From the beginning of the fall of commodity prices to the market crash and Great Depression was about 2 years. This doesn't mean that things weren't getting worse though, they were, but stock markets are not an accurate reflection of the economy, they're a reflection of millions of speculators' opinion of where stock prices will be in the future.
Near the end of a long bull market, investors are near delusional with belief in the market's ability to go up forever, after seeing it overcome one hurdle after another, but not fall. They begin to believe the market is entering a new paradigm, that due to this reason or that, it can never go down again. Today we have that exact same mindset, and possibly more so than ever before. The reason is that central bankers around the world have collectively united to ensure that stock markets continue rising, no matter what. They do this with the lowest interest rates in history and money printing on the grandest scale ever seen before.
So, this bubble could be called the Central Bankers' bubble, total faith and belief in Central Banker's ability and willingness to keep the stock market propped up, no matter what. The general public has no idea this is what's making their portfolio look so good, they think it's due to a strong economy. This too serves the interests of our leaders, who want to be seen as doing a good job with the economy, so they can get re-elected. In fact, world GDP, measured in USD terms is down 5% and falling. For perspective, at its lowest point in the 2008-2009 crash, it was down 10%
So, is it possible for Central Bankers to keep stock markets levitated forever? We don't know for sure, but what we do know is that the task becomes more and more difficult, as excessive money printing leads to inflated asset prices, a slowdown in the velocity of money(understand as the flow of money), and a transfer of wealth from the middle class to the upper class.
All of these are negative for the real economy, so corporations have a harder time generating revenues and profits, which of course makes their shares worth less. We see this today, as the term "Non-GAAP" is used extensively to refer to financial statements released which do not conform to GAAP principles. This boils down to corporations releasing financial statements which are at best deceptive, and at worst, fraudulent. Yet investors and the market turns a blind eye because they just want the market to continue going up, at any cost. A recent comparison of GAAP versus non-GAAP S&P earnings revealed that GAAP earnings were actually negative.
We are in a time like never before in world history. Never before has the entire world been engulfed in a worldwide deflationary cycle, while all stock markets were making new highs. Never before has the entire world's investors been so thoroughly convinced that stock markets are bullet-proof than today. This is proven by the "Bull/Bear" ratio which tracks bullishness versus bearishness. Every bear has been systematically removed or taken out and shot. It's times like these when markets are at their most vulnerable, because when every bear is gone, who's left to convert to a bull? You see, new bulls are who keeps the market moving up with their new cash. When everybody's fully vested in the market, there's nobody left to bring in new cash, so markets begin their descent.
This is where Central Banks have come in, with their "Quantitative Easing" to add cash to the markets and keep the stock market going up. This is unprecedented in history also, Central Banks buying stocks? Central Banks are supposed to determine monetary policy, not buy stocks and bonds. The very fact that they are is an enormous red flag that things aren't right. Why are they so afraid of a stock market crash, that they would buy stocks? Why not let the free market deal with these things? That's what our free market system was founded on, belief that the market will cleanse and purify out inefficiencies, inflation, deflation, etc. It works well if you let it, but we aren't letting it, or shall I say that Central Bankers aren't letting it.
So, why? The reason is that our system has reached the stage where it can no longer support itself. There is too much debt, too much corruption, and terrible demographics facing most developed nations. All this spells crash, leading to a depression far worse than the one we saw in the 1930's. Central Bankers think they can fix or avoid all these problems simply by financially engineering the economy. They're finding out that they can't, and in the process they're making matters much worse.
Recently we've seen all commodity prices crash, the last being oil. Most people are aware that oil has fallen, but are not aware that oil is just the latest commodity to fall. Commodity prices are among the most reliable economic indicators we have, since they track demand for commodities, which reflects economic growth. And as I stated in the beginning, when you see commodity prices fall, get ready to see conditions worsen, and a market crash as well. To be sure, central bankers will try to mask the problem as long as they can, which they've been doing since 2009, 6 years now. That's a long time to hide a problem this big, so we're already in the very late stages of this game.
