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Is The Stock Market Overvalued?

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Stock Market Overvalued - Public DomainAre stocks overvalued?  By just about any measure that you could possibly name, stocks are at historically high prices right now.  From a technical standpoint, the stock market is more overvalued today than it was just prior to the last financial crisis.  The only two moments in U.S. history that even compare to our current state of affairs are the run up to the stock market crash of 1929 and the peak of the hysteria just before the dotcom bubble burst.  It is so obvious that stocks are in a bubble that even Janet Yellen has talked about it, but of course she will never admit that the Federal Reserve has played a key role in creating this bubble.  They say that hindsight is 20/20, but what is happening right in front of our eyes in 2015 is so obvious that everyone should be able to see it.  Just like with all other financial bubbles throughout our history, someday people will look back and talk about how stupid we all were.

Why can’t we ever learn from history?  We just keep on making the same mistakes over and over again.  And without a doubt, some of the smartest members of our society are trying to warn us about what is coming.  For example, Yale economics professor Robert Shiller has repeatedly tried to warn us that stocks are overvalued

I think that compared with history, US stocks are overvalued. One way to assess this is by looking at the CAPE (cyclically adjusted P/E) ratio that I created with John Campbell, now at Harvard, 25 years ago. The ratio is defined as the real stock price (using the S&P Composite Stock Price Index deflated by the CPI) divided by the ten-year average of real earnings per share. We have found this ratio to be a good predictor of subsequent stock market returns, especially over the long run. The CAPE ratio has recently been around 27, which is quite high by US historical standards. The only other times it has been that high or higher were in 1929, 2000, and 2007—all moments before market crashes.

But the CAPE ratio is not the only metric I watch. In my book Irrational Exuberance (3rd Ed., Princeton 2015) I discuss several metrics that help judge what’s going on in the market. These include my stock market confidence indices. One of the indicators in that series is based on a single question that I have asked individual and institutional investors over the years along the lines of, “Do you think the stock market is overvalued, undervalued, or about right?” Lately, what I call “valuation confidence” captured by this question has been on a downward trend, and for individual investors recently reached its lowest point since the stock market peak in 2000.

Other analysts prefer to use different valuation indicators than Shiller does.  But no matter which indicators you use, they all show that stocks are tremendously overvalued in mid-2015.  For instance, just consider the following chart.  It comes from Doug Short, and it shows the average of four of his favorite valuation indicators.  As you can see, there is only one other time in all of our history when stocks have been more overvalued than they are today according to the average of these four indicators…

Four Valuation Indicators - Doug Short

Another danger sign that many analysts are pointing to is the dramatic rise in margin debt that we have seen in recent years.  Investors are borrowing tremendous amounts of money to fund purchases of stock.  This is something that we witnessed during the dotcom bubble, it was something that we witnessed just prior to the financial collapse of 2008, and now it is happening again.  In fact, margin debt just surged to a brand new all-time record high.  Once again, the following chart comes from Doug Short

NYSE Margin Debt - Chart by Doug Short

All of this margin debt has helped drive stocks to ridiculous highs, but it can also serve to drive stock prices down very rapidly when the market turns.  This was noted by Henry Blodget of Business Insider in a recent editorial…

What is “margin debt”?

It’s the amount of money stock investors have collectively borrowed via traditional margin accounts to fund stock purchases.

In a bull market, the growth of margin debt serves as a turbocharger that helps drive stock prices higher.

As with a home mortgage, the more investors borrow, the more house or stock they can buy. So as margin debt grows, collective buying power grows. The borrowed money gets used to fund new stock purchases, which helps drives the prices of those stocks higher. The higher prices, in turn, allow traders to borrow more money to fund additional purchases. And so on.

It’s a self-reinforcing cycle.

The trouble is that it’s a self-reinforcing cycle on the way down, too.

If the overall U.S. economy was absolutely booming, these ultra-high stock prices would not be as much of a concern.  But the truth is that the financial markets have become completely divorced from economic reality.  Right now, corporate profits are actually falling and our exports are way down.  U.S. GDP shrunk during the first quarter, and there are a whole host of economic trouble signs on the horizon.  I am calling this a “recession within a recession“, and I believe that we are heading into another major economic downturn.

