What Could Possibly Go Wrong?

Sharing is Caring!

via Lance Roberts 

What goes up, eventually comes down.
That is just reality.
The bull market that began in 2009, has now entered the final stage of “capitulation” as investors throw caution to the wind and charge headlong into the markets with reckless regard for the consequences.

Of course, it isn’t surprising given the massive amounts of liquidity continually injected into the financial markets and global Central Banks have now figured out that continually rising financial markets solve much of the world’s ills. Simply, with enough liquidity, you can cover up bad (credit risks) by guaranteeing holders they will never default.
It’s genius.  It’s a “no lose” investment scheme.
Unfortunately, we have seen this repeatedly in the past.
In the 1980’s it was “Portfolio Insurance” – a “no lose” investment program that eventually erupted into the crash of 1987. But not before the market went into a parabolic advance first.


In the 1990’s – it was the dot.com phenomenon which was “obviously” a “no lose” proposition. Even after Alan Greenspan spoke of “irrational exuberance,” two years later the market went parabolic once again.

Then in 2006-2007, banks invented the CDO-squared, a collateralized derivative obligation based on other collateralized derivative obligations. It was a genius way to invest with “no risk” because the real estate market had never crashed in history.

Today, it is once again an absolute “certainty” that markets will rise from here as global Central Banks have it all under control.

See also  When do we get to the point where they finally admit they were wrong about everything instead of this drip drip drip of "well..."
See also  Bitcoin; OMG Could It Really Reach $250,000 Level?
566 views

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.