Two Wise Contrarians

Two Stock Market Contrarians
on WolfStreet.com Speaketh

[Comments made to a WolfStreet article]

#1 Gershon

Sep 10, 2017 at 9:04 pm

Since the 1990s the physical economy – as distinct from Wall Street’s speculative casino – has been systematically pillaged and asset-stripped by the oligarchy. Not surprisingly, something like 80% of the volume on these rigged, broken, manipulated markets are high-frequency algos buying and selling to each other. As the middle class becomes more pauperized and sees its purchasing power debased by the Fed’s deranged money printing and the inflation the Fed purports not to see, they are too busy paying bills to speculate in the market. The main driver for these ludicrous stock valuations has been corporate buybacks using borrowed money (which used to be illegal), with valuations completely divorced from any underlying fundamentals.

When and how will the Ponzi end? God only knows. The correlation between central bank balance sheets and “the markets” is close to 100%. As long as the fraudsters at the Fed and central banks keep buying stocks and bonds, the Ponzi will keep levitating. But at some point true price discovery is going to asset itself, and that will be cataclysmic for the central bankers debt-fueled asset bubbles. When the whole house of cards comes tumbling down, millions will be wiped out, but the fraudsters running our central banks for the exclusive benefit of their oligarch patrons might finally be arrested and hauled in front of an honest judge as a long-overdue first step toward ending the Fed and restoring sound money and honest markets.

o                                #2 ChrisM

Sep 10, 2017 at 9:31 pm

My response to this question is that back in 2000, it was the first bubble and people were not up-to-speed on market drops. Remember consulting for a VC funded company when told by their founders that they could always raise more money. That was February, 2000. Now that we lived through 3 bubbles, serious investors are more on their toes about the potential sharp downturn and private equity investors are more sensitive to valuations (in some cases, though 2000 valuations can be found today with a number of unicorns). This is the only time in history where you have seen 3 extreme bubbles in such a short time period.

If you look at crypto markets, people are making the same comments as your shoe shine guy. And look at the Australian and Canadian real estate markets, where valuations are through the roof. And then you have China, where there are trillions of yuan invested in non-productive assets. The last two bubbles were popped in the US, the next bubble will be popped from an overseas market that will then cascade into the US market.

https://wolfstreet.com/2017/09/10/small-investor-optimism-about-stocks-hits-record-of-jan-2000-just-before-dot-com-crash/