Unfortunately, our “leaders” are absolutely clueless about what is coming.  They assure us that everything is going to be just fine – just like they did back in 2008 before everything fell apart.  But the truth is that things are already so bad that even the big banks are sounding the alarm.  For instance, just consider the following words from Deutsche Bank

At issue is whether or not the Fed in particular but the market in general has properly understood the nature of the economic problem. The more we dig into this, the more we are afraid that they do not. So aside from a data revision tsunami, we would suggest that the Fed has the outlook not just horribly wrong, but completely misunderstood.

Ultimately, most people believe what they want to believe.

Our politicians want to believe that the economy is going to get better, and so do the bureaucrats over at the Federal Reserve.  The mainstream media wants to put a happy face on things, and they want all of us to continue to have faith in the system.

Unfortunately for them, the system is failing.  I truly do hope that this bubble can last for a few more months, but I don’t see it going on for much longer than that.

The greatest financial crisis in U.S. history is fast approaching, and it is going to be extraordinarily painful.

When it arrives, it is not just going to destroy faith in the system.  In the end, it is going to destroy the system altogether.

  • K

    That is why I got out of the market some time ago. It ceased to make any sense at all. Now it is driven by hunches,and feelings, and last but not least, inside information. No thanks, if I want to gamble, I will go to Vegas.

    • Mike Smithy

      The whole bad news is good news phenomena is what killed my confidence in stawks as well as the artificial manipulation of gold/silver by the TBTF banks.

    • Avner

      Not even hunches, but buzzwords and sloganeering. McDonalds took major hits. They promised they had a plan, and their stock went back up. No details whatsoever on the plan. They had a plan. LOL but it worked.. that’s the stock market in a nutshell. Honestly voodoo is probably more trustworthy and reliable than the stock market.

  • T.

    In 1929 the U.S. debt was $17 billion and debt to GDP ratio was 16%; in 2001 U.S. debt was $5.8 trillion and Debt/GDP ratio was 55%; In 2008 the U.S. debt was $10 trillion and Debt/GDP ratio was 68%; Today the U.S. debt is $18.25 trillion Dollars and the Debt/GDP ratio is North of 101% – uhhh, Does anybody see a horrible and hideously ugly TREND here?

    Yes. We have dug a hole Sooooo deep in National Debt that – Not only are we in over our head, But we can Never ever pay it off unto the third and fourth generation.

    • doug

      Yes. See Jim Sinclair and GOTS-important!

    • WhySoSeriousThe5th

      So what do we do cut everything! You know what will happen if we do that? Rioting that will be fun!

      • Zenithon

        It’s called weaning off. You just don’t cut everything overnight. You make a plan that includes getting people and corporations that have been feeding at the public trough for far to long to slowly wean off of it. Give them time to come up with other options, but definitely slowly deliberately get them off the dole. The debt is not insurmountable yet, but it will take tough decisions and decades of work to overcome it. I’m not holding my breath though that any politician will have the guts to tackle it.

        • Tranqual

          Oligarchs will cut benefits to the sheeple, but corporate welfare, the fleecing of the sheeple will continue unabated.

          • Gay Veteran

            and of course there will be plenty of money for the military-industrial-surveillance complex

          • Annoyingandlovingit


          • GSOB


      • Sierra Dave

        I suggest we open up government services to outside competition. They can do it cheaper. NOT just one, but multiple providers. And include incentives to report fraud. A $10,000 payout to report someone cheating, costing the taxpayers $10’s of thousands or more.

    • Mike Smithy

      Excellent analysis. I suppose that it’s anybody’s guess as to how much higher they can drive the debt to GDP ratio. I have no doubt that actual GDP is much lower than the government propaganda GDP estimates.

      • Avner

        You know it. The government is also going to do something called “double seasonally adjusted.” Meaning if you don’t like the number, just recalculate it to make it look better. Like the way the unemployment numbers get lowered every time more people are jobless.

        The other dirty little secret about the GDP is that government running up debt is considered growth. That would be like if you ran up a $10,000 credit card bill then claimed that debt as income when you filed your taxes the next year. You didn’t make money, you ran up debt.

