Imminent and severe market correction

[Trembling Hand]

Ahhh..... Remember the good times when the Bears were right... and telling everyone about it.... 8 years ago!!!

Then remember them telling us about its gonna get worse.

What has happened to all the bears lately?

 

[tech/a]

It's winter when bears hibernate.
They will be out in summer

 

[MrBurns]

It's winter when bears hibernate.
They will be out in summer

I know exactly where they are, I have BEN and they are on my doorstep.

 

[noirua]

 

[Miner]

Thanks, Noriua.
Whereas reading everywhere a correction is at the door and today's share price slump is just the beginning (probably)
However, I have a strong allergy against two experts - Jim Rogers who always predicted negativity knowing it is head or tail. He was so politically bias against Biden and open-handedly called him in many names, I always wondered why we need to listen to this person.
Maybe a coincidence but most of the time I have noticed Jim's interviewers are not experienced male or female but very young (inexperienced ) female journalists. I am not envious however but it shows some trend that Jim avoids experienced journalists excepting the promoters who take glowing interviews.

The second person is Vern - from the day he was born probably all he was calling BEAR.
Apology for my blasting against the two so called experts - as I said it is allergic reaction - No Telfast stops the itching

 

[barney]

- as I said it is allergic reaction - No Telfast stops the itching

Lol ......

 

[divs4ever]

Thanks, Noriua.
Whereas reading everywhere a correction is at the door and today's share price slump is just the beginning (probably)
However, I have a strong allergy against two experts - Jim Rogers who always predicted negativity knowing it is head or tail. He was so politically bias against Biden and open-handedly called him in many names, I always wondered why we need to listen to this person.
Maybe a coincidence but most of the time I have noticed Jim's interviewers are not experienced male or female but very young (inexperienced ) female journalists. I am not envious however but it shows some trend that Jim avoids experienced journalists excepting the promoters who take glowing interviews.

The second person is Vern - from the day he was born probably all he was calling BEAR.
Apology for my blasting against the two so called experts - as I said it is allergic reaction - No Telfast stops the itching

now i read somewhere March 2020 was only a sharp correction NOT a full-on crash , because the market ( i assume the ASX 200 ) did not penetrate convincingly the long-term trend line

now IF the XJO is still in a continuing bull trend it isn't very convincing , HOWEVER if you use the US indexes you just have to scratch your head in amazement , the glitch in a l-o-n-g bull run looks a fair comment

by the way i have been waiting for that wretched CRASH since the middle of 2013 .. just as well i disn't rush to cash every 10% drop

 

[Miner]

now i read somewhere March 2020 was only a sharp correction NOT a full-on crash , because the market ( i assume the ASX 200 ) did not penetrate convincingly the long-term trend line

now IF the XJO is still in a continuing bull trend it isn't very convincing , HOWEVER if you use the US indexes you just have to scratch your head in amazement , the glitch in a l-o-n-g bull run looks a fair comment

by the way i have been waiting for that wretched CRASH since the middle of 2013 .. just as well i disn't rush to cash every 10% drop

@divs4ever good write up.
Your patience is adorable.
So what do you think now - a crash or still a correction?
I struggle to differentiate a 20 pc as a correction and a crash..
Some thing Luke we were not in a recession on technical grounds?
Thanks in advance.

 

[divs4ever]

@divs4ever good write up.
Your patience is adorable.
So what do you think now - a crash or still a correction?
I struggle to differentiate a 20 pc as a correction and a crash..
Some thing Luke we were not in a recession on technical grounds?
Thanks in advance.

well when i first started studying this game i THOUGHT a crash was below 25% but recently read an article which presented the reasoning that a crash had to break the long term trend line ( since 2008 ) and used the recent quick recovery to further argue the view

so i thought about it , and asked myself 'what if' the opinion is correct ?? this time there were NOT major banks falling , major businesses closing spilling out millions of new unemployed , home-owners being evicted in the thousands ( true i never dreamed of the interventions in place for over a year ) the pain that SHOULD have happened to rectify previous excesses , hasn't happened .. yet

about now ... gee all my understanding in economics has been ignored , debt is now no longer a liability or obligation but a tradeable asset
irrational exuberance .. dystopia , pick a crazy name

i see bailouts , rent moratoriums , mortgage delays , the Central banks BUYING bonds and mortgage-backed securities , AND giving short-term emergency loans billions of dollars a MONTH

now one thing not ( officially ) widespread is central banks buying company stocks via ETF purchases like Japan has done for years

( IMO ) the goal-posts have been shifted so far and so often i can't remember what the playing field looks like

my understanding of a crash .. is that it is loss of faith in the economy ( or market ) , whereas a correction ( normally ) finds where cautious buyers are willing to come back into the market ( bargains too good to resist )

think of your favourite stock .. how low would it go , before you jumped in and bought some with your last thousand dollars ( assuming no terrible company news )

lets say BHP which had a mediocre report today , would you buy at $25 , maybe $20 or would you be too nervous to buy ( the last option is a crash .. almost not a buyer to be found anywhere in the market )

cheers

the market SHOULD have imploded ( earnings fell through the floor in many places ) by now but we have had all these extraordinary ( official) interventions you can bet half this stuff happened behind closed doors in 2008 , but this time we can see the tip of the iceberg

