Author Topic: Why Hasn’t Wall Street Crashed Yet?  (Read 897 times)

0 Members and 1 Guest are viewing this topic.

Offline thaiga

Why Hasn’t Wall Street Crashed Yet?
« on: February 13, 2015, 07:29:21 PM »
If you are going to look at the fundamental health of Wall Street, you would really be scratching your head right now.

There are so many warning signs. One of the most classic warning signs is the Dow Jones crash indicator. According to the Dow Jones crash indicator, if the transportation index crashes along with the main Dow Jones industrial index, and neither one recovers, a financial correction is to follow. This actually happened in 2008 right before the great financial crash.

However, this recently happened, and there is no crash yet. A lot of people are under the mistaken assumption that Wall Street has finally become immune to historical crash predictors. I beg to differ.

The main reason why Wall Street hasn’t crashed yet is because of the stimulus. You have to remember that, while the U.S. Federal Reserve has stopped quantitative easing, there is still a huge amount of easy money flowing through the financial markets. Thanks to the Bank of Japan and the European central bank. In fact, the European central bank just announced that they would be pumping at least 1.1 trillion euros into the global financial system.

Of course, the whole idea of stimulus is to pump as much money buying up bonds so that some of this money would end up into actual investments. These investments would lead to real jobs and real economic recovery. Unfortunately, this is all a pipe dream. This is actually just one giant welfare scam for rich people. Not surprisingly, traditional indicators of market crashes like spikes in the price of gold and oil have failed to materialize. In fact, it is going the other way. Oil has crashed by more than 50%, and gold is stuck at $1,200 per ounce.

The reality is that these waves of stimulus have no way to go. There is no asset class that would absorb all that easy liquidity. This is happening in developed markets. It is also happening in emerging markets like the Philippine Stock Exchange. That money has to go somewhere. The reality is that the asset prices are being valued in such inflated levels that it will only hasten the crash. Expect the trigger to come from an unusual source.

A lot of market observers are saying that the trigger would come from the Greek exit from the European union. Others are saying that it can come from a tech stock crash of the S&P 500. I suspect that it is going to come from left field. It hasn’t been factored in to the price of the euro or the Dow Jones industrial average. It is this surprise factor that will make it crushing enough to trigger cell signals across the globe.

streetwisejournal
Anyone who goes to a psychiatrist should have his head examined.
 

Offline Al

Re: Why Hasn’t Wall Street Crashed Yet?
« Reply #1 on: February 14, 2015, 05:51:49 PM »
There is nothing like a bit of hyperbole in the headline to get the blood flowing. Why hasn't the market crashed? And of course this expert has it all figured out, and who knows, he maybe even partially or totally right.

This current bull market has been ongoing since March 2009 so it is getting a bit long in the tooth. And if you are a long term investor you know that you can count on periodic corrections, that could be mild or more severe. And the reasons for the next correction could be one that this author lists, or could be something completely different.

I rarely put much weight in anyone's market prognostications. I am a long term investor with an asset allocation that works for me. When the next correction comes, I will ride it out, as I have done so many in the past. I keep an eye on that allocation and if things start to get out of wack I rebalance. I am a believer in rock bottom cheap index funds and keep some emergency money out of the markets and dry for, well, emergencies.

I rarely watch the CNBC talking heads on television, except when I am bored and looking for entertainment, I don't put much stock in so-called expert opinions like this one, and I remain unemotional about day-to-day market gyrations.

Life is too short.

And I need to see a man about a horse.
 

Offline thaiga

Re: Why Hasn’t Wall Street Crashed Yet?
« Reply #2 on: February 14, 2015, 06:57:44 PM »
Good post al you sound very shrewd.

here's another from Jacob Maslow the Editor of streetwisejournal, whom they claim he has extensive
experience with writing about global financial matters. Only writing.
  :)

Three Stocks to Buy If There Is a Crash

Let’s face it. The chances of the stock market crashing are higher now more than ever. It doesn’t take a genius to figure out that the only thing propping up equities valuations at stock markets all over the world is cheap stimulus money. Whether the money came from the U.S. Federal Reserve, the European central bank, or the Bank of Japan, it all leads to the same conclusion. Left to their own, all these stock markets don’t have enough sound economic fundamentals to justify their sky-high valuations.

Many analysts point to the fact that stocks are priced at their historic highs. There is really not much room to move on the upside. However, there is a lot of room to fall on the downside. It is only a matter of time until the global financial markets start trending downwards. In the event that there is a crash, keep the following stocks in mind. They may be great buys to scoop up because they can position your portfolio strategically for upward movements in the short-term future.

Salesforce.com

Salesforce.com (NYSE:CRM) is no joke when it comes to enterprise systems. It is a very heavy cloud-based competitor. It is definitely well positioned to take care of future developments in cloud-based enterprise systems. Moreover, its niche market is never going away. There will always be a need to manage customer interaction. There will always be a need to manage customer engagement.

The great thing about this market is that it is very easy to scale up. Whenever you are talking about customer engagement, there are so many value-added add-ons and premium placements and services that you can pile on. Moreover, Salesforce.com allows special custom programs to be built on its platform. This open-ended flexibility makes it a great platform for future growth. This is definitely a great stock to buy at depressed prices.

Amazon

Amazon (NASDAQ:AMZN) is the future of online commerce. This is the once and future king. A lot of people like to criticize it. The good news is that it is invested in a very robust infrastructure and can weather any economic storms in the future. Moreover, it has the seeds for creating a truly seamless traffic and commerce platform that generates traffic, as well as monetizes that traffic. Amazon is definitely a great buy if the market crashes.

General Electric

This is a very powerful old school company that you should look into. General Electric (NYSE:GE) has really gone out of its way to go back to its industrial roots. It has spun off or gotten rid of divisions that really don’t speak to the core of its industrial mission. Expect General Electric to make a strong comeback if there is a great financial crash in the future.

streetwisejournal
Anyone who goes to a psychiatrist should have his head examined.
 

 



Thailand
Statistics