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Warning Sign: The Last Time This Happened In Stock Markets An Epic Crash Followed

U.S., PEAKS, HISTORY, VALUED, HIGHS, HIGH, DATA, VALUATIONS, MARKET, JONES, STREET, DOW, MARKETS, FUND, VALUE, STOCKS, RECORDS, CREDIT, MEDIAN, S&P, INFLATION, EQUITY, INDICATORS, CONSECUTIVE, BARCLAYS, INVESTORS, EXPERTS, STOCK, ANALYSIS, CALCULATED, HEDGE, CRASH, OVERVALUATION,

FEBRUARY 25, 2017

By Mac Slavo

The Dow Jones continues to hit record highs and yesterday it reached a milestone not seen since January of 1987.

Back then, the band Starship was at the top of the charts with their hit song Nothing's Gonna Stop Us Now, which appears to also be the rallying cry of Wall Street, Main Street and 1600 Pennsylvania Avenue today.

Of course, for those who are familiar with their history, that year didn't end up so well for investors. On 'Black Monday', October 19th, 1987, the U.S. stock market suffered the largest crash in history with the Dow Jones losing 22.6% in value, amounting to roughly $500 billion in losses by the end of the trading day.

And if the exuberance of 1987 is any guide, we may be looking at a similar set of events over the course of 2017:

The Dow finished with a more than 30 point gain Thursday and hit its tenth record closing high in a row.

But what makes this rally truly historic is the fact that the market is also continuing to hit new highs during this epic run. That hasn't happened since Ronald Reagan's second term.

The Dow wound up hitting 12 consecutive records in January of 1987, and it went up 13 straight days overall.

Of course, market historians might ominously note that 1987 was also the year that the stock market suffered its worst one-day drop ever. (CNN Money)

The records in and of themselves aren't necessarily an indicator of a coming crash, but they should certainly be raising warnings signs, especially considering that many experts, including traditional bulls and bears, are noting that markets have gone up too high, too fast.

"We're due for at least a rest, if not a correction. We're way overbought," said Steve Massocca, managing director with Wedbush Securities. Massocca said the market will continue to focus on data, with a truck load of reports next week on everything from fourth-quarter GDP to inflation and auto sales. The other focus, of course will be on Washington. (CNBC)

But don't take our word for it. Here is what the Federal Reserve had to say about stocks just a few months ago, before we started breaking historical records like we did on Thursday:

Finally, the chart below shows the median price/revenue ratio of S&P 500 component stocks, which recently pushed to the highest level in history, exceeding both the 2000 and 2007 market peaks. In recent quarters, the broad market has deteriorated, even in the most reasonably valued decile of stocks, but the most richly valued decile has held up for a last hurrah, as it did near the peaks of previous bubbles. This dispersion has created a headwind for hedged-equity strategies in U.S. stocks, particularly value-conscious strategies, but investors should understand that beneath the surface of this short-term outcome is singularly the most extreme point of overvaluation for the median stock in history.

As the analysts at Zero Hedge highlight, we are literally at a point where major banks and analysis firms are justifying corporate valuations at 20+ price/earnings ratios with "animal spirits" as a driving force.

No, seriously, we're not kidding:

Carbon-based traders of a certain vintage - which excludes today's 20-year-old hedge fund managers - may recall a time when a 15x P/E was considered "fair." Not any more. In fact, according to a new analysis by Barclays' equity strategist Keith Parker, which tries to factor in so-called "animal spirits" as a driver of valuation has found that 20x P/E is perfectly normal and fair for the current market, further demonstrating just how deep into the goalseeking rabbit hole US capital markets have fallen.

First, to prove we are not joking, here is Barclays explaining why it is important to quantify animal spirits as a input factor of "permanently high plateaued" P/E multiples:

Core drivers of the P/E multiple and animal spirit indicators

In order to estimate the effects of "animal spirits", or the potential effects of some of President Trump's agenda, we first model the S&P 500 P/E using the core fundamental drivers of equity valuations. We then compare the residual from the model (actual minus fitted P/E) to various indicators of "animal spirits" or potential policy changes, including: tax policy, credit spreads, inflation, macro volatility, long-term growth expectations and corporate/consumer sentiment data.

The punchline: "Based on our findings we incrementally add other variables to build a more comprehensive P/E model, to better evaluate the potential effects of "animal spirits" on equity valuations"

At this point Barclays provides numerous pages of tortured, goalseek "empirical evidence" to extract the result it is after. What it "finds" is that what was once a "fair" 15x P/E is now really 20x P/E thanks to, drumroll, animal spirits

Full report: How A Major Bank "Calculated" That 20x P/E Is Now "Fair Value"

April 21 2017 - Trigger Event for the US Dollar? (Ad)

We're not going to attempt to predict what happens next, but history suggests that extreme valuations, consecutive all-time record highs, and media exuberance often lead to the same end result.

But this time it's different, right?

Perhaps. But we suggest preparing for the worst just in case the experts are wrong. That may include re-balancing your existing portfolio with precious metals assets, moving some of your holdings into cash, and positioning yourself with essential supplies in anticipation of a widespread credit event like the one witnessed during the crash of 2008.

