When wall street meets politics

Hullo Pol

I am not a doomer. I do not believe in rapid zombie apocalypse style economic collapse.

I do not endorse the industry of scam artists constantly calling crash.

I did hold tech stocks like MSFT in the 90s and sold them in 1999 something I am very glad I did.

I want to draw your attention to the event that will probably shape the next two years. The near inevitability of a major stock price correction occurring soon.

When the fed raised interest rates to 'cool' the stoock markets in 2000, it collapsed. The fed is now on a one way train to raise interest rates. It becomes more expensive for idiots to borrow money and gamble with margin call leverage as one example.

Robert shiller was one man I followed in 1999, he eventually published a book and won a nobel prize based on his studies of PE ratios as a wrning in stock markets.

Attached is the chart of his metric the shiller PE ratio.

In 30 years I have never seen a worse time to buy stocks. The SnP dividends are shockingly bad, the shiller PE ratio is now approaching 30 (anyone buying much after 29 is an idiot).


So were is the market going

Lets take the dow as an example (hit has soared over the last six months).

The current shiller PE is 28.97. Just under 30.

The current dow jones index is at 20,519.57

The mean average since 1881 for the shiller PE ration has been 16.72

The lowest it got was 4.78 in 1920.

So the AVERAGE is 16, let's be generous and say 17 we are basically at 30

But in correction it goes much lower

Let be very very generous and say it corrects to not much underaverage let's say 10 (nowhere near the low of 4.7)

That gives us

10/30 x 20500 =6800

So that is what you are looking at

The dow going from 20500-2100 down to 6800-7000

I have literally laughed at doomers in the preceding years so I am making this post now and with a clear mind.

The defining political event of the next 18 months is going to be the greatest dow collapse in history.

Other urls found in this thread:

whitehouse.gov/bringing-back-jobs-and-growth
forbes.com/sites/timworstall/2015/12/04/the-federal-reserve-does-not-control-the-federal-funds-rate/#f53e81269afc
twitter.com/SFWRedditVideos

Tis is the dividend payments on SnP stocks.

It is miserable and at 1.95% is barely matching inflation

BY not paying dividends companies have been inflating their stock price buy buying their own stocks using cheap borrowed money.

You will hear a lot about how was this even legal when the tide goes out.

how does this shiller PE thing work?

>Why are stock buybacks legal

Wait why wouldn't they be legal? Isn't it conceptually the same as you and a friend owning something together, and you buying out your friends share?

This is the dow. It has never come out of a bull or growth phase with a near vertical climb.

This vertical climb incorrectly blamed on the Trump effect (it is neither his fault or his cause) is an indicator of exponentiality i.e a terminal phase.

The current President Trump is not responsible for what is about to happen. It is mathematically inevitable.

Won't the just use QE I hear you say?

They can't and I will explain why below.

This plane is going down

>>Why are stock buybacks legal
>Wait why wouldn't they be legal? Isn't it conceptually the same as you and a friend owning something together, and you buying out your friends share?


Why would bundling sets of risky loans together and selling them as investments be illegal?

Ahem.

>I have literally laughed at doomers
but you just admitted they were right.

Bump cause I want to hear more. And specifically if OP doesn't rely on only one indicator.

But I do agree with post. Trump effect is nothing more than the media searching for reasons (excuses) for current market moves, which are purely technical.

Wow, you're telling me that the stock market has almost been completely artificial since the 70s? Say it ain't so, it's almost like the top people in Wall Street are criminals who have been ripping the world off for decades. Really makes you (((think))))

>>I have literally laughed at doomers
>but you just admitted they were right.

No.

Anyone who was a doomer since 2009 missed out badly. Also a gas mask will not help. Or indeed an ar-15. Neither will in all probability society collapse, there will just be new levels of extraordinary poverty.

Current 10 Year Treasury Rate: 2.47%
At market close Tue Feb 14, 2017

Mean: 4.59%
Median: 3.87%
Min: 1.50% (Jul 2016)
Max: 15.32% (Sep 1981)


You don;t need to look hard to see other indicators but the vertical rise on the end of a bull market in the dow says that the effects are becoming exponential

US economic activity during the dot com recession also peaked march 2001.

If the Shiller PE ratio can go up to 45 before crashing in a bit over a year, wouldn't that indicate we're potentially much further than 18 months from a crash?