    • ray

      It’s gotta be better than see this beautiful country slip away any more, the loss of jobs, the immigration most Americans don’t even want, the rotting infrastructure and lies… What hurts me the most is how sheeple the ordinary citizen is now. Makes me wonder if it’s worth saving but it can’t be it’s gone.

      • Karl

        I believe almost all of our problems started with a government too big, and too powerful.

      • Richard

        The country’s beautiful because of nature… not because of “Americans”…

    • Avner

      Well, the real question is when the stock market goes down where does the next bank bailout come from.

      Well, it won’t be a bailout, it will be a bail in more than likely. That means your bank accounts get looted a la Cyprus. That was written into law.

      Also, the supreme court ruled that yes the pensions and 401ks can be seized as well.

      In addition, there are very direct words from central bankers worldwide that they need to ban cash, have government controlled bank accounts where you will be made to spend when they need you to. Think about it, Obamacare set the precedent for that – force you to purchase a private party’s product.

      So, in short – if you don’t hold it in your hand, you don’t own it.


        An Excellent Observation. The only question at this point is when it will happen.

        • df NJ

          You would think this November based on the seven year pattern. You could say October 2016 just before the election. But I think it will happen when people least expect it. After the stock DOW goes 20,000+ then when people least expect say July or August 2017 kaboom!

          • CharlesH

            2017?! My, aren’t you the positive minded one. Hey – I actually hope you’re right and it’s not as soon as this fall.

      • autofixer

        Don’t be silly. All of those MRAPs are to take what you have in your hand from you as well.

        • Avner

          The MRAP is the new customer service desk for your local bank when you’re told to pound sand. You know, if you don’t want to give the unholy trinity of the banks, corporations, and politicos your money, go talk to the officers in the MRAP.

          • T.

            Too Funny.

            Just step right up and let me help you. My name is Mine Resistant Ambush Protected but you can just call me MRAP.

        • Molon Labe Girl

          Good one.

        • A Friend

          I actually don’t know what you mean by an MRAP. Can you explain please?

          • CensoredSpeech

            Mine-Resistant Ambush Protected (MRAP; /ˈɛmræp/ EM-rap) is an American term for vehicles that are designed specifically to withstand improvised explosive device (IED) attacks and ambushes.

          • df NJ

            Which is why so many sheriff departments now have MRAPs. The American citizen is the new enemy.

          • CensoredSpeech

            Only the Conservative American citizen!

      • Karl

        The US laws have been put in place for a “bail in”. Do what you need to do to protect yourself.

      • Jerry


        The Supreme Court DID NOT rule that the government can seize your 401(k) plan. The Supreme Court concluded that employers have an obligation to protect their workers’ 401(k) plans from mutual funds that provide deplorable returns.

        Secondly, your bank accounts will only get looted if the are above the insured amounts. Only uninsured deposits are subject to bail-ins according to the law. That was the case in Cyprus and Iceland. And since tax payer bail-outs are still in play, the government will more than likely print money at the tax payers expense before it will touch insured deposits.

        As far as going to a complete cashless and coinless society, that is still quite a ways off. Several years at least and may be never.

        • unbubbleslayr

          The laws have changed, your money is no longer safe in a failed bank. FDIC does not cover all money in banks. If the Feds don’t step in most banks go under along with all your money.

          • Jerry


            Concerning the changes in the law by the G20, it has to do with uninsured deposits only and only in the globally systemically important banks (G-SIBs). Of course, uninsured money was never 100% safe in the bank even before that. Nothing for that matter is 100% guaranteed safe even precious metals. There are several things in that Dave Hodges article that is not true by the way.

            Yes, you are correct, the FDIC does not cover all the money in the bank. Just up to the insured amount.
            Now would I have money in one of those big banks. No, I would find the safest bank or credit union I could. And I would try very hard not to have any uninsured money in any bank. Luckily my bank is a very good community bank with no derivatives. High asset quality, high liquidity and high capital ratios. They make no sub-prime loans or credit card loans. Located in a part of the country that is stable and holds up well in economic down turns. I am more concerned with hyperinflation and a devalued dollar than my bank going under.
            I do not believe in the overnight complete financial meltdown scenario that others, like Bill Holter, proclaim which I think has little chance of happening. And I also do not believe that the government will take all your money, especially all at once. They will take the lowest hanging fruit first. Pensions and uninsured deposits are at the most risk.

