Always a good read the XJO posts, about the only ones I read.
What a time to be living at the moment. The world is being fuelled by cheap credit and a huge consumption binge, a big race to see who can become the richest and fattest person in your street.
My guess is more than 50% of readers of this post are under 30 years old and having the time of their lives. Let me tell you this is a very abnormal market and yes the market does not always go up.
Computers are driving stocks with an unprecedent amount of cash. You think the market is going down, buy calls. You think the market is going up, buy puts.
I read many financial reports and am astounded at the prices of many stocks, their is little value about. Bad financials, stock goes up, driven by some black box. Good financials, stock goes down, driven by some black box.
Instos/hedge funds/ margins/ CFD's have control of this market and have soaked up a lot of free trading shares in many stocks. The above groups have been running the show in recent years, when they start letting it go, beware below.
Let me tell you it is not normal:
to have a market that goes up every week, even when it looks good for a fall it goes up.
for houses to have an average price of $300k-$600k, just do the calculations on the interest, where will you be in 20 years time?
for banks to lend 100% of the value of a house.
for 20 year olds to be owning brand new cars.
for so many people to be maxed out on credit cards. ( Need a $140 pair of shoes that are worth $5, just charge it.
The tide will turn at some time and fear and panic will feed on itself. Wipe 1% off the XJO and thats $10b that won't get spent in this country, 10% = $100b.
Hope and greed soon turns into panic and despair, what will cause it is a guess, when it happens is a guess.
Remember 1987 and what followed for a decade? Oh sorry were you still in primary school?
The current scenario is not as bad and maybe the market will go up forever.
No one rings the bell at the top and the break is precended by a crack, it only takes one big fund to start a decent fall. Recognise it when it comes for what it is and be prepared.
This whole economy is a big con job, buy an overpriced house you can't afford, fill it full of overpriced imported furniture you can't afford, buy another car, boat, have more children. Vote for some liar politician who makes you feel good about yourself and is protecting you from the nasty people (likely to be himself and big business).
I'm not making predictions of figures or dates just throwing another perspective around.
Some event be it man made, another war or mother nature will take a shine off your perspective. Until then enjoy the ride this market has given you and think of your fellow man and be generous to homeless people and ones who are not sharing your good fortunes.
The XJO posts are a great read to understand where the market is and where it is heading, seems to be a 50/50 bet at the moment but hey that may change this morning.
Us older folk are squirreling cash and assets away to see them thru the next few years.
(20min delay)