Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
FED Balance Sheet Current State - 5th Mar 21
The Global Vaccine Race Against Time and Variants - 5th Mar 21
US Treasury Yields Rally May Trigger A Crazy Ivan Event (Again) In Stock Market - 5th Mar 21
After Gold’s Slide, What Happens to Miners? - 5th Mar 21
Racism Pandemic Why UK Black and Asians NOT Getting Vaccinated - NHS Covid-19 BAME - 5th Mar 21
Get Ready for Inflation Mega-trend to Surge 2021 - 4th Mar 21
Stocks, Gold – Rebound or Dead Cat Bounce? - 4th Mar 21
The Top Technologies That Are Transforming the Casino Industry - 4th Mar 21
How to Get RICH Crypto Mining Bitcoin, Ethereum With NiceHash - 4th Mar 21
Coronavirus Pandemic Vaccines Indicator Current State - 3rd Mar 21
AI Tech Stocks Investing 2021 Buy Ratings, Levels and Valuations Explained - 3rd Mar 21
Stock Market Bull Trend in Jeopardy - 3rd Mar 21
New Global Reserve Currency? - 3rd Mar 21
Gold To Monetary Base Ratio Says No Hyperinflation - 3rd Mar 21
US Fed Grilled about Its Unsound Currency, Digital Currency Schemes - 3rd Mar 21
The Case Against Inflation - 3rd Mar 21
How to Start Crypto Mining Bitcoins, Ethereum with Your Desktop PC, Laptop with NiceHash - 3rd Mar 21
AI Tech Stocks Investing Portfolio Buying Levels and Valuations 2021 Explained - 2nd Mar 21
There’s A “Chip” Shortage: And TSMC Holds All The Cards - 2nd Mar 21
Why now might be a good time to buy gold and gold juniors - 2nd Mar 21
Silver Is Close To Something Big - 2nd Mar 21
Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective - 2nd Mar 21
Gold Stocks Spring Rally 2021 - 2nd Mar 21
US Housing Market Trend Forecast 2021 - 2nd Mar 21
Covid-19 Vaccinations US House Prices Trend Indicator 2021 - 2nd Mar 21
How blockchain technology will change the online casino - 2nd Mar 21
How Much PC RAM Memory is Good in 2021, 16gb, 32gb or 64gb? - 2nd Mar 21
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Brace Yourself, This Ponzi Scheme Will Result in the Greatest Stock Market Crash in History

Stock-Markets / Stock Market Crash May 03, 2017 - 02:00 PM GMT

By: Submissions


By Peter Ginelli : Every day the markets seem to be going up regardless of the news headlines about the current ominous state of world affairs or even poor economic data. Investors seem to be oblivious to the fundamentals that every market requires in order to find a direction.

We all remember the times when the markets would carefully consider the daily geopolitical risks, news headline and economic data before they would react to the upside or the downside. But nowadays, multiple terror attacks in Paris and other parts of the world, terrible economic data released prior to the market opening, or even ridiculous P/E ratios, does nothing in shaking confidence in the markets. It almost appears as if common sense is absent in investors' decision-making. The dangerous prevailing wisdom seems to be "buy, buy, buy”, no matter if the world is going to hell in a hand basket or the economy is getting flushed down the toilet.

Former Federal Reserve chairman, Alan Greenspan's famously coined phrase 'irrational exuberance' seems to be the permanent Wall Street mentality. But investors will soon find themselves the victims of this dangerous mindset. If history has taught us anything in the past 120 years, it is that every time investors think “this time it will be different,” history proves them wrong.

Although no one can determine exactly when this market will plunge, based on all published data, charts and economic fundamentals, the coming collapse will indeed be the worst in the history of the stock market.

Go back to the headlines before each crash, from 2008, all the way back to the big one in 1929, and you will see how many so called experts and analysts missed the fundamentals deliberately or through sheer stupidity, advising investors to buy into the market, reassuring them how this time things are different from prior times. And upon entering or staying in the markets, these unsuspecting investors often saw their life savings disappear in a matter of hours and days. If this sounds familiar to you, it is because that is the definition of 'insanity.'

After all, how can a reasonable person believe that the S&P 500 companies' earnings are growing quarter after quarter, as they have been reporting, and yet the GDP needle is stuck at 1-2% annual growth? What am I missing? That is like a store showing profit year after year while filing for bankruptcy. It's truly a magic trick, or is it?!

