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OT: Beware of the Stock Market Bubble

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Albert View Drop Down
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    Posted: July 02 2017 at 7:51am
We are in a very large stock market bubble, and maybe the largest ever.   Stocks are overvalued by 75% and not good.  Major players such as Amazon, FB Tesla, etc ... all seem to now have a downward pattern. 


Stock Market Bubble: Biggest Bubble Since 1999 And Surpassing 2007

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Summary

CAPE shows stocks are overvalued by 75%.

S&P/Case Shiller Home Price Index shows housing bubble now worse than 2007 levels.

3rd Longest Bull Market in History will end with substantial correction as history has proven many times.

Trump election euphoria has caused major over valuation in stocks, while nothing has been accomplished.

While investors continue to cheer rising stock prices, even as world economic and social issues are causing massive problems, several warning signs continue to be ignored that an imminent major correction in the stock market is overdue. Currently, we are in the 99th month of the current bull market, which is the 2nd longest bull market in history, and second only to the historic tech bubble bull market between 1990-2000. Ultimately, that bubble finally burst with stocks being sent into a 50% decline. It is not a matter of "if" the bubble bursts, but "when" the bubble bursts. History has shown that lofty evaluations are just not sustainable, and it doesn't matter who the President is at the time.

< ="355" itemprop="height"> < ="400" itemprop="width"> < ="https://static1.seekingalpha.com/uploads/2017/6/4/961133-14965796816728818.png" itemprop="">

(Chart via: http://www.sbcgold.com/)

The chart above, which is roughly 4 months old, does not reflect the additional gains the market has seen between March 2017 and present. Additionally important, is the fact that there has been no substantial correction in stock prices since February 2016, and was short lived less than a month, so it can't really be considered a correction, but more of a pullback. The last two corrections in stock prices that are substantial enough to be considered "corrections" occurred in 2002 and 2008. Since March 2009, and the market has been full steam ahead with the assistance of FED interventions.

The chart also shows the impending results of overvalued markets where every bull market saw significant corrections that lasted for many months before beginning to reverse and start to build sustainable price gains again. We also see that the most overvalued eras saw the largest percentage corrections with the exception of the 1932-1937 bull market.

The Case-Shiller PE Ratio which is widely respected as a valuation measure of the S&P 500 Equity Market now shows that stocks are overvalued by 75%. The current measure is 29.88 as of June 2. 2017. The highest measure of 43.77 occurred just prior to the dot-com bubble bursting in early 2000 from the overextended bull market run from 1990-1999, where technology company valuations were extremely overpriced. The next highest measure prior to a major bull market run occurred in January 2007, at 27.21, and soon afterwards the housing and financial sector problems started to become apparent and led to the subsequent 2007/8 market collapse.

The Case-Shiller 10-City Home Price Index now shows that the housing bubble that helped collapse global markets around the world may be upon us again. The Index is now measuring above the 2007 and 2008 pre-collapse levels. The only higher level seen was in 2006, which the period when President Bush began the refund check disbursements to tax payers in an attempt to boost spending to spur the economy and failed miserably. In recalling this period, I remember friends and family using those checks to pay their mortgage and car notes, instead of boosting economic spending.

The last time the index was in the 209 range, where it currently sits, was October 2007. This is the same timeframe when the stock market began its slow and painful 1 1/2 year decline and ultimately caused the FED to intervene in the housing market in March 2009.

< ="187" itemprop="height"> < ="269" itemprop="width"> < ="https://static2.seekingalpha.com/uploads/2017/6/4/961133-1496585075320266.png" itemprop="">

History has proven many times, that when stock and housing prices enter into over-valued zones, there will be substantial corrections that last several months, and usually result in at least a 50% correction or more. History has also proven, that timing when those events will occur, is simply a task too tough to tame. Even the largest firms have failed to be able to time when the bubble bursts. However, when the warning signs begin to reach historic levels, as they have reached now, smart investors will usually begin to heed those warnings and begin making adjustments to their portfolios to reduce their risk.

Markets have been rising to such lofty levels due to the Trump election and euphoria. They have risen on future prospect and promises made by this President, even though all the warning signs say it is time to reduce risk now. In fact, President Trump has been in office for over 4 months, and his "First 100 Days Plan" has already been a complete fairy tale. Not one piece of legislation he promised the American people has come to fruition. The most recent jobs reports show that jobs are being lost faster than they are being created, and those that are being created are majority "minimum wage" jobs that will not sustain economic growth.

