7/9/2015 – A positive day with the Dow Jones up 32 points (+0.19%) and the Nasdaq up 12 points (+0.26%)

Impossible?

Not only is it possible, it is highly probable. At least based on my long-term mathematical work. Also, John Hussman certainly thinks so as well, although not to the extent: Get Ready for Zero Stock Returns Over Next 10 Years

I don’t know why people find this so shocking. I often mention two extended periods of time when stocks showed ZERO appreciation. From 1790 to 1860 (70 years) and 1899 to 1949 (50 year) periods of time. But we don’t have to go that far.

The stock market hasn’t gone anywhere over the last 15.5 years. The chart below shows an inflation adjusted S&P. As you can see, the index hasn’t gone anywhere. The Dow finds itself in the same boat, while the Nasdaq is still 10-15% lower (inflation adjusted).

What’s worse, we are currently in an overvaluation bubble and on a verge of a substantial bear market. In fact, my mathematical work shows that once the market rolls over, we won’t see today’s levels again until the year 2021 at the earliest. Plus, once the next bull market completes in the early 2030’s we are likely to re-test these levels again.

And if you believe that is insane, it’s obvious that you haven’t studied the market long, far or hard enough.

Here is the point I am driving at. Long-term or buy/hold investors will be incredibly frustrated over the next 15-20 years. Just as they have been over the last 15 years. And only those who are willing and are able to shift into a bear market positioning, as my earlier post today suggested, should be able to benefit substantially. Everyone else will be sitting on zero gains. What’s worse, they are set to experience yet another severe bear market over the next few years.

So, a preemptive rotation into a bear market positioning or into cash is the key here.

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. July 9th, 2015  InvestWithAlex.com

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Shocking: Advance Mathematical Work Shows 30 Years Of No Capital Gains Ahead Google

7/7/2015 – A positive day with the Dow Jones up 95 points (+0.54%) and the Nasdaq up 5 points (+0.11%).

The S&P would have to drop 80% to re-recreate an environment when interest rates were this low last time.

Most bulls (most investors today) will argue that today’s high valuations are very well justified. Due to low interest rates. For instance….

Stocks aren’t expensive: Fidelity

In fact, because interest rates are so close to zero, some people believe that stocks deserve infinite valuations. This premise is also know as, “this time is different”.

This chart brings that assumption into question.

Simply put, just because interest rates are low, doesn’t mean P/E multiple cannot go down. For instance, in 1941 interest rates were at around 2% (exactly where they are today) while the P/E ratio rested at 8.

If such an environment was to repeat itself today, the S&P would have to take a 66% haircut.

But wait, it gets even worse. In 1941 we were at the bottom of that particular economic cycle. The earnings have already contracted and stocks were selling at a massive discount. In fact, they were about to stage a 5 year WW2 rally.

Today, the situation is reversed. Earnings expansion is at its peak (thanks to the FED and their little QE liquidity party) and the P/E ratio has only been higher on two other occasions (1929 and 2000). In other words, for the S&P to reach 1941 levels it would have to fall 80%.

Let me put it this way.  Anyone who believes that this stock market rally will continue hasn’t studied history nor appropriate market valuation metrics. Plus and just FYI, “this time is different” is a terrible investment strategy.

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. July 7th, 2015  InvestWithAlex.com

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The S&P Would Have To Drop 80% To…..Google

7/6/2015 – A down day with the Dow Jones down 44 points (-0.25%) and the Nasdaq down 17 points (-0.34%). 

A massive and rather rapid stock market decline is coming later on this year. And while we won’t have a crash, considering the amount of margin debt out there, quite a few people will get wiped out. If you would like to find out exactly when this move will develop, to the day, please Click Here. 

What is the worst case scenario for the FED? 

Imagine the following setup.

