Day to day discussions on S/P, page-8004

@DrManhattan

posted

"The lithium sector is going to bounce really hard at some stage"

I'm just putting an opinion out there on what I think will drive sentiment and the sector. When I say the sector, I mean the equity market side of the sector which pretty much like the whole market is driven by what the US does, ie how much more Kool-Aid the Fed is prepared to give to keep the market bubble alive.

Tesla as I've pointed out is practically the entire current market in the US for EVs and the Model3 is the biggest story in that space by a long way. I'm just putting the premise out that Tesla's success will be a big factor for PLS's and other lithium companies share price successess, a much bigger driver than what is being portrayed on these threads.

The LIT X ETF as I have pointed out is not a big investment vehicle. It has a tiny fraction of assets in comparison to its constituent companies, it trades far more thinly and with far less value than most of its constituent companies and its performance since inception 9 years ago has not set the world on fire (with a cumulative gain of only ~10% over all this time). Based on the performnce of LIT X as a sole measure, the lithium sector's performance is not consistent with a booming disruptive sector which is about to change humanity forever. Maybe that performance is yet to come but my thesis is it will only come if the Model3 Tesla in the US can lead the way.

The opaque Chinese lithium complex with its domestic car makers and markets and downstream lithium companies is just not a driver of US market sentiment in my opinion. Same goes for the Europe. US markets don't care if Norwegians are buying more EVa, they care that the Fed doesn't blow up the market with more interest rate rises.

The DJIA has bubbled from ~6,500 points in March 2009 to ~26,000 points today. That is a compound growth rate of 14.87% per annum. Over the same period US GDP has grown maybe a little over 2% per annum (see chart).


Where do you all think the money came from to grow the US stock market 300% since March 2009 while the US economy only grew by 44% in the same time (US GDP in 2008= $14.22 trillion, US GDP in 2018 = $20.5 trillion)?

The answer is debt creation.

Since President Obama took office, the US national debt has increased by $11.3 trillion. On January 20, 2009, it stood at $10.6 trillion, it is now $21.97 trillion.

The market value of all listed companies in the US has increased from $15.077 trillion in 2009 to $31.121 trillion (in 2017) according to the lastest data on the World Bank's website.

https://data.worldbank.org/indicator/CM.MKT.LCAP.CD?locations=US

This next site has total value of the S&P 500 stocks at $22.065 trillion as at 31/12/2018.

http://siblisresearch.com/data/total-market-cap-sp-500/

S&P 500 captures about 80% of total US market capitalisation, so $27.581 trillion for all US stocks.

Whatever the true figure, the reality is the bubble US stock markets have not been inflated by money pouring out of a booming US economy over the last 10 years, it has been created by printing money.

Investors are happy and seem to always forget that their wealth has been created with Uncle Sam's credit card.

I say be careful because the "Lord giveth and the Lord Taketh away".

Remember you are invested in markets. Esh