Look at the yearly earning of the S&P 500 for each of the past ten years.
Adjust these earnings for inflation, using the CPI (ie: quote each earnings figure in 2017 dollars)
Average these values (ie: add them up and divide by ten), giving us e10.
Then take the current Price of the S&P 500 and divide by e10.

There's too much roleplaying and HAPPENING baiting for me to believe anything on this site anymore. You're an Irish dammit, what would you even care for american finance

>US economic activity during the dot com recession also peaked march 2001.
>If the Shiller PE ratio can go up to 45 before crashing in a bit over a year, wouldn't that indicate we're potentially much further than 18 months from a crash?

If you look at the shiller PE chart you will see that anything much over 29 is prone to rapid collapse. I'd say 25 but I'm caution now because I'm old.

If we hit 44 for example it will come relatively quickly as the effects driving this have gone as I say exponential. However we are ready to crash now. I would get out if the dow hits 21000 even if you love risk because if you hold at those levels you are going to loose about 66%.

I expect shorting to be banned again during this collapse and that is not the wrong word for what this will be.

>You're an Irish dammit, what would you even care for american finance

Should I be farming potatoes or something?

Try farming potatoes. It is hard work.

I am not a holder of silver (I do have some gold not a great deal)

I note that silver has gone up 4.5% in the last 30 days.

When interest rate rises hit this market will implode. This is what triggered the tech bubble crash.

USA is the biggest consumer in the world. If their economy goes to shit, so does everyone elses, especially producers'.

Well OP, according to the whitehouse

whitehouse.gov/bringing-back-jobs-and-growth

America is returning to 4% annual GDP growth. OP BTFO!

Anybody that disagrees is shareblue.

>Neither will in all probability society collapse,
> there will just be new levels of extraordinary poverty.

and what do you think will happen with this new levels of extraordinary poverty? Yes, society will collapse. Doomers were correct, their call was made too early for normies.

So /POL

expect Trump to be unfairly blamed for what is coming.

Effectively the fed no longer controls interest rates. They have to rise and that rise will precipitate the biggest stock market crash in american history.


What do?

Buy back into high dividend paying stocks when it hits 7000 and prepare yourself for a degree of social unrest among low earners.

>and what do you think will happen with this >new levels of extraordinary poverty?

Societies don't collapse because half their citizens are on the bread line. They continue. So will global economics just as they did at the height of ww2.


>Yes, society will collapse.
No it won't. We are an adaptable species but some people are going to be on the streets who never ever imagined they would be.


> Doomers were correct, their call was made >too early for normies.

Timing is everything and just shouting doom all the time does not mean that are right.

This is THE big event of the next 18 months.

>social unrest
that sounds like the kick-off of a societal collapse
Trump is an actor as much as obama was, everything that's going to happen was planned long before and the dude already knows every detail of that plan.

if stock downturns would be easy to predict we wouldnt have any, NEXT

>Well OP, according to the whitehouse
>whitehouse.gov/bringing-back-jobs-and-growth
>America is returning to 4% annual GDP growth. OP BTFO!

It is not. Sorry. It will never pass 5% until this crash has happened. The recovery phase will however be healthy.
>Anybody that disagrees is shareblue.

I loathe them and I find it most unfortunate that President Trump is going to be blamed for this.

The fact is at this juncture no US president can do anything about it.

>When the fed raised interest rates to 'cool' the stoock markets in 2000, it collapsed. The fed is now on a one way train to raise interest rates. It becomes more expensive for idiots to borrow money and gamble with margin call leverage as one example.

This argument is simply wrong, the fed said they are going to raise rates 3 times this year. So the market would already have collapsed in the anticipation of that. THE ONLY WAY your argument would be correct is if you believed that the market believed that Fed wont raise interest rates and that they have no credibility in that regard.

>if stock downturns would be easy to predict we wouldnt have any, NEXT

Like I say. I was either in luck or wise in 1999 but I see the same in fact much worse indicators now and the core one that I followed in 1999 was PE and shiller nailed it.

