Wednesday, July 16, 2014

When the Stock Market is Divorced from Reality

This is hands down the best article on economics and the current state of the financial markets I've read this year.  Arguably the past three.  It explains many different things that are going on, but key above all of them is how central bank intervention in interest rates and quantitative easing distorts nearly all pricing in the financial markets guaranteeing them to become bubbles.

The stock market is no longer a "market" wherein investors try to find companies to finance.  It is now a tool of multi-billion dollar companies to purchase back shares (because of a lack of any genuine new investment), a place for QE dollars to inevitably be parked, and a retirement vehicle for mindless-zombie-money for mindless zombies who think capital gains is what retirement planning is based on.

I am already getting ready for the people who say after a crash, "well how did you know!!!??? There were no signs!!!!"

I suggest you all stop watching state-endorsed news and go with genuine independent thinkers.


Southern Man said...

And please, please let it continue to be so for another decade and a half as that's where my retirement fund lives.

Peregrine John said...

The biggest question: How long before it pops?

Kristophr said...

Move it into a precious metal IRA. Google up "trust" IRAs, move the money into your trust IRA, and then buy IRA legal bullion with it ( generally bars and various government minted coins ).

You aren't getting another decade. to the radio said...

Most people don't realize when they buy shares in a public company how little of it they will really own.
Even if they bought all of the publicly traded shares they would still not have a controlling interest in the company.
Several years ago I came across the preferred (voting) share structure of Canwest Global, a media company in Canada.
The share structure said that the three children of the founder each held a third share and the remaining ten percent were for the public to trade on the TSX.
A lot of people lost a lot of money to that illusion when Goldman-Sachs called in their note during the 2008 recession.
At least the founder's kids lost more.

Anonymous said...

Well, if you keep saying the market will crash, of course you will eventually be right. This is only useful information if you have an idea of when.

Anonymous said...

Martin Armstrong says that while there will be some pull-backs during the move up, the Dow Jones will keep going up until around Oct 1st of 2015. Money is going to keep going into the major US markets until then due to the rest of the world trying to get their money to a less-bad place. Japan's debt to GDP is higher then the USA's and they and due to Abe's money printing over there, import cost for all the things Japan needs are going up. Plus you have China going into a crash, and money is flowing out of that county. Due to that, China needs to distract it's people by saber-rattaling with other countries in East Asia. In Europe, there have been talks of taking money from peoples bank accounts to pay for losses. Also, Russia is freaking out everyone. That makes the US look like the least bad large economy, so the money flows here.