So what's changed in the 42 years since 1982? Why 1982? 1982 marked the end of the stagflationary 1970s and the start of the 40+-year bull market in stocks, real estate, and until recently, bonds.
1. China was just emerging from the Cultural Revolution. After 40 years of astounding growth, it's struggling.
2. Debt levels across all sectors--public, corporate and household--were low compared to the present.
3. The global Baby Boom was entering peak earning, household formation, home buying, and starting enterprises. Now they're retiring and entering the phase of selling assets to downsize and fund retirement.
4. Computer technology entered the mainstream economy and boosted productivity. Now we have AI but its long-term effect on global productivity is unproven.
5. Diminishing returns are manifesting across the global economy, as what worked so well in the boost phase no longer generates the same results.
DYI: This market is so overvalued that it simply amazes me stocks have held up in price for all of these years and yet here we are today defying the laws of economic gravity. Here is where my asset sentiments are positioned today.
Smart Money - Buys Aggressively!
Capitulation
Despondency
Max-Pessimism
Depression
Hope - Silver F
Relief *Market returns to Mean - Short Term Notes & Bills or MMF
Smart Money - Buys the Dips!
Optimism - Gold
Media Attention
Enthusiasm
Smart Money - Sells the Rallies!
Thrill
Greed
Delusional
Max-Optimism Residential Real Estate
Denial of Problem - Stocks
Anxiety
Fear
Desperation - Long Term Bonds
Current Economic Conditions
Prosperity - Moderate
Recession - Shallow
Deflation - None
Inflation - Moderate
Economic Choices
None
Shallow
Moderate
Prominent
Extreme
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