1. Interest rates remain at zero or below 1%.
2. The stock marker rolls over and initiates a decline. A decline that has the capability of turning into a flash crash later in the year.
3. The US Economy “officially” goes negative as corporate earnings collapse.
4. The FED introduces QE 4 to stabilize the market/economy.
5. Bond market reacts in a negative fashion as yields surge.
6. Negative self sustaining loop is now in place.
7. Checkmate and game over!!!

Impossible?

Far from it. I would argue that points 1-4 are already baked in and will fire off over the next 6-12 months. The only thing I am not as confident about is the bond market. In such a case, yields can react in either direction and it is a little bit more difficult to predict at this time.

That is to say, the FED has already missed their opportunity to reload. When the next crisis hits, soon, there is very little that the FED will be able to do. Well, they will be able to watch the market meltdown, but they won’t be able to do anything about it. I am afraid that their nightmare is about to become a reality.

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. July 1st, 2015  InvestWithAlex.com

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The Worst Case Scenario For The FED Is Becoming A Reality Google

7/1/2015- A positive day with the Dow Jones up 158 points (+0.90%) and the Nasdaq up 26 points (+0.53%)

A massive and rather rapid stock market decline is coming later on this year. And while we won’t have a crash, considering the amount of margin debt out there, quite a few people will get wiped out. If you would like to find out exactly when this move will develop, to the day, please Click Here. 

A number of quite important opinions about today’s stock market. Let’s take a look.

• Experts worry that ‘phony numbers’ are misleading investors

As the stock market climbs ever higher, professional investors are warning that companies are presenting misleading versions of their results that ignore a wide variety of normal costs of running a business to make it seem like they’re doing better than they really are.

We have talked about this before. BlackRock: Most Of Corporate Earnings Growth (If Any) Is Accounting Driven

I have said it before and I will say it again. Today’s distortions are so great that the FED’s Ponzi Finance makes Bernie Madoff look like a boy scout. But its more than that. Everyone is playing the same accounting game. Whether it is through low interest rates, share buybacks or outright accounting gimmicks.

While impossible to calculate, I would say that a more normalized environment would add 5 to 10 points to today’s P/E ratios. By the way, Shiller’s Adjusted P/E Ratio is already at 27. Turning an already expensive market into “are you freaking kidding me overpriced accident” waiting to happen.

• U.S. Stocks on Wrong Side of History With Rate Rise in Sight

Never before has a rally in the U.S. stock market gone on this long without a Federal Reserve interest-rate increase. Expecting valuations to keep rising once one comes is asking too much, if history is any guide.

As I have suggested before,  the FED finds itself in an impossible situation. It is stuck in the corner. With all of the misallocations over the last 15-20 years about to come crashing down on them. They best they can hope for at this stage is debt monetization and run away inflation. But with bond prices possibly collapsing, they might not even have that option.

Interesting times ahead, that’s for sure.

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. July 1st, 2015  InvestWithAlex.com

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Is Today’s Real Stock Market P/E Ratio Above 30?  Google

6/30/2015 – A positive day with the Dow Jones up 21 points (+0.12%) and the Nasdaq up 28 points (+0.57%)

Well, that was fast. Just as predicted here yesterday, any small bounce would surely bring out perma bulls with the “this market is bulletproof and buy the dip” mentality. Mr. Cramer delivers.

Cramer: Amazing world chaos-resistant stocks

 “I say you buy some very special biotechs that have refused to come down until now. That’s right, I think you use this marketwide selloff as an opportunity to pick up the speculative development stage biotech names that haven’t had a price break in ages,” the “Mad Money” host said.

Seriously….Biotech??? Biotech is the most speculative sector within the stock market. It is equivalent to where the Internet stocks were right before the 2000 crash.  And while the market will bounce to at least close Monday’s gap, I wouldn’t necessarily be loading up on Biotech here.

Anyway, we are all free to make our own decision. With that in mind, I would rather listen to Bill Gross. Make sure you read his recently published statement in full.

