One reader of my website was quite adamant that I am wrong in thinking the markets might crash. I did not specify a date, but I expressed my view that things seem dodgy. So I will post his comments and also flesh out some of my thoughts. This is, to me, an important topic:
This was the reader’s response:
Re the capital markets. There are (a) those who successfully invest / trade significant capital (many times your house value) and (b) those who do not. The opinions of those in group (b) and those available free of charge to the general public are worthless.
PS No, the markets are not going to crash in 2020. The retracement is over, the secular bull intact, and the only people who don’t understand this are those in group (b).
Let me give some background:
One of my supporters was a trader on Wall St in the 1990s. So he was mentioning to me the other day that some of the ETFs that were 3x leveraged had been changed to a leverage of 2x. The suggestion was that maybe the powers that be are preparing for instability.
I have someone who handles my pension funds. His associate is someone who also handles investments in the US market. That person is a professional, and was saying to me, over a year ago, that US stock markets are EXTREMELY over-valued – ridiculously so. Among my chats to that person was about whether Globalism is coming to an end, and whether the foreign investors (people in North America and Europe), are getting scared of investing in Africa. It made for an interesting discussion and I saw that recently, I think $83 billion was withdrawn by the Western world from the "emerging markets" (read Third World).
I also have been reading that the US Fed, is actually buying up ETFs on the stock market in order to support it. That does NOT sound good. I’m not sure if the Fed is propping up stocks by buying them too.
I am aware of the computer systems that they implemented since the 2008 collapse which "stress test" things to see if all is well.
However, the input of $2 trillion does suggest that the markets are not in good shape and need to be floated artificially. Now, maybe that $2 trillion will be enough to keep the markets flying for the next 10 years. However, you cannot inflate markets indefinitely and you cannot avoid stock market crashes indefinitely.
So maybe the markets are safe for 2020, etc – but it does seem to me that if it was NOT for intervention, that markets would be failing especially with COVID.
I am always interested to learn more, and I hope my reader will come back and comment more. I would like to hear his views.