6/29/2015 – A big down day with the Dow Jones down 349 points (-1.94%) and the Nasdaq down 122 points (-2.40%)
Over the last few weeks I have warned that the market was accumulating energy for a big move ahead. Yet, today’s move is nothing in comparison to what is still to come. If you would like to find out what happens next, the direction of the said move and most importantly, WHEN, please Click Here.
It is highly probable that today’s perma bulls will look at today’s market action and laugh. After all, Greece is on a verge of default and the Dow could barely move down 350 points. Plus, today’s down gap is likely to be closed. In other words, quite a few investors will see this market as literally bulletproof. And perhaps it is.
With that in mind, just how much risk is out there? Let’s take a closer look.
- 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. June 29th 2015 InvestWithAlex.com
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