Conclusion

Americans are maxing out their credit again, and defaults are at a 4 year high and the problem is getting worse day by day. Housing prices have surged to astronomical levels once again, primarily due to the FED Reserve intervention in previous years. As the FED is now under the "must raise interest rates" scenario, expect housing defaults to rise again very quickly. Stocks have reached extremely lofty levels under the euphoria of a President that has delivered none of what he promised so far, and a Congress full of Democrats that are going to fight him every inch of the way for 4 years. Corporate equities to GDP ratios are off the charts and show stocks over-valued by almost 90%. Massive retail closures are being ignored as non-events as large numbers of people enter the unemployment line again. Terrorist activity around the world is becoming an almost daily event, which puts strain on global economies, and it is ignored by the markets. It's just a matter of time before it cannot be ignored anymore.

For all these reasons, and some that I have not even covered in this article, I recommend investors take heed of the warning signs that history has proven not to ignore. Do not get caught up in the Trump euphoria "stock pump". Start making the right decisions to protect your financial interests by limiting your risk in equities that are at all time lofty levels, and not supported by economic growth and true job creation, yet supported by FED reserve free money economics and prospects of a future that isn't going to materialize. There are too many political, social, and economic issues troubling the world, and the stock market is just one major event away from collapse. We are in the biggest stock market bubble since 1999 and 2007, and the data proves it.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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https://seekingalpha.com/article/4078779-stock-market-bubble-biggest-bubble-since-1999-surpassing-2007
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Albert Quote  Post ReplyReply Direct Link To This Post Posted: July 08 2017 at 12:49pm
If MU doesn't hit $100 a share.  I'm blaming Trump. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Technophobe Quote  Post ReplyReply Direct Link To This Post Posted: July 08 2017 at 1:41pm
I absolutely hate him, but financially he is on the ball.  

Blame him for the death of Obamacare, getting well in with the Russians, the gutting of medicaid, dodgy foreign policies, the death of truth and the programming of many of the country's otherwise intelligent people, the condemning of many women to have babies they did not want, isolationism,  protectionism and some serious loss of face internationally.  

But probably not this.

I still think the world of you, Boss!  Even if we agree on nothing where he is concerned.
Absence of proof is not proof of absence.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Technophobe Quote  Post ReplyReply Direct Link To This Post Posted: July 08 2017 at 1:44pm
Ps.  Well done on the stock market killing!
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Kilt5 Quote  Post ReplyReply Direct Link To This Post Posted: July 08 2017 at 4:18pm
what a disaster

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Post Options Post Options   Thanks (0) Thanks(0)   Quote CRS, DrPH Quote  Post ReplyReply Direct Link To This Post Posted: July 08 2017 at 7:02pm
Irrational exuberance:

https://qz.com/1022698/elon-musks-tesla-has-lost-10-billion-in-market-value-after-rival-carmakers-like-volvo-unveiled-their-electric-plans/

Tomorrow, the first of Tesla’s game-changing mass-market electric cars is scheduled to roll off the production line. Next year, Elon Musk hopes to produce 500,000 Model 3 vehicles, which start at $35,000.

The run-up to the realization of Musk’s audacious automotive ambitions should be cause for celebration at Tesla. Instead, the company has had a torrid time in the markets, shedding more than $10 billion in market value over the past two weeks. Tesla’s shares hit an all-time high on June 23, valuing the company at $63 billion.

Tesla opened down around 3% in trading today, following a 7% drop yesterday. Volvo’s eye-opening announcement yesterday that it will only produce cars with electric or hybrid engines from 2019 made it clear that Tesla will have plenty of competition from traditional carmakers in the near future.

Although it’s Musk that made electric cars sexy (paywall), if—or when—the likes of Toyota, Volkswagen, GM, Daimler, Volvo, and others ramp up their electric-vehicle production, the premium valuation that investors have awarded to Tesla may not look as attractive as before.

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Post Options Post Options   Thanks (1) Thanks(1)   Quote Albert Quote  Post ReplyReply Direct Link To This Post Posted: July 09 2017 at 2:55am
Thanks Tech. 

Hi Chuck - Tesla share price has really been struggling lately, and has really fallen hard.  It bounced back a few bucks on Friday, but I believe the day before it was down another -$20.

This could be the reason - Feds said was safest car ever built, but it failed a crash test.

Tesla Pushes Back After Model S Misses Top Crash-Test Rating

Madeline Farber
July 06, 2017

This article has been updated to reflect comment from Tesla.

