During a bull market, imbalances build up that seem scary but are not, in the moment, a deal-breaker. It’s only with hindsight that we look back and say, “Oh yeah, that’s where it started to change.” This series points out the trends that will — eventually — be the warnings we should have heeded:
I believe money is being "printed" and shuffled to big banks (and international), island funds, and Blackrock types all with the intent to keep the market propped up. An exogenous event is coming very soon that will take the controls out of their hands. We are coming upon our "elevator moment".
It's not only US Investors who have a historically high level of investment in the US market. The whole world flooded in as funds hitched a ride in the US market. It had the strongest returns, which attracted ever more international investment, which drives even higher valuation, and more money pours in. A classic positive feedback loop. Be fearful when others are greedy.
Is the invested level effected by the tapped out consumer? If people have less now what they do have in their 401k is a higher percentage of what they have...?
You are correct. In addition, a large part of the reason people have a much higher percentage in stocks compared to the past, is the rule change that made 401k plans automatic unless participants opt out. This is why comparisons are not based on same circumstances. It helps explain why the bubble levels are higher than in the past. It leaves more room to fall, as well.
An interesting analogy of living in a bubble (aka "the everything bubble") is the weightlessness inside of a physical sphere.
For example, if the earth were hollow and consisted of just a thin crust, there would be zero (net) gravity anywhere inside, even though on the outside it would be no different than it is now (as a solid sphere). Among many other things it would be entirely disorienting. Without light one would have no sense of where they were inside. In theory, you could be just an inch away from the crust but it would feel no different than being at the dead center, or anywhere else inside.
To me, that's what living in a cultural bubble is like. There are no longer objective standards and points of reference. "Up" is "down", "right" is "wrong", "evil" is "good", "good is "evil", debt is good if you have a lot, unaccountability, lawlessness, irrationality, and historical perspective is considered passe.
That's why I've become agnostic. I have no idea. One historical maxim is enigmatic 'markets can remain irrational for longer than you can imagine', but starting when? Maybe the clock has just started ticking? Can any one honestly say they seriously imagined things could be this crazy even just a few years ago, never mind since circa 2008 (the "GFC") or 2000 or 1987 or 1971 or 1913? Just about every historical metric has been flat lined by now, and not by just a little.
JR has done yeoman's work finding a few graphs here still able to suggest some perspective but I don't have much faith they'll survive much longer. Financial analysis is running on fumes because nothing makes sense, even in retrospect.
The "really" crazy stuff hasn't even started yet. (Really is in quotes because that also implies a point of reference.) We already know of a number of familiar things on the table: more QE, bigger and badder QE, direct monetization of all financial assets, bail-ins, CBDCs, confiscations, Great Takings, Resets, etc. But what new desperations could yet enter the lexicon? Within this bubble we have no way of knowing.
You do realize that a small handful of stocks and the Fed's pumping of the money supply is holding up this market. It will correct when the Fed pulls the plug. Pax
Fed can't pull the plug without causing the greatest depression. Thus, expect more liquidity, inflation,especially asset inflation. Print or die,That simple.
I believe money is being "printed" and shuffled to big banks (and international), island funds, and Blackrock types all with the intent to keep the market propped up. An exogenous event is coming very soon that will take the controls out of their hands. We are coming upon our "elevator moment".
It's not only US Investors who have a historically high level of investment in the US market. The whole world flooded in as funds hitched a ride in the US market. It had the strongest returns, which attracted ever more international investment, which drives even higher valuation, and more money pours in. A classic positive feedback loop. Be fearful when others are greedy.
Is the invested level effected by the tapped out consumer? If people have less now what they do have in their 401k is a higher percentage of what they have...?
You are correct. In addition, a large part of the reason people have a much higher percentage in stocks compared to the past, is the rule change that made 401k plans automatic unless participants opt out. This is why comparisons are not based on same circumstances. It helps explain why the bubble levels are higher than in the past. It leaves more room to fall, as well.
That can't possibly be a factor this soon after the rule change.
Are you kidding. With the millions of employees in 401k's. It adds up and compounds rapidly.
They're gong to try as hard as they can to avoid collapse before the election. Afterward? Brace for impact
An interesting analogy of living in a bubble (aka "the everything bubble") is the weightlessness inside of a physical sphere.
For example, if the earth were hollow and consisted of just a thin crust, there would be zero (net) gravity anywhere inside, even though on the outside it would be no different than it is now (as a solid sphere). Among many other things it would be entirely disorienting. Without light one would have no sense of where they were inside. In theory, you could be just an inch away from the crust but it would feel no different than being at the dead center, or anywhere else inside.
To me, that's what living in a cultural bubble is like. There are no longer objective standards and points of reference. "Up" is "down", "right" is "wrong", "evil" is "good", "good is "evil", debt is good if you have a lot, unaccountability, lawlessness, irrationality, and historical perspective is considered passe.
That's why I've become agnostic. I have no idea. One historical maxim is enigmatic 'markets can remain irrational for longer than you can imagine', but starting when? Maybe the clock has just started ticking? Can any one honestly say they seriously imagined things could be this crazy even just a few years ago, never mind since circa 2008 (the "GFC") or 2000 or 1987 or 1971 or 1913? Just about every historical metric has been flat lined by now, and not by just a little.
JR has done yeoman's work finding a few graphs here still able to suggest some perspective but I don't have much faith they'll survive much longer. Financial analysis is running on fumes because nothing makes sense, even in retrospect.
The "really" crazy stuff hasn't even started yet. (Really is in quotes because that also implies a point of reference.) We already know of a number of familiar things on the table: more QE, bigger and badder QE, direct monetization of all financial assets, bail-ins, CBDCs, confiscations, Great Takings, Resets, etc. But what new desperations could yet enter the lexicon? Within this bubble we have no way of knowing.
Are we near the end or just the beginning?
You do realize that a small handful of stocks and the Fed's pumping of the money supply is holding up this market. It will correct when the Fed pulls the plug. Pax
Fed can't pull the plug without causing the greatest depression. Thus, expect more liquidity, inflation,especially asset inflation. Print or die,That simple.
The machine will ultimately seize … they always do.