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MARKET CRASH: Your Blood Will RUN COLD!

This article was contributed by James Davis with Future Money Trends. 

Nothing stays idle, but especially not these kinds of markets, WHERE THEY presently stand.

The Coronavirus has, from an economic perspective, TRIMMED THE FAT, leaving the S&P 500, NASDAQ and Dow Jones indices in their MOST CONCENTRATED stance ever!

Never in the history of the public markets have so few companies been so valuable, compared with the whole range of them.

This phenomenon is referred to as low MARKET BREADTH and it is best shown in the A/D line, which is short for Advance/Decline line.

The line basically measures HOW MANY component companies are shrinking in terms of market cap, versus how many GROW THEIRS in any given time.

Courtesy: Zerohedge.com

 

Just in the PAST FEW DAYS, it was plain to see how these performances of 495 components of the index behave, as opposed to the BIG FIVE – this is the divergence on FULL DISPLAY.

History doesn’t tell a bullish story on what comes after such RARE DISPARITY, since it mostly happens right before the biggest market tops of our times – but I HAVE MY DOUBTS this time.

We must consider the circumstances in which we find ourselves and remain OPEN TO THE POSSIBILITY that we’ve never entered a recession when leverage was this low, as in this case.

In recessions, there’s typically a BLATANT MISMANAGEMENT of the balance sheets in one or more industries. Clearly, this time around, there was very little of that.

The banking sector, for example, wasn’t leveraged whatsoever. Banks didn’t even REQUIRE A BAILOUT.

This is important, since it means the banks aren’t RUSHING TO DELEVERAGE, and they’re able to renegotiate terms of payment for borrowers, even delaying payment altogether.

Think of the number of people who will now have a POSITIVE EXPERIENCE with their bank – it will CARRY WEIGHT and allow millennials to feel safe and HAVE TRUST in their next few dealings with the banks, just as they want to BUY HOMES.

Courtesy: Zerohedge.com

In 2020, I’ve personally invested more funds in real estate than ever before. Since the Covid-19 outbreak, with many real estate segments ON THE HOOK, such as office buildings, parking lots, casinos and hotels, malls and recreational parks, the number of opportunities one can access IS MASSIVE.

Debt on notes is ranging 8% to 10% and with all these funds CHASING FEWER DEALS, multifamily complexes that are collecting rents in states less hard-hit, as well as companies constructing single-family homes in suburbs, the Return-On-Equity could yield 12%-16%, comprised of 6% cash flow and 10% appreciation.

This money is INCREASING in VELOCITY.

I have my doubts on whether or not the economy is in a “W”-shaped recovery, with a second recession underway, as many predict.

For that reason, I cherish diversification and implement ways of GENERATING RETURNS in private equity, which doesn’t fluctuate as much as the public markets do.

No one has all the right answers, but what we do see, by speaking with large funds and CEOs, is that there’s AVAILABILITY TO CREDIT.

To me, this means, first and foremost, that the worst is behind us. There’s trust and trust is the FIRST STEP towards better days.

Markets won’t stay here. 495 businesses will either recover, sending the index MUCH HIGHER, or they won’t, in which case the BIG FIVE won’t be able to carry the weight for long.

The post MARKET CRASH: Your Blood Will RUN COLD! first appeared on SHTF Plan – When It Hits The Fan, Don't Say We Didn't Warn You.

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RENDEZVOUS w/DESTINY: Silver $52 – PIPES BURSTING!

This article was contributed by Lior Gantz of the Wealth Research Group. 

I showed you the THREE BIG TRUTHS of the coming decade. Ignoring these trends will result in poverty, while adapting to them and ADOPTING THEM will lead TO RICHES.

The second truth is that rates will REMAIN NEAR ZERO for years, perhaps for good (until the dollar is replaced or joined by another reserve currency).

If that’s the case, NEGATIVE RATES are nearly guaranteed. Think of it in this light: if rates are zero and inflation isn’t, then real rates are negative BY DEFINITION.

Too many currency units in circulation have led the large institutional funds to embark upon adventures that they wouldn’t otherwise choose to engage in; they’re borrowing because it’s there for the taking.

There’s just NO WAY to generate a fixed-income stream the same way that it WAS POSSIBLE in the 1980s and 1990s, when nominal rates were high and inflation was quite moderate, NOT TO MENTION that debt/GDP ratios weren’t alarming, as they are today.

Courtesy: Zerohedge.com

The chart above shows the STRENGTH of the TREND. Inflation is rising, since Covid-19 isn’t nearly as bad as those early epidemiologists SCREAMED it WOULD BE.

Therefore, not only is the rebound quick to happen, BUT SINCE industries weren’t in a TOUGH SPOT going into this mess, there’s a real chance that dominant companies will BOUNCE BACK faster than we might expect.

In fact, that’s what the MARKETS ENVISION, since they treat the world’s MEGA-CAP companies, such as Apple Inc., Facebook, Google, Amazon and Microsoft, as more than regular businesses. They ascribe a MASSIVE PREMIUM to them, since they’re also stores of value, AAA bonds and gold, all in ONE CLICK of the mouse.

They dominate their industries, almost like monopolies do, but it’s not like that at all; customers have plenty of OTHER CHOICES, but they love the products and the services they get from them.

Other companies CAN BE DISRUPTED, overtaken or somehow seem vulnerable, but these ones are DEEMED INVINCIBLE.

This notion is translated into HISTORICALLY-HIGH levels of concentration of size, as you can see below:

Courtesy: Zerohedge.com, BearTrapsReport

The market now has days where the OVERWHELMING MAJORITY of stocks are down, deep IN THE RED and yet it closes up. This is possible only because the WEIGHT of the index is towards market capitalization.

This demonstrates the importance of owning the indices, since history proves that the LION’S SHARE of ultimate return originates from only a handful of stocks.

Two years ago was the last time I WALKED THE STREETS of Manhattan and visited the Federal Reserve’s building, as well as Wall Street, home to the New York Stock Exchange.

On this exchange, more than 3,000 public companies are listed. Today, with markets at ALL-TIME HIGHS, fewer than 50 of these stocks are trading at 52-week highs! On the NASDAQ, where about 3,500 tech and other types of companies are listed, fewer than 150 stocks are trading at 52-week highs!

I can see the WRITING ON THE WALL and it tells me we’re either ON THE PRECIPICE of a severe correction or, if the economy generally improves, on the cusp of a SPECTACULAR RALLY to even loftier valuations.

While it is impossible to predict which is next, we can HEDGE PROPERLY, by both diversifying into companies that are STILL CHEAP, while at the same time having exposure to the index, but also allocating funds into precious metals, real estate and PRIVATE DEBT.

Diversification is paramount!

The post RENDEZVOUS w/DESTINY: Silver – PIPES BURSTING! first appeared on SHTF Plan – When It Hits The Fan, Don't Say We Didn't Warn You.

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