          • Sierra Dave

            When there is a nation wide bank holiday. You will see nation wide looting and violence.

            You won’t need to wait for for a financial melt down to complete.

          • Jerry

            You mean “if”.

        • Joe

          Yup, nothing to see here. Go back to sleep everyone. What’s your point?

          • Jerry

            My point is that I am correcting someone who is making a false statement which could unnecessarily scare people (typically called fear mongering). Why, do you want people to believe things that are not true Joe? I also am giving my sound opinion. You must not like it so if you got a brain why do you not use it and tell me what you have a problem with.

      • unbubbleslayr

        How many people put their money into a savings account thinking they are just loaning the money to the bank and drawing interest on that loan? We have been bamboozled people! Wake up before it is too late!


      The suffering will be terrible.

    • Richard O. Mann

      I think and believe it will be the end of the US. With all the countries out there today who have us zeroed in with nukes, and who knows what else, they will finish this country off. These are the last days of America. There will be no “next time, we will do better” after this crash.

    • Max

      Well, remember what we witnessed in Baltimore? Imagine multiple US cities in such disarray but only other races/generations joining in on the mahem. Its strange also because I see people actually starting to wake up and realize it’s not only possible, it’s actually occurring before our eyes. In the now iconic words of the original Jurassic Park…

      “Hold on to yer butts..”

    • unbubbleslayr

      If the money charade would ever end we could get the problem under control. They’ve been robbing us blind with inflation, paying capital gains on inflation not on gains. That is wealth destruction. They keep raising taxes and not making any cuts in the size of government. Wake up people~

    • SunnyFlaSnotress

      Just when you thought the topic was “Is The Stock Market Overvalued?”
      Anyways,”By just about any measure that you could possibly name, stocks are at historically high prices right now.” ..ok..
      Which stocks are Mike and his citings actually talking about as being overextended? Every single stock in the market, an index, certain sectors, or individual ones?
      A good point is made about overextended margin. We all know Black Swans Events are looming, but if these Black Swans are somehow tamed, many stocks actually appear in very good shape.
      Outside of certain sectors, Black Swans excluded, many stocks may be a good value and not overextended.

  • GSOB

    Crooked politicians and bankers. On the other hand:
    “What Would Happen If The Petrodollar System Ended Tomorrow?

    Allow me to briefly explain the impact that a sudden loss of the petrodollar system would have upon the United States of America.

    • Foreign nations would begin sending a flood of U.S. dollars back to the United States in exchange for the new currency needed for oil.

    • The Federal Reserve would lose their ability to print more dollars to solve America’s economic problems.

    • The Treasury Secretary and the Federal Reserve Chairman would meet to determine the best course of action.

    • That action would involve an immediate and dramatic increase in interest rates to reduce America’s money supply.

    • Hyperinflation would ensue temporarily while the interest rates took time to take full effect.

    • All oil-related prices, including gas prices, would reach outrageous levels.

    • Washington would soon realize that the total amount of money in the system would have to be dramatically slashed even further, leading to an even higher increase in interest rates.

    • The clueless American public would demand answers. Those on the left would blame the right. The right would blame the left. And both political parties would seek to blame the Federal Reserve.

    • People with adjustable rate debts would be crushed and massive layoffs would occurs businesses would be suffering from the high interest rates.

    • Asset prices across the board would plummet in value.

    • Amid the financial carnage, an economic recovery eventually would begin to take place. But this new American economy would be tremendously smaller due to a drastically reduced money supply”

    ISIS is grabbing up IRAQ. Our global currency status is all hinged on this oil. That’s why we fight.


      Excellent summation. Sounds like a prelude to Martial Law if you ask me. Now, I confess I would have regarded such a sentiment as paranoia 6 years ago but a lot has happened since then. We dance on the knife edge. Any crisis should shove us over.

      • Avner

        We don’t have a black swan. We have 100 of them.


          You got a point there.

      • GSOB

        Thank you. I agree it could be prelude to military kidnappers but I think it can be the ISIS military as well.
        At least our military will not decapitate us….

        They want to destroy America, I kid you not.
        They want the oil and a nuclear weapon.
        That is their game plan. Infiltrate and assimilate.
        Get your BOB ready.