>>When the fed raised interest rates to 'cool' the stoock markets in 2000, it collapsed. The fed is now on a one way train to raise interest rates. It becomes more expensive for idiots to borrow money and gamble with margin call leverage as one example.
>This argument is simply wrong, the fed said they are going to raise rates 3 times this year. So the market would already have collapsed in the anticipation of that. THE ONLY WAY your argument would be correct is if you believed that the market believed that Fed wont raise interest rates and that they have no credibility in that regard.

You are assuming that the fed is not actually forced by the market to raise them. They have no other choice. It is out of their hands

fine, if its out of their hands the market would have already collapsed in the anticipation of rate hikes, i mean if you know that the market is going down massively when the hike hits, you short that motherfucker before hand.

...

>We are an adaptable species
species as in "on the origin of species" from mason Darwin? because this book is nothing short of a SCI-FI novel.
> but some people are going to be on the streets who never ever imagined they would be.
I don't think that any people in the street imagined they would be.
>Timing is everything and just shouting doom all the time does not mean that are right.
Timing an event that is under control of a tiny elite is impossible but their call was right nonetheless. The markets have been dead for a long time, there has been no price discovery for years, every trader and actor knows that prices are rigged and because no market collapse would be allowed by the top, they just kept buying the fucking dip, that was the only game left to make money. But what's about to change is much more than that.

>fine, if its out of their hands the market would have already collapsed in the anticipation of rate hikes, i mean if you know that the market is going down massively when the hike hits, you short that motherfucker before hand.

Shorting is a mugs game and demands a large amount of capital you are prepared to loose.

The dot com bubble collapsed because of interest rate rises. It is that simple.

So you're saying that we should wait until after the crash and buy back into long term stocks around 7000 DOW? How long will it take to reach that low?

I only have a few thousands in savings, will I be forced out onto the streets? Should I withdraw my money and save it in cash for later investment?

>Why would bundling sets of risky loans together and selling them as investments be illegal?

This was only fucked up because they were rated triple A when they were actually dogshit, and the banks selling them were then betting on them failing.

It was massive fraud. The fraud and dishonesty is the problem.

>So you're saying that we should wait until after the crash and buy back into long term stocks around 7000 DOW? How long will it take to reach that low?

Within 18 months although thhere will be a phase of exponential market rises that have already begun, timing an exist from them is however impossible. This will not hit a top and stay there. It will collapse immediately

>What do?
>Buy back into high dividend paying stocks when it hits 7000

Any suggestions on which to buy in particular?

Also - how do you feel about the Marijuana penny stocks?

As the interest rate rises are a key to WHEN this will collapse here is the scgedule for Fed metings this year
FOMC Meeting Schedule 2017

(FOMC Meeting calendar )

Month Date Event
Jan/Feb 31-1 FOMC Meeting (Jan/Feb)
March 14-15* FOMC Meeting (Mar)
May 2-3 FOMC Meeting (May)
June 13-14* FOMC Meeting (Jun)
July 25-26 FOMC Meeting (Jul)
September 19-20* FOMC Meeting (Sep)
Oct/Nov 31-1 FOMC Meeting (Oct/Nov)
December 12-13* FOMC Meeting (Dec)

>>What do?
>>Buy back into high dividend paying stocks when it hits 7000
>Any suggestions on which to buy in particular?

High dividend payers with low PE ratios and cash in the bank e.g NOT amazon

>Also - how do you feel about the Marijuana penny stocks?

All penny stocks are garbage

Here is the straight PE (non shiller for the snp500)


It is on 26.32

The average is 15.64

The low is 5.31

Again lets be generous and say the correction is JUST to 10

10/26 *2341 =~900

Now that is an optimist ic view based just on regular PEs. I'd say worse based on shiller

Robert James "Bob" Shiller (born March 29, 1946) is an American Nobel Laureate, economist, academic, and best-selling author. He currently serves as a Sterling Professor of Economics at Yale University and is a fellow at the Yale School of Management's International Center for Finance.


I wonder what yales pension fund is invested in right now.....

Thank you for your wisdom and warning, noble potato farmer.

>December 12-13* FOMC Meeting (Dec)

I'm guessing here.

Jun 2017 raise
August 2017 raise
November 2017 (markets overheadting is news) raise

Market beings crashing

So second half of this year. The first rate rise is a countdown to BOOM

>Thank you for your wisdom and warning, noble potato farmer.

