8/4/2015 – A down day with the Dow Jones down 48 points (-0.28%) and the Nasdaq down 10 points (-0.20%).
The market continues to trade within a tight trading range. Putting most traders/investors to sleep. With that said, I continue to maintain the view expressed here Is Our Historically Boring Market About To Get Exciting? You Bet. To quickly summarize, most markets continue to accumulate energy for a big move ahead.
AKA, don’t be caught with your pants down or asleep.
In terms of how much risk is out there, consider the following…..
- Shiller’s S&P P/E ratio is at 27. The third highest in the history of the stock market. Only 1929 and 2000 tops where more expensive (not by much). We all know what happened thereafter.
- Today, Americans have 41 percent of their financial assets in stocks, matching the high in 2007 and trailing only the Internet bubble.
- Americans already own a lot more stocks than they usually do. At 57 percent, the current holdings relative to bonds and cash are far from their peak at 66 percent in 2000, but they’re approaching levels that have coincided with market peaks in the past. The low was hit in 1982 at 27 percent.
- America’s 95 million investors are at huge risk. Remember the $10 trillion losses in the crash and recession of 2007-2009? The $8 trillion lost after the dot-com technology crash and recession of 2000-2003? This is the third big recession of the century. Yes, America will lose trillions again.
- With interest rates at zero, the FED will be powerless to backstop the next bear market leg. Even the next round of QE can backfire in a major way. Depending on how the bond market reacts.
I am not sure how most people view this, but for me, the points above represent a tremendous amount of risk in today’s financial system. A risk that is currently not being properly priced in.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. August 4th, 2015 InvestWithAlex.com
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