Equities going parabolic - Is the crash near?

[vand]

2 hours ago, Aaron said:

Hey there,

the thing is, nobody inside a bubble can say for sure that it's a bubble. Only works in hindsight. Even if YOU knew that we're inside a bubble, you would have no way of knowing WHEN it's going to burst. You could stand at the sidelines and miss one of the greatest bull markets waiting for the bubble that you personally know there is for sure, to burst. One thing is sure, however. Someday, the market IS going to crash and nobody knows when, how deep and for how long. But that has always been the case and it's just part of what the market (any market) is about. Such market crashes do bring great opportunities for those who have some cash ready to buy great companies or index funds that have fallen with the general market. ;-)

Cheers, Aaron

Greed can blind you to the obvious. 

Financial bubbles aren't difficult to spot. Look for a chart that goes parabolic and you have a good candidate, then look at sentiment of the market players and determine why they think that this time the laws of economics don't apply..

The difficulty is in calling the top of a bubble, as there is no accounting for the mass delusion of the herd as more new money comes in, and also when considering institutions like goverments and multinationals have an interest in keeping the thing going then they find ever more ways to fuel it. Housing is best example of this, where the bubble has been driven by ever more ridiculous policies to make mortgages more affordable and more subsidies are dreamt up to help the aspiring homebuyer.

[vand]

This bull market is now the 2nd longest in history. Only the 1990-2000 expansion lasted longer. 

https://dailyreckoning.com/crash-alert-market-set-51-fall-new-data/

[sixgun]

There is no doubt this is a bubble. I have lived through several bubbles in several asset classes and this is a big manipulated bubble.

A lot of this is driven by corporations and central banks. The Bank of Japan has bought up much of the Japanese stock market.

http://www.zerohedge.com/news/2016-12-26/bank-japan-top-buyer-japanese-stocks-2016

Much of the QE to infinity has gone into the markets. This fake money has not been used to build up the real economy, to create useful manufacturing jobs. It has gone into asset bubbles and pure speculation.

Most of the shares traded as traded by computers. They run on algorithms; mathematic equations which buy and sell on the basis of input data. A key data input is the VIX. The volatility index of S&P futures. If you want to take a punt on the US stock market you will go long or short futures. If you want to insure [hedge] a move against your position and any underlying stock, you buy PUT options. A PUT option gives the holder the right but not the obligation to sell the underlying [stock, futures, bond...] at a specified price within a specified timeframe. So if the market fell the value of PUT options in that market would go up and offset losses in your stock. 

The VIX is a measure of the number of PUT options being taken out. It is sometimes called the Fear Index as it measures how worried traders are about prices falling. The VIX has been falling and falling. There is very low volatility in the market, very little volatility in options. Traders seem to have no fear of a market fall. 

The VIX fell 50% in the last week to below 10. This sort of fall in the VIX in the circumstances is orchestrated. Algos will take a low VIX to indicate the market is bullish and they will go on the buy. You want to keep the algos buying you suppress the VIX. The markets are at the top and they were flagging so the VIX index was crushed and algos went back on the buy. Much of the buying is in a small group of stocks. Amazon, Google, Facebook, Apple. With so many of the long side of the trade and everyone concentrating on certain stocks, when things turn sour the fall will be huge and fast. When everyone is long Amazon, who is going to be the buyer?

When i first started buying shares i would look at the P/E ratio. The price of a share divided by the earnings per share. Something like 10 or 11 was a healthy growing company, 6 or 7 might be a good value stock or a flagging company. We are near P/E ratios of 30 now. Considering the markets are at or near all-time highs, there is massive debt in the system, that earnings are not keeping pace with rising share price, all the geo-political tensions, the potential bank collapses and so on and so on; this is beyond all reason. It is completely artificial and is a massive bubble.