You are welcome culture of fine meat pate based sandwich objects

to be real
everyone and their mothers suspect this coming
the world sees china weakening and india not exactly taking over since 2014
retards conclude china & india btfo, USA stronk
non-retards see a global recession/ depression coming

“Waiting too long to remove accommodation would be unwise, potentially requiring the [Federal Open Market Committee] to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession,” Yellen said 14 Feb.

The Fed is next scheduled to meet 14-15 March.


She knows. I expect her to vanish soon then before the shitstorm she should be gone in the next 4 months for some ahem, personal or political reason..

>everyone and their mothers suspect this coming

Timing is everything. People selling gas masks use economic collapse as a daily sales pitch for the last decade, same with silver and gold sellers.

if it was so high in 2008, how can you say that it will collapse soon? like, 26 isnt as near as high as in 2008

>if it was so high in 2008, how can you say that it will collapse soon? like, 26 isnt as near as high as in 2008

The shiller pe was Jan 1, 2008 24.02

Today it is 28.97.

The regular PE was
Jan 1, 2008 21.46

Today is 26.32

>if it was so high in 2008, how can you say that it will collapse soon? like, 26 isnt as near as high as in 2008

See above checked and both regular PE and schiller PE are far higher now then they were at the start of 2008.

You are wrong user.

>culture of fine meat pate based sandwich objects

i might be worried if interest rates were at historical norms, but they're not, and they're not going to be for awhile.

What can be done to prepare for this for the average person?

found this

yellen is supposed to go in feb 2018 and apparently determined not to quit.

I wonder if she makes it.

She will frame her resignation to be Trumps fault and because she was not in charge the crash happened. nice narrative for her out.

Rates will rise though.....

>What can be done to prepare for this for the average person?
how would you prepare or a period of unemployment?

clear debts, have some cash savings, have a good cv, don't live in areas with a lot of social housing or struggling lower middle class families.

If I understand this correctly - rates pretty much *have* to rise at this point, yeah?

How do we get plebs to understand this so there's less "OMFG DRUMPF CRASHED DA ENOMOCY" talk?

>If I understand this correctly - rates pretty much *have* to rise at this point, yeah?

yes

> How do we get plebs to understand this so there's less "OMFG DRUMPF CRASHED DA ENOMOCY" talk?

If only you could. He's in no way responsible but will be blamed. There is nothing the US gov can do here, QE would have to be on the same scale ass the existing US monetary supply to have the same effect as in 08. That is not possible. It is going to hurt.

Shit couple of years to have to face retirement that's for sure.

For millennials it is actually in my opinion positive. A real reset will flush the useless and inept and create opportunities for real growth.
Unemployment will be rising in 2018 though for sure even if Trumps public woks schemes take some edge off it.

>i might be worried if interest rates were at historical norms, but they're not, and they're not going to be for awhile.


>“Waiting too long to remove accommodation would be unwise, potentially requiring the [Federal Open Market Committee] to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession,” Yellen said 14 Feb.

They are under severe market pressure to raise rates.......and quickly. Watch the market go vertical and a panic response o slamming rates.

>i might be worried if interest rates were at historical norms, but they're not, and they're not going to be for awhile.

Actually the mean for the real US 5 year interest rate since 2000 is 0.60%

The current is 0.11%

.5% is a big deal.

.75 over a year is huge.

Current 7 Year Real Interest Rate: 0.37%
Current 10 Year Real Interest Rate: 0.46%
Current 20 Year Real Interest Rate: 0.77%
Current 30 Year Real Interest Rate: 0.94%

Well silver and gold have been doing well for the last decade

If you are in a tech startup get out of it and into a real company and get job security.

They are going to get pounded on financing (again)

>If I understand this correctly - rates pretty much *have* to rise at this point, yeah?
Yes, otherwise FED has 0 leverage in case of another recession, which is bound to happen sooner or later.

>Well silver and gold have been doing well for the last decade

Silver. Nah. Not particularly although 4.5% in the last 30 days is impressive. It is a volatile commodity and a relatively small market.

It's also manipulated to hell. There have been so many times some party has payed a settlement of few hundred millions due to manipulating silver.

Lest they go negative interest rates, would be hilarious though.

>>If I understand this correctly - rates pretty much *have* to rise at this point, yeah?
>Yes, otherwise FED has 0 leverage in case of another recession, which is bound to happen sooner or later.

