Realcent.org

This graphic is the best expression of the bubble we're in that I've seen to date. Doesn't mean it won't continue for longer, but if there is not some mechanism that closes the gap between asset value and GDP then we are in for a crash eventually.

(As an aside, first time I've done this with a graphic solely from my phone. Worked better than expected.)

Oh crap! Excellent and scary graph, 68.

Posted without comment after looking at the graph...
https://www.youtube.com/watch?v=t45DKmtzTHo

From the title of this post, I didn't know if it was going to be about champagne or a porn star. So naturally, I had to read it...

Saw this chart too. Kind of scary. I think we are heading for a market correction in 2018. The talking heads are saying that insiders have been net sellers since September. Theory is that the tax plan is to get corporate cash back into the U.S. for buy backs and dividends to keep the market going.

Recyclersteve wrote:From the title of this post, I didn't know if it was going to be about champagne or a porn star. So naturally, I had to read it...

That's interesting; I hadn't thought of champagne.

Changechecker wrote: The talking heads are saying that insiders have been net sellers since September.

FYI- Insiders are almost always net sellers. That is the way it is supposed to be, as many of them receive stock compensation regularly. Also, many have shares with zero cost and a useful life of 10 years, so selling in and of itself means nothing.

Think about it this way. Assume you are a highly compensated individual for a company and get stock options with a 10 year life to them that you can sell perhaps 2-4 years after receiving them. If you hold out and don't sell till near the end of the 10 year life, that would actually mean you really believe in your company (a good thing in my book).

Now, let me give you a tidbit according to Barron's, which I consider to be a credible source (I've read it every week since the late 1990's and have made good money by doing so). Barron's has been tracking this info weekly for years and says that SELLERS NORMALLY OUTNUMBER BUYERS (INSIDERS ONLY- NOT ALL SELLERS) BY A MARGIN OF SOMEWHERE BETWEEN 12:1 AND 20:1. So to hear that someone said insiders have been net sellers is no big deal whatsoever. It would be very hard to find a time, no matter how much of a screaming buy the market is, when inside sellers don't outnumber inside buyers.

To add a bit of context, if sellers outnumber by more than 20:1, it is supposed to be bearish. If they outnumber by less than 12:1, it is supposed to be bullish. But the numbers go back and forth between bullish and bearish so often that it is hard to infer anything legitimate from what it happening.

By the way, the stock market is another one of my hobbies and was a great profession for me for almost 20 years.

Consumer debt is at record levels. Rates are rising, we could have an inverted yield curve as early as next year if the Fed keeps raising them. Isn't this a precursor to economic slowdown AKA recession

Changechecker wrote:Consumer debt is at record levels. Rates are rising, we could have an inverted yield curve as early as next year if the Fed keeps raising them. Isn't this a precursor to economic slowdown AKA recession

Yes, but you have to accept the old adage "The market can remain irrational longer than you and I can remain solvent." In other words, everything you say may be logical and technically correct. Yet the market can still do the opposite and you could still lose money.

An example: I remember hearing people say many times for decades that high interest rates are bad for precious metals. If that is true, then why did gold skyrocket to $875/oz. and silver to $50+ in early 1980- in the face of very high interest and inflation rates? You could counter by saying that the Hunt Brothers tried to corner the silver market, but that wouldn't explain the huge move in gold.

I don't really care too much if/when we go into a recession. I don't worry about what economists say because I've spoken with plenty of them in my financial career of almost 20 years- and seldom do they do very well in the stock market or manage money for others. I don't know if it is the old saying about the "paralysis of analysis" or what it is. They may be smart academically, but translating that to the stock market is another thing altogether. Much economic news is misleading or just wrong- so I've never been a huge fan of it.

Examples:

1) Inflation rates are misleading because they don't include food and energy (that's a couple big omissions).
2) Unemployment rates are misleading because they don't include people who have long since given up looking for work, yet still have the skills to be employed if someone would just give them a chance.
3) Money supply used to include an M3 measure that isn't even reported anymore and hasn't been for some time.

I feel comfortable in my ability to make money (not by doing the right trade necessarily, but by managing the risk) with pretty much any hand dealt to me. That said, I am comfortable selling short and trading options. If you are in the stock market and don't know how to make money from a market fall (not necessarily shorting- perhaps you buy a bearish ETF or trade puts), then you are missing out on a big potential opportunity. I remember saying to lots of people in 2008-09 (in the teeth of that huge collapse) that they need to learn how to take advantage of a down market. Some would say "I'll just wait until the market breaks down." By then it will be too late!! You need to develop the skill while the market is acting like it is. Otherwise, you will panic when there is really big money to be made. When the big money is staring you in the eye, you will hesitate and miss out on the opportunity. My gosh, what does it take for some people to step up once in a while!

Example: The open on Monday, August 24, 2015 when the Dow was down a whopping 1,089 points in just 5 minutes! If you had to call someone to ask for advice on what to do, you missed the boat! If you had a protective sell stop to keep your losses reasonable, it likely didn't work well (if it worked at all) that morning.

Here is a thought provoking question for everyone- let's just assume that tomorrow morning every single stock in the U.S. would be down around 20%. It would only happen briefly and then the opportunity would be gone. Assuming you've got spare cash and are looking for a bargain, what would you buy?

Expect the unexpected... and hopefully your computer monitor has an airbag built into it!!!!