When trading an index, it pays to track the top 5-10 stocks to get confirmation for sector downtrend. Last Friday, the top 5 in $SPX sold off more than the index that should indicate more sell-off are ahead.
Fed minutes shows concern is growing over massive liquidity injection and huge dbth pile up. This should (because market is not normal) the shift in change of sentiments
“… several participants observed that equity, corporate debt, and CRE valuations were elevated and drew attention to high levels of corporate indebtedness and weak underwriting standards in leveraged loan markets. Some participants expressed the concern that financial imbalances-including overvaluation and excessive indebtedness-could amplify an adverse shock to the economy …”
“… many participants remarked that the Committee should not rule out the possibility of adjusting the stance of monetary policy to mitigate financial stability risks, particularly when those risks have important implications for the economic outlook and when macroprudential tools had been or were likely to be ineffective at mitigating those risks…”
US Fed QE should fail as Japan already tried it. Since the 2008 GFC, Japan has been pumping massive Liquidity (QE) that on a relative GDP basis, is 3 times higher than in the U.S. Japanese experiment was a dismal failure, and Japanese stocks price are stock at 10 years low going nowhere. In the US, the media machine has changed the narrative so, instead we have a Bubble on the back of QEs. In some sense, Japan is in better position as their debt did not create a massive bubble.
My point is, the US and global economy at best is in circular stagnation, so earnings wont go up, EPS remains negative. Based on current 20 P/E broad based and 40-50 P/E on sectors like tech, the 10 years return projection of a a mixed balance portfolio of bonds and stocks is less than 0.1%. The return from Hedge funds and pension funds for ordinary investors has been 0% in case of Long/Short Hedge funds and less than 2% for mixed funds. Ordinary investors don't buy pure top five or just index. So all the cheers for the market that gone up by 30% is not really in people's pocket.
On top of that mom and dads turned into traders and buying $Tesla at $920 thinking it goes to the moon. I shorted $tesla at $920 and made profit. Novice bullish traders will end up like many as bag holders when market sell-off picks up
Fed minutes shows concern is growing over massive liquidity injection and huge dbth pile up. This should (because market is not normal) the shift in change of sentiments
“… several participants observed that equity, corporate debt, and CRE valuations were elevated and drew attention to high levels of corporate indebtedness and weak underwriting standards in leveraged loan markets. Some participants expressed the concern that financial imbalances-including overvaluation and excessive indebtedness-could amplify an adverse shock to the economy …”
“… many participants remarked that the Committee should not rule out the possibility of adjusting the stance of monetary policy to mitigate financial stability risks, particularly when those risks have important implications for the economic outlook and when macroprudential tools had been or were likely to be ineffective at mitigating those risks…”
US Fed QE should fail as Japan already tried it. Since the 2008 GFC, Japan has been pumping massive Liquidity (QE) that on a relative GDP basis, is 3 times higher than in the U.S. Japanese experiment was a dismal failure, and Japanese stocks price are stock at 10 years low going nowhere. In the US, the media machine has changed the narrative so, instead we have a Bubble on the back of QEs. In some sense, Japan is in better position as their debt did not create a massive bubble.
My point is, the US and global economy at best is in circular stagnation, so earnings wont go up, EPS remains negative. Based on current 20 P/E broad based and 40-50 P/E on sectors like tech, the 10 years return projection of a a mixed balance portfolio of bonds and stocks is less than 0.1%. The return from Hedge funds and pension funds for ordinary investors has been 0% in case of Long/Short Hedge funds and less than 2% for mixed funds. Ordinary investors don't buy pure top five or just index. So all the cheers for the market that gone up by 30% is not really in people's pocket.
On top of that mom and dads turned into traders and buying $Tesla at $920 thinking it goes to the moon. I shorted $tesla at $920 and made profit. Novice bullish traders will end up like many as bag holders when market sell-off picks up