Tesla is not happy with the recently released Model S crash-test rating.

In a test simulating an off-set frontal collision at 40 mph, the insurance Institute for Highway Safety (IIHS) announced Wednesday that the Model S earned an "acceptable" rating, which is the second-best designation, Business Insider reports. The IIHS is a research affiliate within the insurance industry.

The reasoning, according to Business Insider, is a seat belt issue.

During the crash test, the Model S's seat belt didn't stop the driver's head from slamming into the steering wheel through the deployed air bag — thus resulting in a second-best rating for the vehicle.

In a statement to Fortune, however, a Tesla spokesperson pushed back on the findings, arguing hat the Model S should have been given a higher rating.

< width="500" height="281" ="https://www.youtube.com//uecPZvDPQgg?feature=o" border="0" allowfullscreen="">

"While IIHS and dozens of other private industry groups around the world have methods and motivations that suit their own subjective purposes, the most objective and accurate independent testing of vehicle safety is currently done by the U.S. Government which found Model S and Model X to be the two cars with the lowest probability of injury of any cars that it has ever tested, making them the safest cars in history," the spokesperson said.

http://fortune.com/2017/07/06/tesla-model-s-crash-rating-dispute/

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Albert Quote  Post ReplyReply Direct Link To This Post Posted: July 09 2017 at 3:01am
The market is pretty tough right now.  People have been a little duped into thinking the market is still amazing, when actually it's the DOW 30 that is doing great, which is only comprised of 30 companies.  Tech stocks are really struggling at the moment.  Although companies like SHOP and TDOC has a great future, I'm betting in Micron Technologies (MU) to make a run up to $40 - $60 in short term.  Their earnings are skyrocketing and it's a strong company that is undervalued. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote FluMom Quote  Post ReplyReply Direct Link To This Post Posted: July 09 2017 at 12:27pm
LOL guys, I only purchase dividend yielding stocks and they NEVER seem to go down. I am waiting for the next crash so I can pick up some of those stocks I keep waiting to go down.

I have never believed in making money on buying a stock and waiting for it to go up. I would have to watch that stock too much and I am never going to do that.

I wish you all luck in the stock market because it is a real BITCH! It takes one to know one...LOL!

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I agree FM - a lot of it is just gambling and risky.  Hope the crash doesn't come until next year, but very little doubt that it will happen, or at least a very serious correction.   All experts are forecasting it as a certainty.   Many say the end of 2018 for the latest, but who knows. 
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Albert, although I have been prognosticating doom for years about the Stock Market, it is alive and well under Trump.

Do you remember when the Dow was down 3000 points? 

Oils is up to $45.99 a barrel and even gold is up. They are creating new jobs by the thousands and trying to tackle the Obamacare disaster.

The Republicans have taken both the House and Senate by storm and the Democrats have got to get their act together if they ever hope to win the votes to get back in and gain the majority in anything.

The bottom line is better a businessman as president than a social anarchist or someone supporting every dark side of our culture and minority wanting special treatment.

It is time to pay attention to the Rust Belt and the Coal miners and stop protesting killing whales and the forests. Protesting is not effective. It may be fun for people now legally high and rich and in school with nothing better to do, but it does nothing.

Perhaps once it restored racial equality and women's rights - but those are not our most pressing problems now. It is the economy. And lawyers don't know how to run a business. No more lawyer presidents.

Personally we hope to restart our businesses in many ways and prosper when all the contracts aren't being given to minorities and special groups.  I am glad the miners in West Virginia may do better. I lived there. I saw the environmentalists destroy the coal industry.

And the outsourcing of our labor market and sending jobs and factories offshore was a disaster. We made Japan and China rich while they destroyed Detroit and our car industry.

Sometimes any change is better than no change. We could not survive another 8 years of social insanity - paying people to come and live in America while deserting our own hard working people.

Many things could cause the markets to fail. They are set up in the air and we all know that. But right now - and let's hope for awhile - they are up.

