Experts Warn That The “Scariest” Stock Market Signals Are Flashing Red
So many top professionals in the financial industry are sounding the alarm about a coming stock market crash right now. And there certainly have been rumblings in 2018 – not too long ago we had a three day stretch that was called “the tech bloodbath”, and during that time Facebook had the worst day for a single company in stock market history. But we haven’t seen the really big “crash” yet. Many have been waiting for it to happen for several years, and some people out there are convinced that it is never going to come at all. Of course the truth is that we are in perhaps the largest stock market bubble that our nation has ever seen, and all other large stock market bubbles have always ended with a major price collapse. So whether it happens immediately or it takes a little while longer, it is inevitable that stock prices will eventually return to their long-term averages.
Doug Ramsey, the chief investment officer at Leuthold Group, is one of those that is sounding the alarm. Unlike price to earnings ratios, price to sales ratios are very hard to manipulate, and he has pointed out that price to sales ratios are higher than we have ever witnessed before.
In particular, when you look at the median stock price to sales ratio, it is the highest that it has ever been and it is twice as high as it was in February 2000…
To me, that number is absolutely stunning, and it shows that we have a long, long way to fall.
As I have said before, stock prices need to fall by 40 or 50 percent just to get into a neighborhood where they will begin to make sense again.
And something else that Ramsey has pointed out is that in 2018 stocks are behaving very much like they did just before the dotcom bubble crashed…
Another major indicator that is “flashing red” is correlation.
Just prior to the last two stock market crashes, stock prices began to wildly diverge. While some stocks were still going up, others were cratering big time. This lack of uniformity is often a sign that big trouble is on the horizon. The following comes from CNBC…
Well, guess what is happening right now?
James Paulsen, also with the Leuthold Group, is warning that correlation “is at one of the lowest levels in the post-War era”…
When the stock market finally crashes, a lot of people are going to complain that nobody warned them in advance that it was coming, but in reality anybody that cannot see it coming from a mile away must be blind.
There is no question that it is coming. The only question is how soon it will get here.
And it certainly doesn’t help that a trade war has erupted which is greatly disrupting global commerce.
For example, a giant cargo ship carrying 20 million dollars worth of soybeans has been circling in the ocean off the coast of China for over a month because it missed the tariff deadline by just a few hours…
Somebody is going to lose a tremendous amount of money in that deal.
If you take an honest look at the numbers, there is no debate that we are in far worse shape than we were just before the financial crisis of 2008. Our debt levels are much higher, stock prices are way more inflated, and financial institutions have become even more reckless. None of the long-term problems that plagued us back in 2008 have been fixed. Instead, the current system was patched up and all of the bubbles were re-inflated. Unfortunately, our attention spans are so short these days, and for most people 2008 seems like ancient history at this point.
But without a doubt a much worse crisis than 2008 is on the way, and most people are going to be absolutely blind-sided by it.
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