Why Assets Will Crash
The
increasing concentration of the ownership of wealth/assets in the top 10% has
an
under-appreciated consequence:
When only the top 10% can afford to buy
assets, unleashes an almost karmic payback for the narrowing of ownership,
a.k.a. soaring wealth and income inequality:
Assets Crash!
This means the pool of potential buyers is relatively small, even if we include global wealth owners.
Since price is set on the margins, and assets like houses are illiquid, then we can anticipate all the markets for assets owned solely by the wealthy to go bidless--yachts, collectibles, vacation real estate--because the pool of buyers is small, and if that pool gets cautious due to a drop in net worth/unearned income, there won't be any buyers except at the margins, at incredible discounts.
Stocks Remain
at
Bubble
Levels!
As of May 1, 2020
26.50
DYI: With so little potential buyers
available when the crash resumes its downward trajectory available buyers will
only come out of the woodwork at substantially
lower prices. This descend will take
years before a secular bottom – Shiller PE under 10 is achieved. The Federal Reserve will attempt to buy
everything from government and corporate bonds, stocks, to outright junk bonds
all to no avail in its desperate attempt to end asset deflation. Markets just don’t revert to its mean but
decline below thus creating it long term average. What is happening is simply put – revenge of
math!
Despite the overall
stock market being overvalued oil stocks and those in the energy field in
general is a bright spot for purchase.
Energy companies have dropped between 50% to 60% thus spotting current
high dividend yields. Obviously if oil
and gas prices stay this low for more than a year dividend cuts will occur,
however, at this low price you are being compensated for the risk. This is for those who have a time horizon for
3 to 5 years and possibly 7 years for this industry to be back on top of game
with overvalued stock prices.
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