 

[divs4ever]

now in March 2020 i had too many tempting prices to decide between , but was i terrified about buying .. not me i normally have very low debt , so no worries about a nervous banker ( obviously others following the popular 'easy credit ' style argued by some political leaders , had a very stressful time .. as did the lenders )

but where next

there is a LOT of future tax-money pulled forward to intervene almost everywhere , how will it be paid back ?? your children , grand children , great grand children .. there are roughly 330 million US citizens and in the last two years they have created at least an extra 10 trillion dollars ( in 'borrowed money' ) and the US had heavy debt BEFORE all this , say September 2019

BTW this is NOT just a US problem , it is a UK problem , EU problem , Japanese super problem , and plenty of other nations are on the ropes ( hanging off a cliff )

 

[Miner]

now in March 2020 i had too many tempting prices to decide between , but was i terrified about buying .. not me i normally have very low debt , so no worries about a nervous banker ( obviously others following the popular 'easy credit ' style argued by some political leaders , had a very stressful time .. as did the lenders )

but where next

there is a LOT of future tax-money pulled forward to intervene almost everywhere , how will it be paid back ?? your children , grand children , great grand children .. there are roughly 330 million US citizens and in the last two years they have created at least an extra 10 trillion dollars ( in 'borrowed money' ) and the US had heavy debt BEFORE all this , say September 2019

BTW this is NOT just a US problem , it is a UK problem , EU problem , Japanese super problem , and plenty of other nations are on the ropes ( hanging off a cliff )

Well said @divs4ever for a very thoughtful share. Looks like it is a crash and 1930 is returning.
BTW, welcome to ASF - noticed you only joined today.

 

[divs4ever]

yes i am a refugee from the Commsec community ( which is closing soon ) and have been a member of some other forums ( some which are fading away ) ( PS i always use a different user name on every account .. just basic security to me )

i join them to learn new points of view ( here and internationally )

i need at least 30 years of wisdom before the train wreck ( i reckon )

sorry i can't guess what will happen next , all my reference points are shattered

way back about 2018 a few bankers argued they saw no way out without a major war ( i assume a near global one like WW2 ) , happily that hasn't happened so far

but if SOME smart money worked out they were trapped in a very dark place , where are we now 3 years later

thanks for the welcome , it is nice to see some current share talk ( although i and a big fan of LICs and use ETFs as well )

 

[Miner]

yes i am a refugee from the Commsec community ( which is closing soon ) and have been a member of some other forums ( some which are fading away ) ( PS i always use a different user name on every account .. just basic security to me )

i join them to learn new points of view ( here and internationally )

i need at least 30 years of wisdom before the train wreck ( i reckon )

sorry i can't guess what will happen next , all my reference points are shattered

way back about 2018 a few bankers argued they saw no way out without a major war ( i assume a near global one like WW2 ) , happily that hasn't happened so far

but if SOME smart money worked out they were trapped in a very dark place , where are we now 3 years later

thanks for the welcome , it is nice to see some current share talk ( although i and a big fan of LICs and use ETFs as well )

Nice. Hope our ASF will be enriched with your experience . This forum is very ably managed by @Joe Blow with the support from few other active members.
Hope you will stay and the ship continue sailing.
BTW saw the commodity prices overnight . Massive change will be seen on asx.
All the best.

 

[StockyGuy]

Nice little tremor running thru things ATM. Most Asian markets finished in red (including ASX), Europeans did, USA futures all in red, important commodities in red (excluding gold, which has turned green again).

 

[divs4ever]

Nice. Hope our ASF will be enriched with your experience . This forum is very ably managed by @Joe Blow with the support from few other active members.
Hope you will stay and the ship continue sailing.
BTW saw the commodity prices overnight . Massive change will be seen on asx.
All the best.

am happy to find a forum that isn't a 'boiler room ' , but i don't have that much market experience just realized i had to learn and THINK quickly to accomplish my aims in 2011 , now if thank helps other novices , well that's excellent

i see 'greedy ' as what is best for YOU ( not owning everything you see )

staying might be harder , you don't have Centrelink approve your disability pension in just 6 days ( after the independent consultation ) because i am in excellent health .( and i was only applying for sickness benefits to boot )

now i was ready for a reaction to the yield-curve inversion signal we had 18 months back , but no luck there ( except some reasonable gold-producer prices )

there seems to be a massive disconnect between the market , and any economy or reality and i doubt the economy or reality are going to change to prove the market is correct

oil seems too high , gold/silver too low , and where the hell is all that iron ore going ( i suspect i will NOT like that answer , but my iron stocks are traveling well currently )

many G7 nations are printing cash faster than confetti and a wedding

i hope i inspire more novices to ask questions , i have learned so much from novices doing stuff i hadn't previously thought about

what i HAVEN'T noticed much lately are producers mentioning their hedging contracts , surely they are locking in some future income in such a climate

 

[aus_trader]

Nice little tremor running thru things ATM. Most Asian markets finished in red (including ASX), Europeans did, USA futures all in red, important commodities in red (excluding gold, which has turned green again).

