Editor: Vladimir Bajic | Tactical Investor
Trending Stocks: Bill Gross Is Worried About Markets
The global economy is barely growing, yet U.S. stocks are soaring. Gross argues that this disconnect will end in tears for investors.
“After almost 10 years of near-zero interest rates and excess liquidity, investors increase the risk in their portfolios to achieve their targeted return. Since we’ve had a long bull market (with few hiccups) this risky exposure was only felt to upside. Record dividend and buybacks also increased this feeling of ‘nothing can go wrong.’
Well. so far he has been wrong, but maybe like a broken clock he might get right eventually
Inga Chira founder of AttainableWealthfp.com also seems to share the same sentiment
“I am getting concerned about where the US markets are going and why they keep going as high as they are. Bill Gross is right, there is a discrepancy between the real economy and the financial markets and it is not sustainable but the issue is that we don’t know when the markets will invert. I keep telling myself that I invest long term only and that cycles will happen numerous times and that it really does not matter at the end of the day. But interest rates are starting to go up, the economy is not growing much and by any rational expectation, the future should be bleaker than the last few years.”
Barrons Take on Trending Stocks
Capitalism, with its adopted fractional reserve banking system, depends on credit expansion and the printing of additional reserves by central banks, which in turn are re-lent by private banks to create pizza stores, cell phones and a myriad of other products and business enterprises. But the credit creation has limits and the cost of credit (interest rates) must be carefully monitored so that borrowers (think subprime) can pay back the monthly servicing costs. If rates are too high (and credit as a % of GDP too high as well), then potential Lehman black swans can occur. On the other hand, if rates are too low (and credit as a % of GDP declines), then the system breaks down, as savers, pension funds and insurance companies become unable to earn a rate of return high enough to match and service their liabilities. Full Story
Tactical Investor outlook
When one continuously sits and waits for an event using false evidence to justify that it’s just around the corner, the event does not manifest and one is left holding an empty can and looking like a fool. That pretty much sums up most of the experts who have been predicting a stock market crash since the inception of this bull market.
We have developments that would fall under the “perturbing” category; for example, this escalating trade war, which unfortunately China is destined to lose. Markets are forward-looking beasts, and the Chinese markets have all but given the Chinese leadership an almost nil chance of winning this battle. However, that’s a story for another day. Stock Market crash 2018 revisited: Market crash unlikely
Bear Market Fears are overblown
If you had purchased top-rated companies when the masses were dumping their stock during the so-called crash phase, you would have made a fortune over the years. To be fair one does not jump in as soon as the masses start to sell or buy as soon as the masses turn bullish. One looks for extreme shifts in emotion; when the crowd is euphoric it’s best to take profits and sit on the sidelines; if you are aggressive, you can short the markets. When the panic readings soar to the stratosphere, and there is a talk that the outlook can only worsen then the prudent call of action is to start establishing positions in top-rated companies.
And a plethora of articles is frantically penned as the Financial experts are hoping that things will pan out differently. This a clear example of insanity in action; regurgitating the same rubbish in the hopes that the outcome will suddenly change. One thing these guys are good at is writing fiction, and it makes you wonder why they don’t make a career out of that as they are pretty darn good at it; reality seems to elude them. Bear Market Fears-are they overblown?
Other articles of interest:
Why everyone should own some Gold & Silver Bullion (June 12)
1st World Corporate America & Third World Regular America (27 May)
Negative rates will fuel the biggest Bull Market rally in History (25 May)
Millennials being squeezed out of Housing Market (20 May)
Problem is Fractional Reserve Banking-we don’t need Gold standard (15 May)
BBC Global 30 Index Signals Dow industrial Index will trend higher (11 May)
Stock Market Bull not ready to buckle (4 May)
Fear mongers are parasites that profit from your fear (2 May)
Gold Bugs think & stop listening to Fear mongers (1 May)
Fear mongers are parasites that profit from your fear (27 April)
Plain evidence that financial experts know even less than Jackasses (26 April)
