The Six Scariest Charts In The World Today

 

Stocks reside on the same planet as bonds AND stocks are significantly correlated to the return on bonds.

So even if stocks “shouldn’t” go up, they still can…

And this is going to be intellectually painful to a lot of people. After all, today the S&P500 sits at an ‘as reported’ P/E ratio of 24.61!

That is not cheap. Historic average is 15.

But that P/E ratio of 24.61 is living in a world where the following is happening:

(1) 30% of developed-world debt is negative and growing.
(2) An additional $1.6 trillion of developed world debt went negative since Brexit.
(3) 100% of swiss debt is negative yielding.
(4) Japan’s debt is 400% of GDP.

And so we could see one last move higher in stocks and possibly everything else too.

Stocks…
Bonds…
Gold…
Real Estate…

After all why shouldn’t everything go up. Why can’t we all win all the time?

Isn’t that what Yellen, Draghi and Abe want?

But man you better be ready, because if this debt party does go into overdrive, then the hangover is going to destroy many futures.

Yes, I know. That word “destroy”. But I think that is what’s going to happen to a lot of people’s wealth.

And the worst part. When the hurt gets hurting, it’s going to be when people are in their 60’s or 70’s or 80’s.

And not like the good old days when the market fell 49% from 2000 to 2002 when those who are 66 right now, were a mere 50 years old.

What’s going to hurt most is the removal of people’s “revenue-generating” runway.

There will be no more, “I have a good ten more years of working left” to help people this time around.

And sadly, that’s what I believe is coming… a clean out. Even if that ‘clean out’ comes after one more stock market party.

So here’s the deal.

Invest based on what IS happening and not what you want to happen.
Invest with your money aligned to the market and not your age.
Invest with your money aligned to the market and not your “self-described” risk tolerance.

And finally throw out conventional ideas like Diversification and replace them with Probability.

So with that review of this week’s news, I want to move your attention to the six scariest charts on the planet right now.

What happens to these six charts will determine what happens the next six to twelve months.

Do not ignore these six charts.

Access to this weekend’s podcast is here.

In Your Corner,

RCPeck-Dig Signature.JPG     
RC Peck, CFP  

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