Pay Attention, it will be difficult

       Stock market and the Economy- things to know which few ae aware of!

VALUATIONS? The standard fundamental gauges clearly show that the stock markets are overvalued. For example: The market’s price to sales ratio is now 40% above the long term average high, that statistic indicates that if the total gross sales of all the S&P companies is compared to the stock market value; it is too high, not sustainable and it will eventually correct….….

EARNINGS…The price earning’s ratio for the S&P 500 is currently 23 times earnings…the long term average has been 16 times…so merely returning to the normal standard would be harsh…. We expect a decline of 30% to 40%!

LACK OF LIQUIDITY….the stock markets offer limited liquidity. Getting “in and out” of positions (buying and selling) is often quite difficult for many stocks.

THE VOLUME …. Few people understand that approximately 90% of the stock market volume is institutional volume. That is not to say that the ownership is 90% owned by traders but of the daily trading volume…

INTEREST RATES ….They are artificially low and do not reflect the true cost of borrowing money and inflation. This is central bank engineered manipulation which is designed to keep the world economy from falling off a cliff. High interest rates would kill the stock market and lead into a long painful bear market. Rising rates would also badly damage the real estate market.

OIL RISK… Trump made the US the major oil producer and helped keep world fuel prices low. But today the administration’s completely moronic decision to limit exploration and production has brought the $110/barrel price. But with the inept US government leadership, poor decisions are to be expected.

NASDAQ …the difference…the high volatility of the NASDAQ market is reflective of the fact that smaller traders are in that market and trading it aggressively. And keep in mind that market makers don’t keep inventories of their stocks as they did in the past.

IT IS A “MUST INVEST MARKET” Very few investors comprehend the fact (yes, a fact) that mutual funds, retirement funds and hedge funds are competing for investors’ cash. The best results attract the public and underperformers often lose to higher performers.

Quote made to us…“We had a large investor client move when another fund manager reported that his fund had better results than we had for a prior quarter.” That factor often leads to severe overvaluation that cannot support itself during declines.

U.S. DOLLAR…the key to the kingdom, the dollar is overvalued according to the IMF (15% to 20%). U.S. dollar weakness will be reflected in a stock market decline and a rise in commodities prices as in gold….as has occurred in the past.

CYCLES…they are now suggesting very negative times ahead, cycles are not always on schedule but can return with a vengeance; they suggest that we will soon see a harsh bear market in the industrial stocks and a poor economy.

INFLATION…it is very high, but it did not recently arrive; it has been ongoing for years, they mislead the public by not including food and exergy costs!