Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24
THE GLOBAL WARMING CLIMATE CHANGE MEGA-TREND IS THE INFLATION MEGA-TREND! - 3rd May 24
Banxe Reviews: Revolutionising Financial Transactions with Innovative Solutions - 3rd May 24
MRNA - The beginning of the end of cancer? - 3rd May 24
The Future of Gaming: What's Coming Next? - 3rd May 24
What is A Split Capital Investment Trust? - 3rd May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Future of Net Worth

Stock-Markets / Liquidity Bubble Dec 08, 2018 - 05:13 AM GMT

By: Harry_Dent

Stock-Markets Have I mentioned that this bubble in stocks – the one that most economists and analysts still claim “is not a bubble” – is now the greatest by far in its numerical advance, its percentage gains, and time frame?

You’re damn right I have!

I’m broadcasting the warning far and wide, to any who will listen. Hopefully I can save a few, including you…

Unfortunately, people fat and drunk and high on free-money crack don’t see any bubble (nor do they want to, even if they could)! 


They especially don’t see the double bubble that has formed.

Real estate and stocks have both bubbled together strongly in similar time frames since 2012. They continue to do so, although the Dow Home Construction Index is signaling a warning, as I shared with you here.

Look at this chart…

Household-Net-Worth-ENM.jpg (960×720)

We’re in uncharted territory for sure.

The peak in the last generational wave and long-term bull market was in early 1961 at 393% net worth to GDP. I’m sure it wasn’t as high even in the great 1929 bubble top. Back then fewer people owned homes or stocks.

The bottom hit in 1978 at 321%, down 18%.

It took until late 1989 to get back to the historical average of 379% and until 1997, or 19 years, to get back to that 1961 high.

Then the first bubble, driven more by the tech stock bubble, saw new highs of 445% between 2006 and 2007. That fell 10% back to around 400% in 2009… not so bad because real estate held up, cushioning the fall.

The second bubble was driven more by real estate, as it bubbled for the first time, and accelerated to 485% in early 2000. It then dropped a more serious 18%, back to 400%. That time around, both sectors were down, and net worth was slower to accelerate again because housing didn’t bottom until mid-2012.

But from 2012 into recently, we’ve seen the greatest net worth bubble ever! It’s reached a staggering 524% of GDP… we’re rich!

Stocks and housing have been on a strong tear together, with stocks off the chart from QE crack that has benefited market investors more than any other financial sector.

The scenarios…

If this current correction does stay more modest in late 2018, and heads up one more time, that figure could get to 550%-plus by late 2019 (housing would level off or appreciate more slowly at this late stage).

Of course, after that, there’s the big crash for sure.

Even from this peak, the minimum crash in net worth as a percentage of GDP would be back down to that 400% level in 2002 and 2009, down 24% from here…

That will be brutally painful for our long-term savings, with larger declines ahead than what we saw 2008 and 2009 in both stocks and real estate.

If it falls to the historical average, at 379%, that’s a loss of 28%.

BUT…

Given that this is both a generational and a 90-year Great Reset or Bubble Buster Cycle low ahead…

The average net worth could decline back to that 1978 low of 321%… or worse!

That would mean a loss of 39%!!!

STILL believe in “buy and hold?”

We absolutely don’t. Neither does my friend and colleague, Adam O’Dell, and he has a litany of reasons to share with you (in case the one I’ve just offered isn’t enough).

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

P.S. Another way to stay ahead is by reading the 27 simple stock secrets that our Seven-Figure Trader says are worth $588,221. You’ll find the details here.

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2018 Harry Dent- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Harry Dent Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in