You see, this is more like a Ponzi scheme than a magic trick. And Ponzi schemes do work, for a while, before they finally fall apart. And the last few investors in a Ponzi scheme always lose the most.

Let me show you how this Wall Street Ponzi scheme works. When the FED lowered the short term rates to near zero after the financial crisis of 2008, many of these companies on the S&P 500 convened in their boardrooms and started brainstorming on how to convince investors to buy their shares. After all, the only way an unsuspecting investor was willing to buy their stocks, was if they start growing in value again. And they couldn't rely on a sinking economy or the fundamentals to make that happen.

So they came up with this grand Ponzi trade: Instead of jeopardizing our own money in a crappy economy, why don't we borrow from the banks at 0.0% rate and buy back our own shares? As we buy back shares and there are fewer share available to purchase by investors, the prices will go up. Then the investors will feel confident and start coming back in as we unload these very shares on them with a profit and pay back the bank without having spent a single penny of our own money in interest. Wow, what an amazing idea.

Oh, I almost forgot, and the growth in the earnings we see quarter after quarter? Sorry folks, but it didn't come from these companies selling their goods and services, as used to be the case. It came from dumping those overvalued shares back on suckers after the prices were artificially pushed up through buybacks. Yes, the retired mom and pop with the hopes of making a killing in the market for their retirement days are ultimately the victim of their scam.

Is it surprising to anyone with intelligence that as soon as the FED began raising rates, however small and symbolic, the earnings of these companies began to shrink significantly and the markets stopped their upward trends?

And oh yes, enter stage left, President Donald J. Trump. Let's not forget the so-called Trump-bump. Investors started tripping over each other, rushing to buy even more stocks as Trump won the general election last November, in the hopes that things will be different under president Trump's pro-business, anti-regulation policy promises. What they did not take into account was the lack of details on how he plans to create 3-4% economic growth without adding to an out-of-control national debt and annual deficit.

Trump promised he will make America great again by creating jobs and economic growth, however he discounted the infighting within his own party who can't even agree on the single most unifying legislation among the GOP members; to repeal and replace Obamacare.

After that unfortunate debacle, investors began to reassess their perception of a Trump presidency. Can Trump indeed walk on water?! Can he sell corporate and middle class tax cuts, a trillion dollar infrastructure spending package, a $15 billion dollar southern border wall to his own party while the national debt crossed the $20 trillion dollar benchmark?

So far, the answer appears to be a big fat NO, but since when has Wall Street cared about details? They are too busy buying back their own stocks and selling it back to suckers at a profit to keep the Ponzi scheme going.

Folks, it is your money, I can't tell you what to do with it, but when this Ponzi scheme has finally run its course, don't say, "No one warned me, how was I supposed to know all this?" You have been warned.

Indeed, the cracks have been appearing all over this Ponzi scheme market, and once the collapse begins and everyone starts running for the exits you will be trampled by the big boys before you can even reach your broker to rescue the last few dollars of your life savings.

Keep in mind that even when the economic conditions have been great and our leaders have acted responsibly, the markets have had cyclical crashes once every 7-8 years, going back 120 years in the history of the stock market.

Today, 8 years into this aged, manufactured bull market, our economy is far from healthy, and while our politicians are busy fighting over the most ridiculous things, our national debt is spiraling out of control, and companies continue to manipulate their earnings with share buybacks. Ask yourself this simple question: is this stock market reflecting the reality of today's economic and political fundamentals?

Anyone with an ounce of common sense would answer no.

In conclusion, mark my words. The coming market collapse will go down as one of the worst in our nation's history. Those who think they can defy the odds and get out of the burning building before others, would be well advised to look back and see the road behind them; littered with the rotting remains of those who thought the same thing and didn't make it out fast enough before their lives were ruined.

Save yourselves before it is too late! No thanks needed.

Peter Ginelli

I have been actively involved in market research and analysis for over a decade. My opinions are based on extensive research from various sources including the latest world geopolitical and geo-economics events and best available information and data available. My professional background is primarily in the precious metals market place which include but not limited to research and analysis of daily news events at LCI and how they may affect the precious metals market.

© 2017 Copyright Peter Ginelli - All Rights Reserved

© 2005-2019 - 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

6 Critical Money Making Rules