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 Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Why You Must Beware of Quicksilver Markets

Stock-Markets / Financial Markets 2015 Mar 23, 2015 - 05:23 PM GMT

By: Money_Morning

Stock-Markets

Shah Gilani writes: “Quicksilver Markets” is the provocative title of an Office of Financial Research (OFR) report published March 17.

The report’s author, Ted Berg, in his conclusion warns that “Quicksilver markets can turn from tranquil to turbulent in short order.”

He believes the stock market could crash – again.


Of course, no one paid much attention to the report, least of all the markets last week.

But we should.

Here’s why…

Care Package

So what if Berg is a chartered financial analyst who previously worked at Freeport Investment Management and Lehman Brothers before that. So what if the Office of Financial Research is a research arm of the U.S. Department of the Treasury.

So what if the research peeps at the OFR provide their analysis to the Treasury’s Financial Stability Oversight Council (FSOC), whose own website says, “The Council is charged with identifying risks to the financial stability of the United States; promoting market discipline; and responding to emerging risks to the stability of the United States’ financial system.”

And who cares if Berg’s report starts, “One of the missions of the Office of Financial Research is to analyze asset market valuations and if there are excesses, explore the potential financial stability ramifications of a sharp correction. The author argues that U.S. stock prices today appear high by historical standards.”

The markets don’t care. Investors don’t care. Traders don’t care. The Treasury doesn’t care. The FSOC doesn’t care.

Even the OFR itself makes Berg include this little “we don’t care” heads-up to anyone bored enough to read the short brief: “Views and opinions are those of the author and do not necessarily represent official positions or policy of the OFR or Treasury.”

I’m not going to bore you with the facts the report lays out.

Like how the current market resembles a few periods in the past – like 1929, 2000 and 2007. Like how something called the CAPE ratio (cyclically adjusted price-to-earnings) is approaching two standard deviations above its long-term average, just as it did in September 1929, December 1999 and May 2007.

Here’s what Berg has to say about that: “each of these peaks was followed by a sharp decline in stock prices and adverse consequences for the real economy.”

I’m not going to bore you with the report’s fearmongering over the Q-ratio, which compares the value of nonfinancial equity value with net worth – and how that’s flashing red. Or how the “Buffet Indicator” (as if he knows anything), which compares corporate market values to gross national product, is jacked up to cloudy levels.

No, none of that stuff matters.

What matters is that when it comes to the stock market there are more buyers than sellers.

Until, of course, there comes a few days, weeks or months when there are more sellers than buyers.

Not that that ever happens – well, besides 1929, 2000 and 2008.

Source :http://www.wallstreetinsightsandindictments.com/2015/03/must-beware-quicksilver-markets/

Money Morning/The Money Map Report

©2015 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning 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