It is forced by the market the fed does not 'control' interest rates. The banks will just raise them anyway. Here is an article that will explain

"The point here is that the Federal Funds rate is the rate at which the banks lend to each other in order to be able to meet their reserve requirements. In this it's very like the overnight Libor in sterling in London. But the point is that it's the rate the banks lend to each other: not the rate at which the Fed does anything. And what the Fed is doing is using those Open Market Operations to try and influence it during the day and or week. Which is usually does very well, at least as well as anyone could. But do note those huge variances there.
And the point and implication of this is to point out that the Fed simply does not "control" interest rates. They are market determined.
"

forbes.com/sites/timworstall/2015/12/04/the-federal-reserve-does-not-control-the-federal-funds-rate/#f53e81269afc

You see te fed has literally no choice or their rates will go completely out of whack with market rates. They have to raise them

what the hell do you think is happening?

And when they raise them a CRACK sound and two rate rises later a market collapse. see snp dividends, PE, Shiller PE.

Its a huge bubble.

>DEC 4, 2015

Then why the fuck was Yellen searching for excuses in EVERY SINGLE FOMC meeting last year?

"If rates go up, you're going to see something that's not pretty," the billionaire businessman told Fox News during a Tuesday morning phone interview. "It's all a big bubble." 9 August 2016


He's no idiot that man but there is nothing he can do to stop this.It is far worse now than it was when he said that. The market threw a hissy fit over one tiny rise and will implode with further rises. .

>>DEC 4, 2015
>Then why the fuck was Yellen searching for excuses in EVERY SINGLE FOMC meeting last year?

Because even that tiny rise nearly sparked a crash. They are in even worse territory now. Greenspan rose rates and the tech bubble imploded. I see her getting out and blaming trump to avoid getting nailed for this. She fucked up.

>you short that motherfucker before hand.

They ban shorting during a crash. You do know that?

likely nothing, possibly a disaster. Markets have a certain predictive power. They are sometimes wrong and put bad probability or do not account for systemic risk(as in 2008). But what I say for certain is that if there is a sure event(or a fairly certain), as with the current rate hikes the markets will already price this probability in beforehand. Its kind of like how when a company announces their quarterly earnings its not just the fact that earnings are positive or negative that moves the stock, but if those earnings are better or worse than the market expected them to be.

What i am getting at its that its literally impossible to predict in advanced business cycles, looking at just the PE ratio, or that 'DOW 20K is overpriced' you ALWAYS have to compare it to the rest of the economy, changes in taxes, changes in institutions, global risk or lack therof etc.

im saying that if you know that the recession or a downturn is coming because of the decrease in interest rates in 6months and its public information you will be shorting them today.

The fact is the market does not think that the recession is coming because of slight increase in interest rate.

sorry increase in interest rate

>What i am getting at its that its literally impossible to predict in advanced business cycles, looking at just the PE ratio, or that 'DOW 20K is overpriced' you ALWAYS have to compare it to the rest of the economy, changes in taxes, changes in institutions, global risk or lack therof etc.

Robert Shiller won a Nobel prize in economics for going exactly that.

I expect large funds to be exiting and selling to retail investors and smaller funds and rivals so they get the shitty end of the stick as the market rises.

In a way you are right always assume everyone is smarter. What you are missing is a lot of the big and smart money will have moved when it pops.

The UK is going to get buried

First of last year, 0.25% raise in rates by the fed = one of worst start to US stock markets ever.

That made things real for me.

It's all a matter of how long they can keep it going.

I only have a $15,000 interest in the market right now, 401K. Just sitting on a bunch of cash with my thumb up my ass.

How to protect 401k?

>im saying that if you know that the recession or a downturn is coming because of the decrease in interest rates in 6months and its public information you will be shorting them today.

You'd be exiting positions into then yes an I'll bet big funds already are doing that. I'm sure goldman sachs will come out rosy as ever.

The people getting laid off won't though

>I only have a $15,000 interest in the market right now, 401K. Just sitting on a bunch of cash with my thumb up my ass.
>How to protect 401k?

Go into cash before each fed meeting

pay dbnts

but why into cash? if the market crashes, wont the dollar crash too? what is the risk for a rapid inflation?