Current concerns in the financial markets center around the absence of liquidity and the effect it might have on future market prices. In 2008/2009, markets experienced not only a Minsky moment but a liquidity implosion, as levered investors were forced to delever. Ultimately the purge threatened even the safest and most liquid of investments. Several money market funds appeared to ‘break the buck’ which in turn threatened the $4 trillion overnight repo market – the center core of our current finance-based economy.”

But shadow banking structures — unlike cash securities — require counterparty relationships that require more and more margin if prices should decline. That is why PIMCO’s safe haven claim of their use of derivatives is so counterintuitive. While private equity and hedge funds have built-in “gates” to prevent an overnight exit, mutual funds and ETFs do not. That an ETF can satisfy redemption with underlying bonds or shares, only raises the nightmare possibility of a disillusioned and uninformed public throwing in the towel once again after they receive thousands of individual odd lot pieces under such circumstances. But even in milder “left tail scenarios” it is price that makes the difference to mutual fund and ETF holders alike, and when liquidity is scarce, prices usually go down not up, given a Minsky moment. Long used to the inevitability of capital gains, investors and markets have not been tested during a stretch of time when prices go down and policymakers’ hands are tied to perform their historical function of buyer of last resort. It’s then that liquidity will be tested.

In other words and as I tend to visualize it, we are sitting on top of a 40ft containter full of TNT, with a lit fuse disappearing inside of it. We have talked about disappearing liquidity before. Plus, given today’s overvaluation levels, there is just way too much risk in our financial system.

We have faced a similar environment pre 1987 crash. That is to say, should the market correct 10-15% in a rather rapid fashion, we might have a subsequent flash crash scenario that will take us down another 25-40%.   Carl Icahn, Jim Rogers and now Bill Gross are warning about this. Who else do you need?

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. June 30th 2015  InvestWithAlex.com

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Shocking: Buy The Dip Mentality Can Lead To A Crash Google

6/22/2015 – A positive day with the Dow Jones up 107 points (+0.59%) and the Nasdaq up 37 points (0.72%). 

Let me ask you a question. If someone from the future approached you on October 10th, 2007 and outlined the next 7-8 years within the stock market, what would you do? Would you….

1. Completely ignore the 2007-2009 sell-off because the market would eventually make up all of the losses and then push higher within the next 7 years -OR-
2. Pawn your left kidney, sell your firstborn and then buy every put option you could afford in anticipation of a 2007-2009 decline. Only to repeat the process at 2009 bottom with call options.

Well, I don’t think there a doubt that most people would go ahead with option B. Unless they have few screws missing and/or too lazy to get their broker on the phone.

Why am I bringing this up? 

I am beginning to see quite a few “What’s The Big Deal” Or “What’s the Worst Case Scenario” articles being propagated by the mainstream financial media. For instance, The worst case if you invest in a hot stock market

Worst case scenario: In nearly 90 years of market history, if you bought stocks on the absolute worst day, the average time to make your money back was 3 years. That’s less time than it takes most people to get through high school or college. It’s doable. It shouldn’t make you shy away from investing in stocks.

“Obviously, to live through that is painful,” says Valeri, an investment strategist. “But when you think about what you’re investing for — and for most people it’s at least 10 or 20 years out — you will get past that.”

They all come to the same conclusion. Even though the stock market is overvalued, do not worry and keep buying, your investment will eventually appreciate. Perhaps.

Just 90 years? I have the Dow chart going all the way back to the first day of trading. May 19th, 1790 or 225 year. Let me tell you something. There have been quite a few periods of 50 years or more when stocks haven’t gone anywhere.

For example, the stock market hasn’t really gone anywhere between 1790 and 1860. A 70 year period of time. Sure, there were bull and bear markets, but no net capital gains. Then, if you went long in 1899, you didn’t see any “net inflation adjusted” gains until 1951.

So, what is the risk going long today, at the 3rd highest level of valuations in the history of the market (behind 1929 and 2000 tops)? Umm, I don’t know, but I would imagine there is quite a bit of risk associated with such a stupid proposition.

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. June 22nd, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Shocking: No Capital Gains Over The Next 50 Years? Google