad market rally but sectoral mania. The historical reversion to mean of 18.7 seems inevitible, though timing is always the tricky part. Tangible assts looking more attractive by the day.
Something to question is whether the market goes down by eg 30% or the Mag 7 go down by 70% and the rest by 6%. If you are worried about a bubble everywhere, that suggest one course of action; if you are worried about the second, then think about selling the Mag7 or selling the S&P and buying Eg RSP (equal weight not mkt cap). If everything gets beaten up, it won’t make much of a difference, but if the Mag7 suffer much more, as in my example, then RSP should be down approx 6%. This is oversimplistic because Margin debt ( or meeting margin calls), ETFs and index funds complicate the picture… Just wonder about tossing out the baby with the bath water…. Usual Caveat… not advice but perhaps something to think about.
Talk to a qualified Genesis Gold who understands what’s happening at a deeper level….get on board with Jim Rickards. His credentials are far too long to type. I dare say David Stockman is too, but I won’t assume.
Every credit bubble/financial mania ended in financial collapse and this one will too, of course. The difference this time is central banks already pushed short nominal rates to zero hence they cannot foment an even more extreme mania by pushing those rates to new lows again. The multi decade "avoid hangovers, stay drunk" recklessness is over. Now we should be prepared for a fiat currency destroying secular financial collapse.
Tangible assets offer refuge, particularly liquid tangibles (i.e. precious metals), for those who act in a timely fashion. Tragically someone, meaning most everyone, must now hold oceans of bad financial paper all the way down (possibly 90% in real terms); there is no net selling in a market. Many who worked hard and lived responsibly are going to be profoundly harmed through no fault of their own.
Great knowledge straight to the point and wisdom Thank you
The Shiller PE comparison to 1929 is sobering. What strikes me is the concentraton risk with Magnificent 7 accounting for 36% of the index. When seven stocks drive half the gains, thats not a broad market rally but sectoral mania. The historical reversion to mean of 18.7 seems inevitible, though timing is always the tricky part. Tangible assts looking more attractive by the day.
Something to question is whether the market goes down by eg 30% or the Mag 7 go down by 70% and the rest by 6%. If you are worried about a bubble everywhere, that suggest one course of action; if you are worried about the second, then think about selling the Mag7 or selling the S&P and buying Eg RSP (equal weight not mkt cap). If everything gets beaten up, it won’t make much of a difference, but if the Mag7 suffer much more, as in my example, then RSP should be down approx 6%. This is oversimplistic because Margin debt ( or meeting margin calls), ETFs and index funds complicate the picture… Just wonder about tossing out the baby with the bath water…. Usual Caveat… not advice but perhaps something to think about.
Where does one put their money? Are dividend stocks safe? Physical metals? Help!
Talk to a qualified Genesis Gold who understands what’s happening at a deeper level….get on board with Jim Rickards. His credentials are far too long to type. I dare say David Stockman is too, but I won’t assume.
Every credit bubble/financial mania ended in financial collapse and this one will too, of course. The difference this time is central banks already pushed short nominal rates to zero hence they cannot foment an even more extreme mania by pushing those rates to new lows again. The multi decade "avoid hangovers, stay drunk" recklessness is over. Now we should be prepared for a fiat currency destroying secular financial collapse.
Tangible assets offer refuge, particularly liquid tangibles (i.e. precious metals), for those who act in a timely fashion. Tragically someone, meaning most everyone, must now hold oceans of bad financial paper all the way down (possibly 90% in real terms); there is no net selling in a market. Many who worked hard and lived responsibly are going to be profoundly harmed through no fault of their own.