Just an update until some things are finished. If you look for them there are many, bios about people who will grow old with very little savings. The recent Wapo post put it bluntly and cruelly: it will widen the divide between those who do and those who don’t, or those with or without.
The stock market is a way to keep in touch with things from North Korea to healthcare. It is, when it falls, it will really put Trump behind the 8-ball.
For months now really smart and experienced people have been saying the U.S. stock market, with all its value and influence, is an overvalued bubble. It is on a par with the worst recessions or depressions in history. Then, over the past quarter or half a year, it went up farther. There hasn’t been a meaningful correction in something like two years.
By valuations I mean, are these companies worth this much? For the most part they’re the same companies from five, even ten years, ago. Earnings and the economy are strong, but are they really worth two or three (or more) times what they were a few years ago?
For me, five, six, seven years of 17% returns, then 27% over the past year, is not sustainable. It is also “wealth creatable.” It is more than just savings.
“This is what we have been waiting for” one of the many, in the news analysts said maybe 6 or 9 months ago. Specifically, the man was referring to low interest rates, strong profits, low inflation, and strong growth. That is true.
It is not sustainable. There are (at least) to components to stock pricing, 1) underlying fundamentals (profits, economy, etc.) and 2) market sentiment. Right now they are both sky-high.
Trump is the least popular president in history. He represents a lifestyle most people cannot relate to. He is not going to change. The next three years, beginning with the mid-term elections, may have a lot to do with his replacement. Recently, lower corporate taxes, is perhaps his final–or just another–bubble.
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