September 5, 2014

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People have such short memories. Even though we are repeating
so many of the same patterns that we witnessed in 2000-2001 and
2007-2008, most people do not think that another financial crash is
coming. In fact, with the stock market setting record high after
record high lately, I have been taking quite a bit of criticism for my
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relentless warnings about the coming financial storm. Many of the
comments go something like this: "Snyder you are a moron!
Nothing you say ever comes true. The stock market is going to
keep on rocking and Obama is going to lead this country back to
greatness. I hope that you choke on all of your doom and gloom."
Of course these critics never offer any hard evidence that I have
been wrong about anything. They just assume that since the
stock market has soared to unprecedented heights that all of us
"bears" must have been wrong.
But the truth is that what we are observing right now is classic
bubble behavior. The stock market crashes of 1929, 1987 and
2008 were all preceded by irrational market rallies in the spring or
summer. The financial markets have become completely divorced
from economic reality, and such a state of affairs never lasts
forever. It is just a matter of time before a correction comes.
But every time there is a bubble, most people end up getting
caught up in all of the euphoria. And it is happening again. In
fact, CNBC has just reported that bearishness among market
newsletter writers is the lowest that it has been since 1987. But of
course we all remember what happened back in 1987...
Professional investors haven't had this little fear
about stocks since Ronald Reagan was president.
It was the same year Michael Jackson told us in a
song he was "Bad." The New York Giants won the
Super Bowl.
And oh yeah ... by the way ... the stock market
crashed.
As gauged by the weekly Investors Intelligence
report, bearishness among market newsletter writers
has fallen to 13.3 percent, a level it has not seen
since 1987 as the market continues to set new highs
despite a seemingly endless call for a long-overdue
correction.
People need to understand that just because something has not
happened yet does not mean that it is not going to happen.
In this day and age, we have extremely short attention spans and
we do not have the patience to wait for much of anything. But the
financial world is not a game of checkers. It is a game of chess
where things can take an extended period of time to play out.
Those that are mocking those of us that are bearish should
consider where we stand financially in comparison to previous
crash cycles. For example, the derivatives bubble is 20 percent
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larger than it was back in 2008, the "too big to fail banks" are 37
percent larger than they were back in 2008 and global debt levels
are 40 percent larger than they were back in 2008.
In other words, many of our long-term economic problems are a lot
worse than they were just prior to the last major financial
meltdown.
But most people pay such little attention to the fundamentals these
days. All they can see is that little stock market ticker going up
and up and up.
Other analysts with much stronger credentials than I are issuing
similar ominous warnings about what is ahead for the financial
markets.
For example, Nobel Prize-winning economist Robert Shiller is
warning that market valuations are tremendously bloated right
now...
Shiller, a Yale University professor who is often cited
as one of the most influential people in economics
and finance in the world, created a metric that
compares stock prices with corporate profits. The
metric recently climbed above 25. That level has only
been surpassed three times since 1881: 1929, 1999
and 2007.
Steep market tumbles followed each instance,
including the bursting of the dotcom bubble in the
early 2000s.
But it doesn't take a genius to see this.
Just look at the chart of the NASDAQ that I have posted below.
The "dotcom bubble" in 2000 is really easy to see. So why can't
more people recognize the bubble that is happening now?...
BlackListed News CC 2006-2014
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In so many ways this bubble is reminiscent of the "dotcom bubble"
of 14 years ago. Consider the following numbers from a recent
article by Brett Arends...
When you look at medians, or in other words the
typical stock, valuations are higher today than they
were at the peak in 1999-2000.
For example, the median stock today is 20 times
earnings. In January 2000, it was 16 times.
The median stock today trades at 2.5 times book or
net asset value. At the start of 2000 it was just 2.2
times.
The median stock today trades for 1.8 times annual
per-share revenues. In 2000: just 1.4 times.
What we are experiencing is not normal.
And this is especially true considering the fact that our overall
economic performance is tepid at best.
A stock market correction is coming.
But you don't have to take my word for it. Some of the most
prominent names in the financial world are warning about the
coming correction. Two of them were recently interviewed
by CNBC...
A jolt to international confidence in central banks will
lead to a 30 to 60 percent market decline, David Tice,
president of Tice Capital and founder of the Prudent
Bear Fund, told CNBC's "Power Lunch." When this
happens, he said, markets will face a "period of
extreme turmoil."
This crash will be precipitated, he said, by a
disillusionment with the Federal Reserve's
"confidence game," which will then see inflation rise,
and the Fed scramble to raise rates. At that point,
Tice added, "the Fed starts to lose control."
Another market watcher also called for an impending
fall.
The Fed's low interest rates could bring a "scary"
50-60 percent market correction, said technical
analyst Abigail Doolittle.
"Unfortunately, I think it could come on a crash similar
to what happened in 2007," Doolittle, the founder of
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Peak Theories Research, said on "Squawk Box" a
day after the S&P 500 closed above the 2,000 level
for the first time ever. "It's tough to know what the
exact catalyst will be. But that's the very nature of that
kind of selloff. They start slowly and then happen very
suddenly."
And as Zero Hedge has pointed out, billionaires such as Sam Zell,
George Soros, Stan Druckenmiller and Carl Icahn all seem to be
"quietly preparing" for the next crash.
Yes, the next financial crash has taken longer to come to fruition
than many had anticipated. But as I have discussed so many
times before, this is a very good thing. We should want this period
of relative stability to last for as long as possible. The longer that
things remain relatively stable, the longer that all of us have to
prepare and to position ourselves for the financial chaos that is
coming.
At this point, the fact that we are in the midst of a massive financial
bubble has become so obvious that even the Bank for
International Settlements is publicly talking about it...
Financial markets have been exuberant over the past
year, [...] dancing mainly to the tune of central bank
decisions. Volatility in equity, fixed income and foreign
exchange markets has sagged to historical lows.
Obviously, market participants are pricing in
hardly any risks.
Many have expected me to "change my tune" about the coming
collapse because of how well the stock market has been
performing.
Well, that simply is not going to happen.
Our economic fundamentals have continued to deteriorate, and
our financial system is in far worse shape than it was just prior to
the financial crash of 2008.
The truth is that we are right on schedule for the next great
financial crash.
You can choose to ignore the warnings if you would like, but
ultimately time will reveal who was right and who was wrong.
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Comments
1


TakeOffYourTinfoilHat
Michael Snyder needs to crash his car into a wall.
Stupid fear mongering idiot that writes on a fifth
grade level. Nothing to see here folks from Michael
Snyder. A broken clock is still correct twice a day. If
you claim the market is going to nosedive for long
enough eventually you'll be correct because that is
how the business cycle works. If you had listened to
that idiot Michael Snyder several years ago you
would have missed out on double digit returns. Fuck
off Michael, everyone can see thru your bullshit. You
should have stuck with law school at least you would
fit in with the rest of the money grubbing jackasses.
P s. Your first novel was a miserable failure and
written like you were in middle school.


Steveng

The double digit returns are being propped up
by the Feds which, in turn, many small time
investors - thinking that the stock market will
continue to grow - borrow money to get into
the stock market. Margins have doubled
since 2012. When the Feds decide it's time to

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