We recently saw a pension company bail out a mortgage provider in Canada. The property market in Canada is grossly inflated. The US property is not as inflated by it is toppy. The property market in the South East of England is inflated. London prices are being driven by foreign capital entering the market. The 2008 crash started in 2006/7 and originated from the property market. We have massive amounts of loans related to cars in the US. Many of toxic loans which the car buyers cannot pay back. Second-hand car prices are falling hard. If interest rates start to climb many will be unable to afford their mortgages. There is a long list of reasons for a crash to occur and a short list for one not to.

We are in a bubble. 

[SilvergunSuperman]

[Guest]

The ground is near...

 

 

[vand]

Have we reached "peak delusion" ?

Yellen says another financial crisis not likely in a our lifetime (thanks to monetary policy!):

http://www.cnbc.com/2017/06/27/yellen-banks-very-much-stronger-another-financial-crisis-not-likely-in-our-lifetime.html

 

 

[Daz147]

18 minutes ago, vand said:

Have we reached "peak delusion" ?

Yellen says another financial crisis not likely in a our lifetime (thanks to monetary policy!):

http://www.cnbc.com/2017/06/27/yellen-banks-very-much-stronger-another-financial-crisis-not-likely-in-our-lifetime.html

 

 

She is good friends with Gordon Brown, he abolished "Boom and Bust" , well he certainly abolished the "Boom", left us with the "Bust"

[KDave]

She means she will do her best to ensure that the limited liquidity related events that led up to the last crash in 2008 won't happen again on her watch. I think the best she is hoping for, is that the world grinds along in stagnation and turns Japanese under the weight of debt that is growing daily. She is also saying here, that there are no such things as 'blackswans', only white ones, nor are there things that 'no one saw coming', as she can see everything. 

Alternatively, she could also be interpreted as saying that it won't be like the last time- it will be at least 10 times worse, so much so that calling it a crisis at all will be the greatest understatement of all time. Perhaps this is her version of calling the top? 

[silversky]

6 hours ago, vand said:

Have we reached "peak delusion" ?

Yellen says another financial crisis not likely in a our lifetime (thanks to monetary policy!):

http://www.cnbc.com/2017/06/27/yellen-banks-very-much-stronger-another-financial-crisis-not-likely-in-our-lifetime.html

 

 

Yeah it's all a bit depressing to be honest.  All sanity ended on August 15th 1971 shortly before I was born.  (End of gold standard).  My father recently admitted to me that he was rather confused about the fact that he'd made more money from the increase in the value of his property (>100x) than he had from actually working for 40 years!!!  I've seen the papers and we did the math and it's true.  What a screwed up world we live in hey!.

I'm actually praying for a massive crash.  No doubt it would also smash my pitiful holdings in PM's but who cares.  We all need one and I don't care if I end up with nothing after it.  I'm pretty close to that as it is.  It would leave open a world where my son can actually make something of himself through hard work and savings the way real people have done for millennia before all this bs.  Instead we have the spectre of the evil creditism continuing on until the world is finally completely owned by the central bankers and their ilk.  What a dreadful prospect.

[ApisMellifera]

Gosh @silversky beware what you wish for.... you might get it....

I also think that smart work, hard work and savings is still the way to go. You can still teach this to your son right?

I rather not have a massive crash but am making plans to be prepared for it. That's why am partially in PM's. Ow yes, you can't eat PM and it's not easy if your cashflow is tight. So you might want to consider to teach your son to build up and put cash aside in useful and practical "investments". @KDave gave a book recommendations called 'The Alpha Strategy' awhile ago which altered my views where I could put my hard earned cash towards. Do give it a go... you might be pleasantly surprised and have a good plan for both you and son?