Certainly turned to reality as predicted by the futures...

 

[greggles]

You know a market correction can't be too far away when even CNN is talking about a correction being "right around the corner".

A stock market correction may be right around the corner

We've all had plenty of warning about this one. The pain is starting to set in as the economic stimulus in the US is wound down.

 

[Dona Ferentes]

He's at it again

Jeremy Grantham, the famed investor who for decades has been calling market bubbles, said the historic collapse in stocks he predicted a year ago is under way and even intervention by the Federal Reserve cannot prevent an eventual plunge of almost 50 per cent.
In a note posted on Thursday (Friday AEDT), Grantham, the co-founder of Boston asset manager GMO, describes US stocks as being in a “super bubble”, only the fourth of the past century.
And just as they did in the crash of 1929, the dotcom bust of 2000 and the financial crisis of 2008, he is certain this bubble will burst, sending indexes back to statistical norms and possibly further.
That, he said, involves the S&P 500 dropping some 45 per cent from Wednesday’s close – and 48 per cent from its January 4 peak – to a level of 2500. The Nasdaq Composite, already down 8.3 per cent this month, may sustain an even bigger correction.

“I wasn’t quite as certain about this bubble a year ago as I had been about the tech bubble of 2000, or as I had been in Japan, or as I had been in the housing bubble of 2007,” Mr Grantham said in a Bloomberg interview. “I felt highly likely, but perhaps not nearly certain. Today, I feel it is just about nearly certain.”

In Grantham’s analysis, the evidence is abundant. The first sign of trouble he points to came last February, when dozens of the most speculative stocks began falling.
One proxy, Cathie Wood’s Ark Innovation ETF, has since tumbled by 52 per cent. Next, the Russell 2000, an index of mid-cap equities that typically outperforms in a bull market, trailed the S&P 500 in 2021.
Finally, there was what Mr Grantham calls the kind of “crazy investor behaviour” indicative of a late-stage bubble: meme stocks, a buying frenzy in electric-vehicle names, the rise of nonsensical cryptocurrencies such as dogecoin and multimillion-dollar prices for non-fungible tokens, or NFTs.
“This checklist for a super bubble running through its phases is now complete and the wild rumpus can begin at any time,” Mr Grantham, 83, writes in his note. “When pessimism returns to markets, we face the largest potential markdown of perceived wealth in US history.”
It could, he said, rival the impact of the dual collapse of Japanese stocks and real estate in the late 1980s. Not only are equities in a super bubble, according to Mr Grantham there’s also a bubble in bonds, “the broadest and most extreme” bubble ever in global real estate and an “incipient bubble” in commodity prices.

Even without a full reversion back to statistical trends, he calculates that losses in the US alone may reach $US35 trillion ($48 trillion).
Mr Grantham is a dyed-in-the-wool value manager who has been investing for 50 years and calling bubbles for almost as long. He knows his predictions are fodder for sceptics.

One obvious question: How could the S&P 500 advance 26.9 per cent in 2021 – its seventh-best performance in 50 years – if stocks were poised to plummet?
Rather than disprove his thesis, Grantham said the strength in blue-chip stocks at a time of weakness in speculative bets only reinforces it.
“This has been exactly how the great bubbles have broken,” he said. “In 1929, the flakes were down for the year before the market broke, they were down 30 per cent. The year before they’d been up 85 per cent, they had crushed the market.”

Seeing the same pattern that played out in every past super bubble is what gives him so much confidence in predicting this one will implode similarly.
Mr Grantham pins the blame for bubbles of the past 25 years mostly on bad monetary policy. Ever since Alan Greenspan was Fed chairman, he argues, the central bank has “aided and abetted” the formation of successive bubbles by first making money too cheap and then rushing to bail out markets when corrections followed.

Now, investors may no longer be able to count on that implied put. Inflation running at the fastest clip in four decades “limits” the Fed’s ability to stimulate the economy by cutting rates or buying assets, Mr Grantham said.
“They will try, they will have some effect,” he added. “There is some element of the put left. It is just heavily compromised.”

Under these conditions, the traditional 60/40 portfolio of stocks offset by bonds offers so little protection it is “absolutely useless”, Mr Grantham said.
He advises selling US equities in favour of stocks trading at cheaper valuations in Japan and emerging markets, owning resources for inflation protection, holding some gold and silver, and raising cash to deploy when prices are once again attractive.
“Everything has consequences and the consequences this time may or may not include some intractable inflation,” Mr Grantham writes.
“But it has already definitely included the most dangerous breadth of asset overpricing in financial history.”

Bloomberg

 

[finicky]

I was on a phone hook-up with Jeremy Grantham. The old man has put out almost word for word what I said (unattributed)