Medclinician






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Originally posted by Medclinician Medclinician wrote:

It is time to pay attention to the Rust Belt and the Coal miners and stop protesting killing whales and the forests. Protesting is not effective. It may be fun for people now legally high and rich and in school with nothing better to do, but it does nothing



Couldn't disagree more, Med. Just because people feel strongly enough about an issue that they choose to protest doesn't automatically make them drug users, students or the idle rich. Protesting is a perfectly valid means of expressing an opinion, particularly in a country that values freedom of speech. Many of our basic rights were won by protesters who often risked life and limb.
You see no value in defending the environment? I understand that the Trump administration doesn't give a crap about it, especially when there's money to be made, but I'm surprised to hear you say that.
And while we're on the subject of the environment - coal is done as a fuel. It's filthy, expensive, dangerous to mine, and fast receding in history's rear view mirror. Nobody realistically believes it's going to be making a come back. Trump's promise to revitalize the coal industry was just another of his empty campaign promises. He said what people wanted to hear even though he had no intention of making good on it.
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Post Options Post Options   Thanks (1) Thanks(1)   Quote Satori Quote  Post ReplyReply Direct Link To This Post Posted: July 12 2017 at 10:08am
coal miners ???

really?
REALLY???

its a DYING industry

it has been supplanted by fracked natural gas

its cheaper,cleaner  and easier to extract

power companies in my state continue to shut down coal fired plants and switch to natural gas
my electric rates have dropped by 25%

forget coal,at least in first world countries
we don't need the expense ,the pollution and environmental damage of that poison
let India and China continue to poison their country and themselves
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Albert Quote  Post ReplyReply Direct Link To This Post Posted: July 15 2017 at 5:21am
The stock market has been good to me lately and enjoying the tech runs.  Did good on Micron (MU), and loading up on one called Sorrento (SRNE) at $1.90 as analysts are giving it a target of $20.  I'm always a sucker for analyst forecasts that are 10x the current price, lol. 

The market is overvalued, but it sure favors Trump a lot.   Good time to invest for maybe another year or so, hopefully. 
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Watch SRNE at $2.00 with target of $20.   They partnered with Chinese.   Old Albert always knows what he's doing.  Unless you ask my wife.  

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Post Options Post Options   Thanks (1) Thanks(1)   Quote carbon20 Quote  Post ReplyReply Direct Link To This Post Posted: July 15 2017 at 4:05pm
Originally posted by jacksdad jacksdad wrote:

Originally posted by Medclinician Medclinician wrote:

It is time to pay attention to the Rust Belt and the Coal miners and stop protesting killing whales and the forests. Protesting is not effective. It may be fun for people now legally high and rich and in school with nothing better to do, but it does nothing



Couldn't disagree more, Med. Just because people feel strongly enough about an issue that they choose to protest doesn't automatically make them drug users, students or the idle rich. Protesting is a perfectly valid means of expressing an opinion, particularly in a country that values freedom of speech. Many of our basic rights were won by protesters who often risked life and limb.
You see no value in defending the environment? I understand that the Trump administration doesn't give a crap about it, especially when there's money to be made, but I'm surprised to hear you say that.
And while we're on the subject of the environment - coal is done as a fuel. It's filthy, expensive, dangerous to mine, and fast receding in history's rear view mirror. Nobody realistically believes it's going to be making a come back. Trump's promise to revitalize the coal industry was just another of his empty campaign promises. He said what people wanted to hear even though he had no intention of making good on it.

couldnt agree more JD,


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Post Options Post Options   Thanks (0) Thanks(0)   Quote Albert Quote  Post ReplyReply Direct Link To This Post Posted: July 16 2017 at 12:15pm
I like SRNE in the stock world lol.   This is going to be really odd lol, but after researching, on the following link, wondering if Sorrento SRNE may have found the cure to curing cancer and killing tumors.   See image on page 20.   Don't really care if it goes to $1,000 a share if it were true, and really don't give a damn about the money.  I make a good living.  But the image on page 20 of killing tumors is very compelling.  Cancer is a monster and absolutely hate it.  

http://sorrentotherapeutics.com/wp-content/uploads/2017/03/Sorrento-Corporate-Presentation-ROTH-Mar-2017-FINAL.pdf
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Technophobe Quote  Post ReplyReply Direct Link To This Post Posted: July 16 2017 at 4:36pm
I could not agree more, Boss.

I had a good look at that report.

Obviously they are after the money.  Curing cancer would make them lots.  Treating it effectively, but long term would make them more, so the drugs Cetuximab, Infliximab, Basiliximab, Omalizumab are probably their golden geese.

BUT, bless them, they appear to be going after the real McCoy with the antibody therapy as well.  That is potentially the magic bullet.  There is no way that could make them the same huge amount of money, as a cured patient does not need to come back for another dose, but it would be a wonderful thing and would wipe the opposition out!
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Albert Quote  Post ReplyReply Direct Link To This Post Posted: July 18 2017 at 10:43am
I agree tech.  :)
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