In the end, nobody, including central bankers, can control the world economy. All their efforts will ultimately be in vain and will in fact make this coming crash that much worse. Had we simply taken our medicine and gone into a long recession like we began in 2008, we would be coming out of it by now and back on the road to prosperity. But politicians and central bankers wouldn't stand for that, they want to be re-elected, or try their hand at controlling the world economy. We can thank them for this mess, and the coming much larger mess.
Practically no leader, institution, or financial "expert" will tell you this though, because they either want your vote, are afraid of letting the truth out, or still think they can control the effects. You won't be informed until the day after the crash, when the truth can no longer be hidden. By that time it will be too late though, and your life savings and asset values will be wiped out, far worse than 2008.
Only this time, there will be no quick spring back like there was in 2009. The reason is because we've already used all the tools we had to fend off the big crash until now, and all it got us was meager growth, and a lackluster economy. And all at the expense of much, much more debt. Political leaders have racked up mountains of debt trying to spend their way out of this recession, as if that were possible, so we will enter the next crash in much more debt than we were in 2008. We will also not be able to lower rates to stimulate, since they're at all time lows. We will have no tools left to withstand this crash, it will hit with full force and continue for years, maybe a decade.
So, am I scared? Worried? Sure, but more so for loved ones, friends, and unsuspecting people the world over, more so than myself. I'm not worried for myself because I'm ready, I have myself positioned financially to not only resist this, but profit from it. I've read history and know, at least roughly, how this will play out. And because I know this, so do my clients. They aren't scared either, they're educated and understand what's occurring and what to expect. This removes much of the fear and uncertainty, and is the job of a financial advisor. But unfortunately, most financial advisors don't do much research and are thus wholly unaware of what's taking place in the economy. That means their clients are unaware too.
Wealth Management Vancouver is my company, and that's where we educate our high net worth clients so they can protect their assets from this coming crisis. Vancouver Wealth Management is our brand, encompassing a number of locations in the Vancouver area. Each one having a team of advisors who understand how to interpret the events we see unfolding today and position their clients properly
Near the end of a long bull market, investors are near delusional with belief in the market's ability to go up forever, after seeing it overcome one hurdle after another, but not fall. They begin to believe the market is entering a new paradigm, that due to this reason or that, it can never go down again. Today we have that exact same mindset, and possibly more so than ever before. The reason is that central bankers around the world have collectively united to ensure that stock markets continue rising, no matter what. They do this with the lowest interest rates in history and money printing on the grandest scale ever seen before.
So, this bubble could be called the Central Bankers' bubble, total faith and belief in Central Banker's ability and willingness to keep the stock market propped up, no matter what. The general public has no idea this is what's making their portfolio look so good, they think it's due to a strong economy. This too serves the interests of our leaders, who want to be seen as doing a good job with the economy, so they can get re-elected. In fact, world GDP, measured in USD terms is down 5% and falling. For perspective, at its lowest point in the 2008-2009 crash, it was down 10%
So, is it possible for Central Bankers to keep stock markets levitated forever? We don't know for sure, but what we do know is that the task becomes more and more difficult, as excessive money printing leads to inflated asset prices, a slowdown in the velocity of money(understand as the flow of money), and a transfer of wealth from the middle class to the upper class.
All of these are negative for the real economy, so corporations have a harder time generating revenues and profits, which of course makes their shares worth less. We see this today, as the term "Non-GAAP" is used extensively to refer to financial statements released which do not conform to GAAP principles. This boils down to corporations releasing financial statements which are at best deceptive, and at worst, fraudulent. Yet investors and the market turns a blind eye because they just want the market to continue going up, at any cost. A recent comparison of GAAP versus non-GAAP S&P earnings revealed that GAAP earnings were actually negative.
