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
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued

Stock-Markets / Stock Markets 2019 Sep 16, 2019 - 05:08 AM GMT

By: Harry_Dent

Stock-Markets Two things should be obvious: We are in a totally artificial recovery due only to global printing of $13 trillion and more recently, tax cuts; and this is now the longest rally and economic recovery in U.S. exceeding 10 years.

There has been a recession every 10 years since I was a kid: 1962, 1970, 1973-1975, 1980-1982, 1990-1991, 2001, and most recently 2008-2009.

The sunspot cycle has captured them all and that has averaged a little over 10 years since 1900. That cycle is near a bottom and is not due to turn up until at least late 2020 and more likely 2021 or later.



What the Pundits Believe 

As I said on Wednesday: How long can you keep consumers spending on ultra-low rates until everyone is re-employed that is remotely capable and everyone has refinanced their mortgage or bought a better car or house?

More and more leading indicators are showing slowing here – and around the world even more so, as I covered on Wednesday.

But then the pundits argue that there is nowhere else for investors to put their money with such artificially low bond yields, and that simply continues until there is a major economic disappointment or the bubble just bursts of its own extremes. Was there a recession when the tech bubble peaked in March 2000? Not until almost a year later. Was there a recession when Japan’s Nikkei bubble peaked at the end of 1989? Their economy looked a lot better than ours today and was not running on endless money printing yet.

But History Shows…

I have showed a plethora of charts that almost all say that stocks are the most overvalued in history, more than 1929 and every other major top, except the tech bubble that peaked in March 2000. But that saw the greatest fundamental trends converge in history that almost no one but me saw coming in the 1980s. You can’t even remotely compare economic statistics in this recovery to that unprecedented boom. The total market cap to GDP is at the highest ever, above the 2000 top, as is price to sales, which is not as manipulatable as profits.

Here’s another simple one from Ned Davis, one of the few good cycle guys on Wall Street.



This chart of the S&P 500 against its long-term trend line since the early 1900s is the first to show greater over-valuation in 1929 than 2000. But one thing is clear: We are in another major over-valuation trend that will correct and a final Dark Window rally likely ahead will only make that more extreme like 2000 and 1929. This chart is similar to the cyclically adjusted P/E ratio from Robert Shiller.

The Most Likely Scenarios 

A final blow-off rally to as high as Dow 33,000 and Nasdaq 10,000 would still be the best peaking scenario with even higher overvaluation. But the megaphone patterns since January 2001 are also suggesting we may have seen the best of that final rally and we see one more rally to slight new highs only on the Nasdaq and not the Dow and S&P 500, after a deeper correction near term.

In the 5 Day Forecast for Boom & Bust subscribers on Monday, I showed the two most likely scenarios for this final top, and like the leading indicators on Tuesday, they point towards January to March of 2020. After reviewing Andy Pancholi’s latest cycles at The Market Timing Report, I would stretch that final top in the Nasdaq only to as late as early May.

This market is overvalued enough to blow any time something big enough goes wrong… or like in Japan in 1989 and the tech bubble in early 2000, even if something doesn’t.

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 © 2019 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