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|User Info||There's No Bubble In Stocks; entered at 2017-12-22 01:47:07|
Registered: 2010-11-02 Dallas, TX
Hard to see an obvious downside catalyst right here to be honest. Literally every financial asset except for commodities are trading at generational highs no matter how you measure it. The punch bowl is slowly being drained by the Fed at this point via flat to declining balance sheet and increased short rates, but no one seems to care. How many more years/months will this whole complex continue to grind higher?|
Perhaps it is just a matter of time and patience to wait for this exuberance to burn off, but outside of financial assets being "expensive" it is hard to find major imbalances. At least in the housing bubble you had migrant workers qualifying for jumbo ninjas and I worked for the company who was the BIGGEST LBO OF ALL TIME (we all know how that turned out) so it was pretty easy to see the catalysts for the bubble prick.
There are no fundamentals in equity markets in the short or medium term (go ahead and tell me about the one stock you have held until you have received its fully discounted cash flows) as multiples are just a plug figure for investor confidence. Bonds are fighting the rate hikes by just smashing the hell out of the back end of the curve. Other financial assets are humming along nicely as well. The market literally refuses to sell anything right here.
Obviously a geopolitical black swan could change things, but hard for me to envision a "cash flow" moment (like happened with internet bubble and mortgage bubble) happening anytime soon. Without an identifiable moment where bills come due, it is hard to time these market cycles. Hard to argue with 20% more appreciation in the banana republic stock indices in 2018 if this investor froth continues unabated...especially if John Q. Public keeps buying $1,000 phones that get bricked by the manufacturer every 2 years.