We are in a time like never before in world history. Never before has the entire world been engulfed in a worldwide deflationary cycle, while all stock markets were making new highs. Never before has the entire world's investors been so thoroughly convinced that stock markets are bullet-proof than today. This is proven by the "Bull/Bear" ratio which tracks bullishness versus bearishness. Every bear has been systematically removed or taken out and shot. It's times like these when markets are at their most vulnerable, because when every bear is gone, who's left to convert to a bull? You see, new bulls are who keeps the market moving up with their new cash. When everybody's fully vested in the market, there's nobody left to bring in new cash, so markets begin their descent.
This is where Central Banks have come in, with their "Quantitative Easing" to add cash to the markets and keep the stock market going up. This is unprecedented in history also, Central Banks buying stocks? Central Banks are supposed to determine monetary policy, not buy stocks and bonds. The very fact that they are is an enormous red flag that things aren't right. Why are they so afraid of a stock market crash, that they would buy stocks? Why not let the free market deal with these things? That's what our free market system was founded on, belief that the market will cleanse and purify out inefficiencies, inflation, deflation, etc. It works well if you let it, but we aren't letting it, or shall I say that Central Bankers aren't letting it.
So, why? The reason is that our system has reached the stage where it can no longer support itself. There is too much debt, too much corruption, and terrible demographics facing most developed nations. All this spells crash, leading to a depression far worse than the one we saw in the 1930's. Central Bankers think they can fix or avoid all these problems simply by financially engineering the economy. They're finding out that they can't, and in the process they're making matters much worse.
Recently we've seen all commodity prices crash, the last being oil. Most people are aware that oil has fallen, but are not aware that oil is just the latest commodity to fall. Commodity prices are among the most reliable economic indicators we have, since they track demand for commodities, which reflects economic growth. And as I stated in the beginning, when you see commodity prices fall, get ready to see conditions worsen, and a market crash as well. To be sure, central bankers will try to mask the problem as long as they can, which they've been doing since 2009, 6 years now. That's a long time to hide a problem this big, so we're already in the very late stages of this game.
In the end, nobody, including central bankers, can control the world economy. All their efforts will ultimately be in vain and will in fact make this coming crash that much worse. Had we simply taken our medicine and gone into a long recession like we began in 2008, we would be coming out of it by now and back on the road to prosperity. But politicians and central bankers wouldn't stand for that, they want to be re-elected, or try their hand at controlling the world economy. We can thank them for this mess, and the coming much larger mess.
Practically no leader, institution, or financial "expert" will tell you this though, because they either want your vote, are afraid of letting the truth out, or still think they can control the effects. You won't be informed until the day after the crash, when the truth can no longer be hidden. By that time it will be too late though, and your life savings and asset values will be wiped out, far worse than 2008.
Only this time, there will be no quick spring back like there was in 2009. The reason is because we've already used all the tools we had to fend off the big crash until now, and all it got us was meager growth, and a lackluster economy. And all at the expense of much, much more debt. Political leaders have racked up mountains of debt trying to spend their way out of this recession, as if that were possible, so we will enter the next crash in much more debt than we were in 2008. We will also not be able to lower rates to stimulate, since they're at all time lows. We will have no tools left to withstand this crash, it will hit with full force and continue for years, maybe a decade.
So, am I scared? Worried? Sure, but more so for loved ones, friends, and unsuspecting people the world over, more so than myself. I'm not worried for myself because I'm ready, I have myself positioned financially to not only resist this, but profit from it. I've read history and know, at least roughly, how this will play out. And because I know this, so do my clients. They aren't scared either, they're educated and understand what's occurring and what to expect. This removes much of the fear and uncertainty, and is the job of a financial advisor. But unfortunately, most financial advisors don't do much research and are thus wholly unaware of what's taking place in the economy. That means their clients are unaware too.
Wealth Management Vancouver is my company, and that's where we educate our high net worth clients so they can protect their assets from this coming crisis. Vancouver Wealth Management is our brand, encompassing a number of locations in the Vancouver area. Each one having a team of advisors who understand how to interpret the events we see unfolding today and position their clients properly
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