According to data from Bank of America presented in a Bloomberg article, since last November equities have seen inflows of an astonishing $575 billion, more than in the last 12 YEARS combined. Goes a long way in explaining the meteoric rise in stock prices.
Meanwhile, the same article points out that as prices rose trading volume has been coming down - see chart below.
8The saying goes “volume leads prices”, so... fair warning, I guess.
So, lots of trapped money at very high valuations...
ReplyDeleteHi Hell,
ReplyDeleteSorry, I have been very busy of late, will continue our previous converstaion later... but just a random thought.
Assuming the Fed (or someone else), is interested in propping up the market, would not a very thin market make it easier...? In fact, so easy, that they can basically do it forever? =)
Best Regards,
Chicken
Yes, until someone(s) with “real” money wants to sell in size. Then, not even the Fed can stem the tide.
DeleteDo you have a YouTube channel Hells? This guy sounds very similar. Equally insightful too...
Deletehttps://youtu.be/YcI09uh6wxA
I don't... yet :)
DeleteHint, Chinese property market? =)
ReplyDeleteAh... that is easy... shoot the first guy that tries to sell in size... after they see what happens to the first one, they won't do it anymore.
ReplyDeleteMagic =)
Now, I think about it... I suspect I know what happened to all those disappearing billionaires...
ReplyDeleteDear Hell,
ReplyDeletejust a word of caution...
I agree with almost all of what you say... And as you say, the world has changed... A lot of the past data is not relevant anymore.
For example, the previous statistical analysis on the S&P is not correct. You can only use past statistics if the conditions (underlying distributions) remain constant. In engineering terms (the underlying conditions are strict-sense stationary).
If the underlying conditions change, we cannot use statistics derived from past data to predict the future.
What conditions have changed?
A) The amount of money being printed;
B) The attitude of the U.S. govt. In previous govts, there has been an attitude that economic swings are natural (and even good). Now, there is an attitude of maintaining the status-quo at all cost. Look at China for an example of what happens when you do that.
I think you are right in most of the analysis... but the Tsunami coming may be later than you think... and much higher than you think... I don't think we are just talking 1929... We may be looking at something a whole lot worse...
Best of luck guys... hope we all make it to the other side... hopefully, there is an other side...
I"m afraid you are right... the tsunami could be much worse than 1929. There is a confluence of "perfect storm" forces gathering out there, and some very, very smart people are already warning us about them. Look up what Ray Dalio is saying, for example.
DeleteAlso, the biggest elephant in the room is Climate Change. In fact, I should call it Human Biosphere Change - or could it be Human Biosphere Collapse?
As a chemical engineer, I often see the Earth as a huge vessel containing chemicals that do not react without the presence of a certain amount of catalyst. Humanity has been adding this catalyst at ever increasing amounts... and at some point the catalyst concentration in the vessel will reach critical mass and.... BOOM the reaction will happen instantly...
Another way to see it, again chemically, is as a buffered solution. Keep adding acid and nothing happens, seemingly. Until that final drop... and then the solution turns 100% acidic instantly...
To expand on point B)... I am not saying that current govt is full of especially bad people... I think they are reacting to forces that run much deeper... forces that they can feel but don't understand...
ReplyDelete