I have attached a PDF version : alpha_strategy.pdf
(Source: http://www.naturalbuildingblog.com/the-alpha-strategy-free-e-book/)

I bought the hardcopy on amazon and there are more chapters in the hardcopy then the E-book:
Amazon link : https://www.amazon.co.uk/Alpha-Strategy-John-Pugsley/dp/0917572025/ref=sr_1_2?ie=UTF8&qid=1498820080&sr=8-2&keywords=the+alpha+strategy

@Paul has also started a easy and great saving strategy plan in this thread: http://thesilverforum.com/topic/6938-cant-afford-it-get-some-gold-the-easy-way-without-really-trying-everyone-can-do-it

I know.. I know... another BelangP vid... but the below video's are also something to consider...

 

 

 

 

alpha_strategy.pdf

[Guest]

If anyone actually believes Yellen and thinks the world economy is not in for a shock, then I suggest they have a quick glance at this PDF article released only a few days ago...it details the 'real' current worldwide central bank balance sheets, excellent stuff. 

PDF: peacockfedecbassets.pdf

I paid attention when the Chancellor of the exchequer Alistair Darling said just before the last crash 'We are in great shape'.

And now when Janet Yellen says 'No crash in my lifetime', then believe me, I am ready for a crash. 

[vand]

We are living in unprecedented times, where credit risk on corporate junk bonds is deemed no higher than on treasury debt.

https://www.marketslant.com/article/madness-dont-buy-gold-buy-24-junk-instead

[augur]

On 30/06/2017 at 13:50, RichRock said:

And now when Janet Yellen says 'No crash in my lifetime', then believe me, I am ready for a crash. 

Is there an explanation why the assets held by the FED remain literally unchanged for the las three years?

[sixgun]

On 6/29/2017 at 19:43, vand said:

Yellen says another financial crisis not likely in a our lifetime (thanks to monetary policy!):

http://www.cnbc.com/2017/06/27/yellen-banks-very-much-stronger-another-financial-crisis-not-likely-in-our-lifetime.html

 

 

Janet Yellen says 'No crash in my lifetime',

Poor woman must have terminal cancer or something.

This thing could go on a long time, in theory. We could see Dow 100 000 - indeed as the USD collapses it is logical for this to happen.

This week is the soft launch of BullionCoin, the gold and silver backed cryptocurrency Andrew Maguire is involved in. My brother alerted me to a comment Maguire made today that one of the investors in BullionCoin intends to use BullionCoin as money and to pay his sales agents with BullionCoin Silver. He has 1.7 million sales agents worldwide. The guy would be buying silver, creating BullionCoin blockchain title of ownerships and using these to pay staff. It will no doubt be optional and people won't take all their pay in BullionCoin but if it were only $10 a month on average staff were taking in BullionCoin Silver, that is $17 million in physical silver buys each month which would not have been. Multiply up through other investors and the amounts can quickly increase, all physical gold and silver that would not have been bought in the past. This would break the paper markets. 

[vand]

US markets are still very strong, but at least the FTSE is looking very tired now. It's been treading water all year and putting in a big topping pattern. The moving averages have completely flattened out. Price action is consistently below the current 144DMA.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=UK%3AUKX&insttype=Index

It will be a long way down when the panic starts.

[vand]

An interesting synopsis of the Volatility trade from a Hedge Fund manager:

https://www.nytimes.com/2017/09/13/business/dealbook/market-volatility.html?_r=0

https://static1.squarespace.com/static/5581f17ee4b01f59c2b1513a/t/561dc6bfe4b0ee35464228f2/1444791999826/Artemis_Q32015_Volatility-and-Prisoners-Dilemma.pdf

Interesting how he points out the role of central banks has shifted in the last 5 years from "clean up the mess" to "pre-emptive management". 

[LongScottSilver]

On 2/22/2017 at 10:38, oliversw5 said:

I sold everything I had and put it into metals...Am I a fool? Time will tell

I suppose it depends on what you had to sell.

[oliversw5]

18 minutes ago, LongScottSilver said:

I suppose it depends on what you had to sell.

I can answer this question. I put it into metal and decided to buy and sell. Naive at times yes, a fool very rarely. My investment would have made me a passive income of around 700 and a few thousand in the increase in share price for the year. I will make around 12k buying and selling metal. I stand by getting out the market and I won't be going back into the market for a while.

