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
8 Stock Market Indicators in 1: Here's the Message of the Panic/Euphoria Model - 19th Apr 21
Gold - You Can Win a Battle, but Still Lose the War - 19th Apr 21
Will Interest Rates Rally Further Push Gold Price Down? - 19th Apr 21
Gold Fireworks Doubt the Official Inflation Story - 19th Apr 21
YuanPay Team Discuss The Process Of Crypto Diversification - 19th Apr 21
Central Banks May Ramp Up Gold Buying - 18th Apr 21
How to Get Rid of Driveway Weeds With Just WATER! 6 Months later NO Weeds, Ultimate Killer! - 18th Apr 21
State of the European Markets - DAX, FTSE, CAC, AEX, SMI, IBEX 35, S&P/MIB, Euro Stoxx 50, RTS - 18th Apr 21
Einvestment Fund: What You Need To Know About Investments - 18th Apr 21
Google Alphabet (GOOG) AI Deep Mind Stock Trend Analysis - 17th Apr 21
Stocks and Bonds Inflationary Slingshot - 17th Apr 21
Best Smartphone Selfie Stick Tripod Review by ATUMTEK Works with Samsung Galaxy and Iphone - 17th Apr 21
How to Give Budgie's First Bath | Easy Budgie Bathing and Water Training with Lettuce - 17th Apr 21
Record-breaking Decrease in New Passenger Vehicle Sale in Europe - 17th Apr 21
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Choosing Your Path in This Financial Landscape

Personal_Finance / Investing 2017 Oct 21, 2017 - 12:29 PM GMT

By: Rodney_Johnson

Personal_Finance I just turned off the television. There wasn’t anything wrong, there was just… nothing. As I go through my day, I stay tuned to CNBC, albeit with the sound down low, simply to have background activity. But today, I just can’t get there. I keep asking myself the same question when I hear their comments… so what?

Usually I enjoy some of the banter, and I recognize that most of the people floating across the screen are very smart and accomplished. But I don’t feel edified. In my head I’m playing an endless loop of old quotes and comments that ends up sounding like a game of “Pick a Platitude.” It goes something like this:


While history doesn’t repeat, it rhymes… The markets can stay irrational longer than you can stay solvent… When the tide goes out, we’ll find out who’s been swimming naked… It’s never different this time…

I think these words are my natural defenses to what seems like a constant barrage of explanations as to why the markets will remain high no matter what happens.

And why shouldn’t that be the case?

Price earnings ratios are well above the long-term average. Robert Shiller’s more effective cyclically adjusted price earnings ratio (CAPE) is also running hot. But it’s been like this for years, with no serious pullback, so why even talk about valuations?

They don’t matter, right?

The sun came up in the East today, and the markets moved higher.

Sure, there’s a good chance of war. Or rather, more wars. We’ve been in an armed conflict for 16 years… so long that we no longer consider Afghanistan to be a military hot zone. Now we’ve got a real chance of spilling blood and treasure on the Korean Peninsula. Rocket Man Kim tests missiles and nuclear weapons, we play war games off his coast with stealth bombers and special forces.

What could go wrong?

The markets go up, just as they should.

And then there’s my favorite. Slow economic growth. Even as the Federal Reserve printed $3.5 trillion and held interest rates at zero for years, we could barely manage 1.5% to 2.5% growth. As the chart shows, the Fed consistently forecast better days ahead, which never happened.



But why do we pay attention?

Low growth is an inconvenient puzzle, not a problem. This must be true because the markets went up.

Which all leads back to the platitude playlist in my head.

Investors were nervous ahead of the 2016 presidential election, for all the reasons listed above.

The markets seemed untethered from reality.

Then Trump surprised the world, and we had to change the list of possible outcomes for the next four years. Instead of more regulation, we’d have less. Instead of fighting business leaders, the White House would be a partner for growth. Suddenly, things appeared brighter. I wrote as much last fall, noting that Trump’s election gave investors a new reason for hope, and clearly most people in the markets felt the same way. The major stock indices have tacked on more than 20% since then.

But does it make sense?

Are we, to paraphrase Irving Fisher, at a permanently high plateau? Do P/E ratios, CAPEs, geopolitical events, and GDP growth rates no longer matter?

Color me skeptical.

Earnings season is about to get into full swing, and I expect solid profits from Corporate America. We’re also in the all-important fourth quarter, when Americans spend the most, which should be super-sized after the hurricanes.

But then what?

Maybe we return to the new normal, the one hammered out of the past decade that includes central bank intervention of historical proportion, with more than $15 trillion of new money printed around the globe to bail out banks and support asset prices. In that case, we can rest easy, assured of higher prices for all.

Or maybe we return to just normal, that old world where valuations matter and long-term growth is a concern, because we have to figure out how to pay for our retiring populations and healthcare while keeping our indebted youth afloat.

In such a scenario, the platitudes move to the fore, and the personalities on CNBC start talking about how such a turn was inevitable because, as we all know, asset prices revert to the mean. Which is another platitude.

I guess it’s good to remember why such statements become platitudes in the first place – the words contain wisdom that withstands the test of time.

Rodney

Follow me on Twitter ;@RJHSDent

By Rodney Johnson, Senior Editor of Economy & Markets

http://economyandmarkets.com

Copyright © 2017 Rodney Johnson - 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.

Rodney Johnson Archive

© 2005-2019 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

6 Critical Money Making Rules