>but why into cash? if the market crashes, wont the dollar crash too? what is the risk for a rapid inflation?

At least interest rates will be rising as opposed to loosing 66% (or more) of your capital.

>if the market crashes, wont the dollar crash too?

No. In fact the dollar will strengthen

>The fact is the market does not think that the recession is coming
What else is new? The market doesn't think recession is coming prior to every single recession. That's why bubble bursts are so much fun.

um dude, the idea is that the stocks price as set by the market does not have checks for the faultiness of company loans making it essentially the same as 2005 derivatives.

Shit masquerading as good due to a flaw in the system.

The thing is, if it is done a little bit, it should be mostly harmless and trigger a positive cascade that the company can capitalize on without much problems.

but the problem happens when 1) everybody does it and 2) when someone really big does it to the extreme.

I wonder, is this why america has so much money owned as debt? corporations borrowing rates and numbers should be way above private options.

Oh shit.. I see what you mean OP this means that most stock is fucking worthless or at best difficult to trust/ estimate..

or rather is hinged (somewhat) on the value of the USD.

These systemic risks are fucking ridiculous (if my understanding from your point OP is correct)

How would you even begin to address this?
Is the current market fraudulent? I was joking about shorting the US markets the other day... Also which markets will be hit the worst in your estimation? There should be some logic within this, which corporations are most at risk for doing such a profit scheme, NY based ones?

>>if the market crashes, wont the dollar crash too?
>No. In fact the dollar will strengthen

Safe haven, market turmil, international markets will also tank. France, London, Italy (esp Italy), Spain. higher rates in USD. Sterling is fucked as is the FTSE

and then you google rational expectations theory and realize that once you put a theory out there that neatly ties past performance together and makes it easy to predict business cycles, investors would be using it and the next recession would not have the same characteristics as the previous.

its phillips curve all over again

>No. In fact the dollar will strengthen

USD is in the finishing stages of it's bull.

yes because they are unpredictable and often random events, which is NOT the interest rate hike.

lets be honest, depends on the crash, if it US specific and eurozone comes out well the dollar will crash. or if the recession is so severe they replace dollar as the reserve currency by an index of a bunch of currencies

I have only one holding at this time, ticker GNW.

After the buyout, I will be sitting on cash. I will prolly buy another rental house with it.

>Is the current market fraudulent?

I think the stock buy backs on borrowed corporate bonds have been extreme and conceal the fact that the likes of IBM is an under invested shitshow being run into the ground. It also props up jokes like amazon, fb etc. The corporate bond market and municipals could unravel rapidly.

> I was joking about shorting the US markets >the other day...

For the big boys only. You loose money every day you wait on a short and you need te capital to float that and be prepared to deal with it if you are out. If you are wrong by a week you could loose all your money.

>Also which markets will be hit the worst in >your estimation?

London

>There should be some logic within this, which >corporations are most at risk for doing such a >profit scheme, NY based ones?

Hard to say. Te sea monsters are always lying on the beech when the tide goes out but as they are usually the ones concealing fraud internally there is no way to tell by looking at them externally.

>and then you google rational expectations theory and realize that once you put a theory out there that neatly ties past performance together and makes it easy to predict business cycles, investors would be using it and the next recession would not have the same characteristics as the previous.
>its phillips curve all over again

Again. I would be fairly sure that big funds are in fact selling into the rise and exiting positions.

>if it US specific and eurozone comes out well the dollar will crash

It will not be US specific other markets are just as bad e.g FTSE

Hint: OTM VIX calls.

Buy them.

Average FTSE 100 P/E is 30.0


Anyone able to find a shiller PE for the FTSE with history. Bet it is at least double average if not more.

>I would be fairly sure that big funds are in fact selling into the rise and exiting positions

wouldnt explain why the dow/other indexes have been going up tbhfamalam

>(((stock markets)))
I hope they are abolished outright when the next depression happens

>Hint: OTM VIX calls.
>Buy them.

For what strike dates......better be on the nail or your money is gone. You buy for November and it hits feb and you are broke and very annoyed.

If the stock market collapses there will be a goddamn civil war here in Canada screencap this and mark my fucking words. The economy is already a house of cards propped up by bread and circuses and all it will take is even a small breeze to send it all crashing down