Since the October lows only four stocks: Facebook, Amazon, Netflix, Google (FANG) have provided most of the gains to the indexes. Many stocks have NOT participated in this rally yet! This market is FANGed for sure but do not bet on this rally unless it broadens out considerably!
The great bull market that began in 1982 when Ronald Reagan was president is now fundamentally over. Revenues, cash flow, and earnings are declining despite rampant money printing by the worlds Keynesian central bankers and near zero percent interest rates for seven years. The American consumer is spent with debt levels relative to income at unprecedented high levels and consumers elsewhere globally have very high debt levels. Total debt is way too high and despite continued low interest rates growth will remain very anemic at best for many years. Conditions in America today are almost the opposite of that in 1984 when it was morning in America. Back then we had extremely high interest rates but low debt loads for Government , business and consumer alike and the corporate blue suit CEOs had only just begun shipping jobs overseas. Consumers were in much better financial condition and had high propensity to borrow to offset declining wage growth. Today, consumers have headwinds of declining wages and work hours and must receive increasing government assistance aid to maintain living standards which is not really a good foundation for sustainable corporate earnings growth.
Please understand also that when corporate executives decide to borrow money to buy back stock shares at highly inflated absurd prices they effectively borrow earnings from the future further reducing growth potential while loading the balance sheet with debt. Corporate cash flow is now not much higher than it was in year 2011 but stock prices are much much higher. As debt continues to increase relative to cash flow big time problems will emerge that will make stock market bulls wish it where year 2008 all over again because the next bear market has the potential to be much much more severe. In my opinion stock market bulls are going to be blown to smithereens once again and this time it is going to be much more severe.
Credit market ain't buying it! Every dollar the FED prints is a liability! It is NOT free money as many on Wall Street believe. The FED is already leveraged 77 to 1! The FED will blow up in the crash and those Wall Street speculators will get executed!
Stocks are vertical today despite declining cash flow, declining earnings, and declining revenues. Hopium is the fuel for this artiificial bull market in stocks. The credit markets are saying this bull market in stocks is a farce! This divergence first appeared in summer of 2014 and since then it has become much worse. Who is right, credit markets or stocks? We are going to find out soon! If I were betting I would bet the credit markets are right again! Before the major top in October 2007 the credit markets diverged from stocks with stocks topping last. The same is happening again this time.. The stock market may be headed for big time trouble in the not too distant future but before this happens there may be one more big big rally to increase valuations deep in bubble territory with valuations possibly even exceeding the mega bubble levels in March 2000! The stock market may become an epic bubble before the crash!
The stock market is about to enter the bubble mania phase with a huge parabolic move coming. Stock prices will increase an enormous percentage in a very short time frame. The S&P 500 may increase to 2850 by end of next year and 3400 sometime in year 2017. EPIC bubble coming! Valuations will rise greatly and break the record valuation highs in March 2000. Buy stocks NOW!
The US Dollar is set to rise a huge amount in the years ahead because so much as been borrowed in dollars. The dollar must rise as this debt is paid! This will NOT change no matter what the Yellen FED does or does not do. This is very bearish for corporate earnings. The conditions for corporate earnings were maybe as good as they will ever be in year 2014 and now it is going the other way. Stock market bulls are living dangerously! The recent S&P 500 rally to over 2100 is a great opportunity for those who did not sell in year 2000 or 2007 to sell and get out of this rigged casino!
The stock market has once again climbed above the price/return probability chart which means very low returns long term for at least the next ten years. At the top of the channel the market is priced for perfection and 92 % probability that the annual capital gain will be less than 3.2% or 37% total. This is not a good time to invest in stocks for the long term. Short term is another story though. It is quite possible the market may be beginning a blow off to really high valuations even higher than in Year 2000. If this plays out, my target for SPY is 280 to 310 by April of next year! That is a fantastic blow off top!
The stock market has gone from a low of around 1880 Friday morning to a high near 1988 today. That is a big huge move in only two days! I think this prabolic run continues and prices could reach 2800 or even above 3000 prehaps by the end of this year! This year reminds of 1998 with oil and oil service shares very weak and commodies very weak also and that year the market corrected by about 20 percent and then began a massive blowoff to the top in March 2000. I think the same will happen this time. Buy stocks now because the blowff is only just beginning!
Wall Street is living a big fantasy and it will end badly eventually. The fantasy that interest rates can remain near zero forever. The fantasy that stocks can increase in price forever. The fantasy the FED is omnipotent. The whole rally since 2009 is built on a foundation of fantasy while revenues are no higher now than the peak in April 2008! It is a #$%$ fantasy and believe it at your peril! GREED is always punished!
He who has ears let him hear! The stock market is still grossly over valued and set for near zero percent returns long term. Come out of her and preserve you capital. DO NOT listen to those greedy stock peddlers on CNBC! SELL!
The message of this thread is extremely important. Read it and embrace it.
John Hussman observed that when the speculators have an high preference for risk the short-term returns are high but when valuation is high the long-term returns are very low. Right now valuation is extremely high so long term returns will likely be near Zero including dividends but short-term returns can be high even extremely high. The higher the valuation the higher the risk and the lower the potential return. This market is an awful deal for the buyer but a great one for the seller or short seller.
I will call my broker to see what he can do because I am in the market for you. You are going up up in my estimation! I want a thousand shares of RCA and when dividends come due we hug kisses because I am in the market you!
Sing along fellas! It feels so good doesn/t? Just speculate your way to great wealth because the Yellen/Benjamin Strong FED has your back! Working for money just sucks!
1929 was such a great year. My mother was born that year!
The stock market has gone vertical while revenues stagnated the past four years and valuation has increased to the highest levels since early 2001! Stocks really are risky especially at such nose bleed valuations. The rally from low in 2011 to the highs the year is a farce!