You can read more from Mac Slavo at his site SHTFplan.com.


http://www.activistpost.com/2017/02/warning-sign-last-time-happened-stock-markets-epic-crash-followed.html

https://www.youtube.com/watch?v=PDwSzSJq7r8

https://www.youtube.com/watch?v=6pZCM3702Us

https://www.youtube.com/watch?v=3SlNHT_XPPs

https://www.youtube.com/watch?v=JN3rktJuQL8


\\\\\\\\\

 

 

 

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THE AMERICAN TAXPAYERS

the economy of Israel is dependent on them

_____________________________________________________________

Dependent

The word dependent is an adjective meaning contingent on, relying on, supported by, or addicted to. 
_____________________________________________________________

If the economy of USA goes down, the economy of Israel will go down with them.

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I wouldn't worry about 1987.

Start thinking 1929.

The recession we had in 2008 was similar to that of 1921, with the bank failures, dishonest mortgage practices, etc.  When the bottom fell out of the lies, the cover-ups, and the rampant organized crime a few years later, then the crash of 1929 (Black Friday) took place.

Men who had invested on margin jumped out of tall buildings, because not only had they lost everything, but they were deep in debt to the Mafia and mobsters of the Al Capone era.  They faced much worse than death for failing to pay off their debts.

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Remember in the 1920s it wasnt the people who already owned stock who lost everything and killed themselves, it was new investors who  saw the first stage of the crash thought they were getting a lfe changing bargain and jumped in.   Be careful.

I strongly think those who control the markets will engineer a serious crash.   Again they will buy stocks for pennies, having sold at the top.   Then they will blame Trump and populism, many will lose their jobs and need state help.  There will be rioting.   All this will be used to further their global plan of a NWO.

We are too small to do very much about this as individuals, except be aware, be prepared, and live the best life we can, while we can.   Things we take for granted may not be possible at all in the future.

 

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2 hours ago, Neo said:

Remember in the 1920s it wasnt the people who already owned stock who lost everything and killed themselves, it was new investors who  saw the first stage of the crash thought they were getting a lfe changing bargain and jumped in.   Be careful.

I strongly think those who control the markets will engineer a serious crash.   Again they will buy stocks for pennies, having sold at the top.   Then they will blame Trump and populism, many will lose their jobs and need state help.  There will be rioting.   All this will be used to further their global plan of a NWO.

We are too small to do very much about this as individuals, except be aware, be prepared, and live the best life we can, while we can.   Things we take for granted may not be possible at all in the future.

 

"those who control the markets will engineer a serious crash"


They want to hurt Trump.

The fools don't realize it would finish the USA as a world leader.

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5 hours ago, inca said:

"those who control the markets will engineer a serious crash"


They want to hurt Trump.

The fools don't realize it would finish the USA as a world leader.

The fools don't realize it would finish the USA as a world leader.

If there are enough traitors, a foreign enemy is not needed.

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On 01/03/2017 at 10:39 AM, inca said:

The fools don't realize it would finish the USA as a world leader.

I dont expect it to be limited to just the USA.  They will engineer a world crash and when the time is right buy everything cheap.

Also remember they consider themselves international,  if the USA falls and another becomes world leader they will profit from that too.  They wouldnt care.

These things are very cyclical.   One will fall for another to rise, for that to then fall, and another rise.   It has always worked like that.

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3 hours ago, Neo said:

I dont expect it to be limited to just the USA.  They will engineer a world crash and when the time buy everything cheap.

Also remember they consider themselves international,  if the USA falls and another becomes world leader they will profit from that too.  They wouldnt care.

These things are very cyclical.   One will fall for another to rise, for that to then fall, and another rise.   It has always worked like that.

Trump's enemies are already betting on a USA economic crash on the world's stock markets.

This stupidity could wreck the lives of millions of people.

This sort of political behavior should be made a felony.

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23 hours ago, inca said:

Trump's enemies are already betting on a USA economic crash on the world's stock markets.

This stupidity could wreck the lives of millions of people.

This sort of political behavior should be made a felony.

I wouldnt call them Trump's enemies, I would call them the enemies of everyday people.

The internationals dont care about everyday people, and if it takes a war where millions die to get their goals, that's fine.  

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On 3/2/2017 at 7:40 AM, Neo said:

I dont expect it to be limited to just the USA.  They will engineer a world crash and when the time buy everything cheap.

Also remember they consider themselves international,  if the USA falls and another becomes world leader they will profit from that too.  They wouldnt care.

These things are very cyclical.   One will fall for another to rise, for that to then fall, and another rise.   It has always worked like that.

 

The insiders are slowly dumping their stock so as not to arouse suspicion.

The uninformed gullibles are handing their money over to the banking cabal.

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On 02/03/2017 at 7:40 AM, Neo said:

They will engineer a world crash and when the time is right buy everything cheap.

This did in fact happen in the 1930s, and this is what I have always been told about the Great Depression.  Nowadays, "they" are shadowy figures involved in major, major organized crime.  They are the capi di tutti capi behind the Bilderberg Meetings and the Trilateral Commission, and certain Russian and Eastern European oligarchs and thieves in law who are not invited to those particular meetings, but nonetheless work in conjunction with them.

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