“A recurring feature of a bursting investment bubble is the culmination of absurd statements and assertions by an otherwise seemingly reasonable individuals right around the parabolic top of such phenomena.”
“At the parabolic top of every financial bubble, thrilled investors lose their tether to
reality, and as the price of the speculative instrument rallies ever higher, investors’
expectations for additional price appreciation inflate ever more.
reality, and as the price of the speculative instrument rallies ever higher, investors’
expectations for additional price appreciation inflate ever more.
Whether its Cisco Systems at a trillion-dollar market value, Qualcomm at $1000 a share, Oil at $200 a barrel, Bitcoin at a million dollar a piece, or Tesla at $7000 a share, these far fetched price fantasies are the fuel with which bubbles, and their beneficiaries, attempt to sustain themselves."
Nawar Alsaadi
A Hopelessly Corrupt Financial System Plus Historic Bubbles – Got Gold?
The Fed Is Fueling a Revolt That It Cannot Control
Under the tender care of the Federal Reserve, America's wealth inequality has skyrocketed to new heights of obscenity as America's billionaires feasted off the Fed's recent stock market rally.
The driver of this fantastic concentration of private wealth is the stock market, the vast majority of which is owned by the top 10% (85%). Within this top 10%, the ownership of stocks, junk bonds, business equity and rental real estate is highly concentrated: the top 5% own roughly two-third's of America's private-sector wealth, the top 1% own 40% and the top 0.1% own 20%.
New York Times
A whopping 84 percent of all stocks owned by Americans belong to the wealthiest 10 percent of households. And that includes everyone’s stakes in pension plans, 401(k)’s and individual retirement accounts, as well as trust funds, mutual funds and college savings programs like 529 plans.It's not that hard to forecast a populist revolt against the parasitic class that's grown obscenely wealthy as a direct result of Fed policies while millions lose their jobs and what little financial security they once held. The common-sense demand would be: No more bailouts of Wall Street, which includes the big banks, the financiers, the corporations buying back $5 trillion of their own stocks to enrich the few at the top, and the corporations kept afloat with junk bonds and other financial trickery funded by the Fed.
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DYI: What to expect with a
federal Reserve willing to do anything to maintain these insane stock market valuation. My guess is a 20 year redo from the mid 1960’s
till the early 1980’s. Above is an inflation corrected stock chart for the Dow
Jones Industrial Average is a grinding down of stock prices as happened in the
time period just mentioned. The Fed’s
and fiscal stimulus will fight the decline creating a few large percentage bear
rallies. Never-the-less valuations will
eventually drop to under 10 as measured by Shiller PE with dividends yields
north of 5%!
Updated Monthly
AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 5/1/20
Till Next Time
DYI
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