**My investment was 10k in RDSB, I can't remember my exact buy price but the numbers are there or there about.

 

[LongScottSilver]

11 hours ago, oliversw5 said:

I can answer this question. I put it into metal and decided to buy and sell. Naive at times yes, a fool very rarely. My investment would have made me a passive income of around 700 and a few thousand in the increase in share price for the year. I will make around 12k buying and selling metal. I stand by getting out the market and I won't be going back into the market for a while.

**My investment was 10k in RDSB, I can't remember my exact buy price but the numbers are there or there about.

 

What are your thoughts on the property market, would you say now is a good time to buy, now that London & the South East is cooling off?

[vand]

On 9/20/2017 at 01:19, LongScottSilver said:

What are your thoughts on the property market, would you say now is a good time to buy, now that London & the South East is cooling off?

London property is still grossly overpriced. If you think the recent softening in the top end of the market is makes it now a good investment then you're deluded. It will only return to sensible yields and prices when there is a full blown crash that wipes at least 40% off the average price. 

[LongScottSilver]

On 9/24/2017 at 21:12, vand said:

London property is still grossly overpriced. If you think the recent softening in the top end of the market is makes it now a good investment then you're deluded. It will only return to sensible yields and prices when there is a full blown crash that wipes at least 40% off the average price. 

Agreed! I am only investing for yield/cashflow. Capital appreciation/future money in such an illiquid asset class is basically gambling/hoping.

[vand]

So it looks like the Buffett indicator hit and all-time high just prior to the recent sell-off:

https://seekingalpha.com/article/4138612-warren-buffett-indicator-now-telling-bet-america

I calculate that on 29th Jan the ratio of the Wilshire 5000 / US GDP was a nosebleed 159%!

[vand]

Sentiment was in the 99th percentile a couple of weeks ago:

https://www.schaeffersresearch.com/content/analysis/2018/02/01/raging-bulls-could-send-stocks-reeling

since then, the action has set up a signal that has not been seen since 1976..

https://www.schaeffersresearch.com/content/analysis/2018/02/08/sentiment-signal-flashing-for-first-time-in-40-years

Not necessarily predicting an imminent crash, but the chances have risen significantly that we are in for a lot more chop and some lower prices in the coming few weeks/months.

[Guest]

We have a major problem here...as yet unannounced by MSM...funny that  Notice that last tick on the chart.

https://fred.stlouisfed.org/series/IBLACBW027NBOG

Been having a great week with the pop corn watching the charts and background listening to MSM wheeling out one 'expert' after another saying 'buy here, BTFD, all is great, nothing to worry about...'. Great what 'experts' will say when they have paid for advertising on the channel.

Laughed my t~ts off when Bloomberg were live interviewing a senator at the White House before the shutdown vote...Bloomberg began to quickly change the subject and talk loudly over the top of him  when he said: 'The US could go bankrupt...'

2007/08 groundhog day all over again.

This time though, if they lose control it's going to make 2008 look like a sunny afternoon walk in the park.

In the chart: Banks suddenly giving each other the finger and not lending...my money's on Italian Banks going pop first. As for Deutsche Bank, watching them carefully as their share price trickles downwards...I may need to buy more popcorn if their $quadrillion derivatives go pop 

[Guest]

Only 527 failed banks have been shut and wound up in US since 2008. 

https://www.fdic.gov/bank/individual/failed/banklist.html

This year will be the Bank failure number's blow off top in the US.

As for the EU, let's just say instead of the number of failing banks, I'd be more inclined to number the Countries left with a working financial system by the end of the year and hope the number is greater than 1.

More popcorn and preparing to watch the sheeple jump into equities again on the 'buy the dip' advice and get slaughtered. PPT (Plunge Protection Team)  bought into close Friday, how reassuring.