  • GSOB

    Think ‘food and water supply’.

    • MichaelfromTheEconomicCollapse

      Well said GSOB. Most people don’t understand this, but the time to get prepared is right now. That is one of the reasons why I wrote my latest book with my co-author…


      • GSOB

        Looks like a good book for two reasons:
        1.) Fix
        2.) You broke the mold… one of reviews stated.
        You got me interested.

    • Avner

      Don’t forget ammo, weapons, and med kits

  • df NJ

    Every bull swears the stock market is undervalued. Every bear swears the market is overvalued.

    • Mike Smithy

      So all BS aside, what do you believe?

      • df NJ

        Those numbers look really grim!

        • Mike Smithy


          • df NJ

            Could be a 50% haircut or even test lower than that!

          • df NJ

            Aside from all the miserable bad news, google “thorium molten salt nuclear reactors ted talk”. It’s at least a little comforting to know that if it were not for the insanity of politics the world at least has a possible answer to the energy crisis. It could be we not only had the insanity but no solution even if we wanted one!

          • alan

            Mr. Yellen will hit the print button really hard and it will close green.

      • John Byde

        What goes up, must come down. Simples

  • Infidel51

    Sorry Michael I couldn’t read this one. The title had me laughing too hard.

    • df NJ

      Because it’s so true or because it’s crazy to think so?

      • Infidel51

        Because its so true.

    • John Byde

      Yep, it’s a bit like “Is snow white?” isn’t it?

  • GetReal4U2

    September approaches quickly…it’s unreal how many people believe the “economy is better than ever” lie…it boggles the mind…

    • df NJ

      People are mostly incapable of escaping the prejudice of their own mindset.

      • Annoyingandlovingit


    • Avner

      I think we should ask the close to 100 million who are jobless if the economy is better than ever. Not the .01% who are siphoning the wealth from everyone else.

  • nobody

    Simple mode of determining the true value of a stock: find out the total profit that has been distributed to the shareholders as dividends for the last 5 years and get its mean yearly value; divide that value with the number of stocks issued – that’s the dividend per share value; considering a 5% interest on an investment is a good one, multiply the dps value by 20 and you’ll get the true value of the stock. Now compare this number to the one the stock is actually traded and you’ll get the true picture.

  • alan

    Who knows what its value is and if we did would it mean anything?


    My feeling is that the FED will do everything in its power to get HRC into the White House. A recession or a collapse is not in the cards. That said events are largely outside of our control now. Should a Black Swan glide in or Hillary falters, then I believe Obama will gin up some pretext to declare Martial Law and suspend the elections.

    • Avner

      I’m inclined to agree except on this point. Isn’t it unusual that HRC and JB are almost kinda lackadasial about their campaigns? Almost like “Meh so what?” What do they know that we don’t?

      I’m betting that they know full well there will be no election.


        How right you are. 6 years ago I would have regarded such a statement as paranoid. Not anymore.

    • df NJ

      Hillary will not get the nomination. She’s a magnet for too much negativity and mud throwing. Just like in 2008 the mud will start sticking. And there’s a lot more mud this time around!


        I pray you are right. Kind of fascinating in a perverse sort of way to watch this Scamster scurry about like the Rat she is.

        • GSOB

          Think about it.
          What kind of message would we be sending to the world if she became President?

          What kind of message would God be sending us by placing her into that position?

          One’s paradigm hinges on one’s world view.

          • XSANDIEGOCA

            Every day is a beautiful day due to his Grace.

            Now, the message we would send to the World should HRC be elected is that we have abandoned our principles, morals and heritage.

            The message that God would send us would be far more ominous: I wash my hands of you.

            Time to pray. Hard.

