Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Points and Figures (Reporter)
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

Is The Stock Market Overheated Like 1999?

% of readers think this story is Fact. Add your two cents.


It’s pretty easy to find articles calling for market tops today.  The next crash is just right around the corner.  I have been seeing the same exact article since 1987.

Here is what we know for certain.

  • You can only see bubbles in the rearview mirror. If you could predict them, or tease them out, then you can take action on them.
  • Markets price in all available information and put it into today’s stock price.
  • Markets aren’t controlled by a cabal of evil geniuses.  The market is bigger than any single player or cadre of players.

The last time it was this heated, it was 2009 and Obama was elected President.  Here is a chart of the 2009 market.  There was no crash. If you were short you got crushed.
SPY Chart

SPY data by YCharts

It’s very easy to put together a logical argument that the stock market is overheated today. Unemployment caused by terrible state public policy regarding the pandemic has bankrupted thousands of businesses and millions of people. Here is a chart today.
SPY Chart

SPY data by YCharts

The charts look similar. In 2009, it just kept going. Here is a chart of the 1999 market.
SPY Chart

SPY data by YCharts

What’s the difference between 1999 and 2020?

I cannot find the tape but in January of 2000 I was on Bloomberg television and the anchor asked me where the Nasdaq was going.  I had looked at a bunch of charts before I went on and I said, “The companies that have gone public have no earnings.  It’s all gas that is causing the rally. I think it goes to 1500.”  The Nasdaq soon hit its high right after that and I was pulled off Bloomberg for making crazy statements.

The Nasdaq went to 1500.  But, it was the toughest short in the history of shorts up until that point.  It proved the market could find your “insolvency” point.  Markets tend to inflict max pain on the people who trade them.  It is a financial numbers game but it’s just as much as a psychological game as you fight with your own internal demons as trades pan or don’t pan out.

So, what are the biggest differences?

The Fed.  The Fed is printing money like Frank Abagnale printed fake checks.  If you don’t know who he is, look him up.  But, no central bank is showing any discipline at all.  The EU is printing money too.  Does anyone think the Fed gets off 0% anytime soon?

The companies going public today in general, and I will make an exception for Door Dash, have business models and are servicing customers.  Are their multiples too high?  Maybe but that’s not for me to say it’s for the market to say.  You have a choice every day to buy or sell their stock.

A potential new administration.  Joe Biden if he gets the Senate will raise corporate, income, and capital gains taxes.  That’s not good for stocks.  Right now, the market is betting he doesn’t get the Senate.

Biden will also re-regulate lots of industries which will massively increase costs.  It is fuzzy right now what exactly he will do but if we look at Obama era regulation, it’s not going to be pretty.  Is it enough to kill a stock market rally with the Fed on 0%?  Very very hard to make the case that it is.

The vaccine.  If the vaccine is successful the pandemic is over.  The question becomes how fast totalitarian governors and mayors roll back their tyrannical policies.  People like that tend to like power and control and see it as their little gift to you, not the other way around.  Rolling them back quickly risks admitting they made a mistake.  Politicians never make mistakes, it is always someone else’s fault.

I don’t think this market is anything like 1999 but might be sort of similar to 2009.  That doesn’t mean we won’t see a bear market.  But, it will be precious few people that actually take advantage of it and short at the right time so they make money.

The post Is The Stock Market Overheated Like 1999? first appeared on Points and Figures.



Source: http://pointsandfigures.com/2020/12/11/is-the-stock-market-overheated-like-1999/


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST


Order by Phone at 888-809-8385 or online at https://www.herbanomic.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen! 
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover -  Reduces Smart Meter radiation by 96%!  (See Video)

Immusist Beverage Concentrate - Proprietary blend, formulated to reduce inflammation while hydrating and oxygenating the cells.

Report abuse
Loading...

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.