  • DJohn1

    The true temporary value of anything is based on the market conditions upon which the average person is capable of buying commodities at a fair and reasonable price.
    WHEN a condition arises that the average person does not have the discretionary income to continue to buy commodities then the market price has to come down in order for average people to buy the product. Which in the current conditions is not happening.
    So what will happen?
    I suggest you will see massive closings of retail stores all over the country as they are stuck with merchandise they anticipated selling at a profit. But if something has disturbed the ability of people to buy products then they will go broke.
    Just such a situation has all ready happened. The situation I refer to is the force-able administration of new health care law that takes a lot out of the average person’s weekly pay leaving them unable to function in the marketplace. (In other words, they have no money left to buy merchandise.)
    The government response to this is to LIE and cook the books for all they are worth in an attempt to hide the situation from the public.
    The massive breakdown of the retail goods industry that has followed is what will bring the stock prices down in one huge rush somewhere in the next 6 months time. Notice I do not refer specifically to any one date such as the one in September.
    Cooking the books can only hide the problem for so long before the money runs out.
    I am one of those average people. I have no degrees in economics with the exception of finance and appraisel mandated by the State of Ohio for anyone with a real estate license of five years or more.
    The only solution I can find for this is to reverse the entire Obamacare law and start over. Only this time make sure it is more user friendly and make it a national health insurance plan in which everyone is covered by a post office type agency. Which means doing away with the entire health insurance industry period.
    That means everyone gets the same health care plan regardless of who you are and how much you make.
    Do not see that happening with the current administration with its head in the clouds.
    The only way such a plan has a chance of working is with a very good business manager at the top. Don’t see that happening either.
    Suspension of all penalties and suspension of the current laws that are ripping the wage earning public apart is the only way to put money back in people’s pockets to an amount that they are capable of buying retail goods and keeping the retail industry solvent.

    • df NJ

      There are two strip malls near my house without not a single business renting any units. The one strip mall has been sitting there for over a year.

    • Gay Veteran

      the solution to high medical costs is for that industry to be covered with anti-monopoly laws.
      Karl Dennigers calculates that costs would drop by 80%!

      • Annoyingandlovingit


    • GSOB

      “The only solution I can find for this is to reverse the entire Obamacare law and start over.”

      The ACA is the final nail being pounded into our economy from within, and ISIS wearing us thin from without.

      Soon to be within.

  • DJohn1

    Little jingle for you.
    What happens in September will result in massive changes in November.

    • Mike Smithy

      Not really. The American electorate only have the illusion of choice. Presidents are selected, not elected.

      • df NJ

        Whoever tallies the votes decides the election. And don’t get me started on sub-fractional gerrymandering.

      • DJohn1

        I disagree. In normal times you might be right as the general public is not really paying attention.
        With the coming debacle, I think we might have a turnaround on the Republican side. They will no longer have the excuse of not having a majority to change things as the President is likely to also be Republican. Then we will see what the true colors are. It used to be that the Democrats represented the poor and the unions. Now they represent the rich. Well it used to be the Republicans represented the rich. So who represents the middle class?
        I think whomever gets elected better think about who they are representing or there will be a lot of trouble at the next election down the road.
        I foresee recall elections if they are not careful whether Republican or Democrats in office.

        • Mike Smithy

          I recall during the run-up to the 2010 congressional elections. The Republican leadership told the electorate that they would reign-in out of control government spending and block the funding for Obamacare. As a result, the electorate voted in a Republican majority to the House of Representatives. Did the Republican’s make an honest effort to keep their campaign promises? Nope. In 2014, the Republicans leadership told the American people that if you would only give us a majority in the Senate, then we can really stop runaway spending and Obamacare. Despite the electorate rewarding the Republican Party, the Republicans did nothing to keep their campaign promises with the exception of Ted Cruz and a few others. Now the Republican message is just give us the Presidency as well as the Senate and House and you will see real change for the better. Color me jaded, but why should I believe them now?

          • DJohn1

            I think we should run for Congress against these bums. How would we get their past into play as a reason to vote for us instead of them?
            I understand the pay is quite good considering . . .

          • Mike Smithy

            Perhaps we just outsource the running of our government to the Chinese. Just think of the tee-shirt and bumper sticker marketing opportunities. Slogans such as “Were not surrendering, we are merely outsourcing”.

          • Annoyingandlovingit

            Do it

          • GSOB

            Rand Paul actually has gotten something done since he threw his hat into the race.

            Son of Ron.
            Faith, hope and love remains….
            Pray for our leaders…

        • Gay Veteran

          “…Then we will see what the true colors are….”


  • Donald Wilson

    Let the economic collapse party begin. I’m tired of the government BS, just feel like crawly into a deep dark hole and sleeping this fiasco. The End…

    • GSOB

      Don’t act like you want it. You really don’t.
      Go pray and then have yourself a good meal and a good nights rest.
      Call on the Lord in the morning.

      • GSOB

        Oh Lord Jesus! Good morning.

  • jakartaman

    Ah – ya!

  • Patriot Alice

    A 10 to 20% correction can be expected, that’s it! This is a managed economy if I’ve ever seen one. And besides how many of us really know the full extent of the ability to create/print money? If I had the liberty to create/print money, I would have a lot of room to adjust my finances accordingly.

    • df NJ

      I am not sure the people controlling the printing of money have intentions that are completely altruistic. Most likely the far opposite of altruism.

    • Mike Smithy

      Don’t you mean “This is a mismanaged economy”.

  • piccadillybabe

    Have a small savings account with my bank. It was $$ I saved before the big crash in 2008-2009. I keep it there just in case. Every year my bank says if I do not claim it, the state will claim it as if I am dead.
    Also, when I ask my bank about IRA disbursements, they never give me a straight answer. They are always referring me to financial specialists who can “help me” with that. The FS just want me to invest it in stuff I am not interested in. Even though I make it clear that I am interested in “disbursements” on a monthly basis, they say when you are 71 you have to take disbursements. What about disbursements before I hit 71, however, about age 65 or 66? They are not interested in helping me with that. It seems that these banks do not want you touching your money and they will make it difficult for you to do that.
    I guess I will keep working until I am 71 because it seems like my IRA is theirs until then.
    Growing up in the 1950s and early 60s, we were taught how to stretch a dollar and live frugally and “waste not want not.” Now days people have no respect for their $$ or anyone elses. Easy come and easy go, this younger generation. Know people who make tons of $$ even in this economy and they blow it, throw it away. I’d be stashing it like a squirrel stashes nuts for a rainy day.

  • Karl

    Michael, I love your no nonsense writing style. What a breath of fresh air!
    I think the only surprise is how long the charlatans have been able to keep this party going. When this ends, and it will, it will be horrible. Thank you for your great work.

  • GSOB

    I really appreciate what Rand Paul has done.
    For the same reason, I appreciate Snowden too.
    What’s next?
    A cure for cancer is around the corner…..
    Praise the Lord!

  • robert

    I think we are going to see more Cuba like conditions where the vast majority of people live in some level of poverty. I have also stated and continue to believe that this is the normal state of things and that the post WW II boom is the anomaly thanks to the Federal Reserve System. The middle class will be much smaller. The unknown is what will the millennial generation do? Will they settle for clerk, table waiting jobs or will they hit the streets in numbers? There have been such responses in Spain with no real results. Same in Greece. It is really too bad that our small towns across America cannot be regenerated and renewed economically. They are dead though so no future there. Getting by is going to be harder and harder. I watch PGA golf and am mesmerized by the crowds lining the fairways. Almost all white and almost all youngish (25-55). They evidently have extra money to purchase tickets to watch a sport that most of them play and at no small cost. I gather they are the haves while the nots are watching lower rent sports or reality TV. I think the time is coming however when the haves might not feel safe trying to get to the golf course. There is not enough law enforcement to keep a lid on things. Big city detectives will tell you that the public has no idea how bad things really are. Had a Houston detective tell me some of the things that go on that never make the news. I live in a gated neighborhood and just today 3 men were apprehended trying to break in 2 houses in broad daylight. They will bond out and plea if they do not flee to the border. I am very glad to be on the low profile side of things. I think what happened to the DC family that were slaughtered like animals will be the common event in the very near future. I think I will invest in another dog or two.

    • df NJ

      New Jersey is like a German police state. We have no lawlessness here that goes unattended. Take look at this video from Michigan:

      google “Saginaw M.I. Sheriff War Machine!”

      Check out what he says 1:40 minute, too funny! And I like the kids observation at 2:01 minute. And what he says at the 2:24 to 2:26 says it all!!! I think the police maybe a little too stocked with military equipment. At some point the police are going to start mowing down citizens without trials. Then who will be the criminals?

    • Coffeedrinker

      Yes, what you said here is key: “The middle class will be much smaller. The unknown is what will the millennial generation do?”

      The millennial generation has youth (or reserve time) available to sort out what will be their future. I recommend that the millennials keep piling on the education as they wait for an opportunity to lead us out of this mess.

      Regarding the shrinking middle class, this has been very dramatic with the lower portion of the middle class falling off and entering a growing underclass category.

      The current middle class is a very narrow and select group that holds on to the American dream (life style) of home ownership and other indicators via high income jobs.

      Inflation acts as cancer eating away at a middle class standard of living. High income is the middle class anti-cancer drug.

  • GSOB

    Interesting. Haven’t seen that formula before.

    • The Most Interesting Man

      My own theory. We delayed. Now it’s almost too big to theorize.

      • GSOB

        ‘It Is Mathematically Impossible To Pay Off All Of Our Debt’ – M.S.

    • Mike Smithy

      That’s why he is the most interesting man in the world.

  • iguana one

    One day, after the Ponzi music stops, the stock players and Wall Street criminals that are left standing on the floor will hear, “Margin Call Gentlemen!” Do you really think that they will have that much cash?
    If anything at all? it will be in Ashes!

    • df NJ

      Marx said laissez faire capitalism is always followed by communism because unfettered greed would result in a government’s currency collapse. Once the government’s currency collapses, people in bread lines will demand MORE GOVERNMENT, not less. See you in the bread lines comrades!!

  • Rufus T Firefly

    The June issue of “Fidelity Monitor & Insight” warns us not to listen to doomsayers. As far as these ratios such as CAPE, Q and market-cap-to-GDP, Cullen Roche of Orcam Financial Group points out these indicators said the market was 40% over-valued in November 2009, 70% over-valued in December 2010 and 50% over-valued in March 2012. In fact, these three ratios have the market over-valued for most of the last 20 years. It seems to me that reading the entrails of a sheep would be a better predictor.
    Don’t worry about margin debt. With rising stock prices and low interest rates, it’s a trailing indicator.
    Bear markets and recessions will happen again. Maybe even real, real soon. But broken clocks are right twice a day. Remember that fear and doom mongering are designed to generate clicks.

  • unbubbleslayr

    The trap has been set, big money has slowly accumulated for years and they are ready for small money to jump in with both feet and then “SNAP.”
    Don’t fall for it, you will lose a lot of money. They have lulled you to think that stocks will just keep going up and look at the returns you missed. I repeat this is a trap, don’t fall for it.

  • chilller

    And Bernanke came out from under his rock this morning to declare stocks are “under valued.” If brains were electricity…he couldn’t light an 042 LED…

  • CharlesH

    Balderdash I say! I don’t have any idea what that means, but it always has a nice ring to it. I can’t add anything of value to this conversation so I’ll just go ahead and read the comments. Michael – another GREAT JOB!!

    • df NJ

      Balderdash is one of those words that are impossible to define clearly.

      “Those who know do not speak. Those who speak do not know.” Lao Tzu, Tao Teh Ching

  • Mondobeyondo

    The stock market is sitting on a wall.
    It’s about to have a great fall.
    All everyone’s horses, and everyone’s economists
    Will eventually turn this country communist.

    (okay, it’s not the best…)

  • Z.M.

    Tyranny of Usury: Protocols of the Learned Elders of Zion 20:30-32
    What also indeed is, in substance, a loan, especially a foreign loan? A loan is- an issue of government bills of exchange containing a percentage obligation commensurate to the sum of the loan capital. If the loan bears a charge of 5%, then in 20 years the state vainly pays away in interest a sum equal to the loan borrowed, in forty years it is paying a double sum, in sixty,- treble, and all the while the debt remains an unpaid debt.
    From this calculation it is obvious that with any form of taxation per head the State is baling out the last coppers of the poor taxpayers in order to settle accounts with wealthy foreigners, from whom it has borrowed money instead of collecting these coppers for its own needs without the additional interest.
    So long as loans were internal the Goyim only shuffled their money from the pockets of the poor to those of the rich, but when we bought up the necessary person in order to transfer loans into the external sphere, all the wealth of States flowed into our cashboxes and all the Goyim began to pay us the tribute of subjects.

    • Z.M.

      The above explains the economic situation the world finds itself in today rather well don’t you think?

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