Billionaires Quietly Preparing for Market Plunge

[Chef Ramsay]

"The stock market is at an all-time, but economic activity is not at an all-time," explains billionaire investor Sam Zell to CNBC this morning, adding that, "every company that's missed has missed on the revenue side, which is a reflection that there's a demand issue; and when you got a demand issue it's hard to imagine the stock market at an all-time high." Zell said he is being very cautious adding to stocks and cutting some positions because "I don't remember any time in my career where there have been as many wildcards floating out there that have the potential to be very significant and alter people's thinking." Zell also discussed his view on Obama's Fed encouraging disparity and on tax inversions, but concludes, rather ominously, "this is the first time I ever remember where having cash isn't such a terrible thing." Zell's calls should not be shocking following George Soros. Stan Druckenmiller, and Carl Icahn's warnings that there is trouble ahead.

More good stuff...http://www.zerohedge.com/news/2014-09-03/icahn-soros-druckenmiller-and-now-zell-billionaires-are-all-quietly-preparing-market

[bryant.coleman]

The stocks are pretty expensive right now... so experts might be right when they say that a market crash is very near. The P/E ratios are getting bigger and bigger, and I don't think this can be sustained in the long term. It will be hard on the global economy though, especially after the recession we had during the 2008/09 period.

[beetcoin]

i've always thought this. with the fed pumping out all that money and creating artificial "demand," the stock market bubble seems about ready to pop. i don't know how the market could reach all-time highs when the economy is nowhere near there, as well as the middle class.

[Bonam]

Actually if you look at P/E ratio and similar ratios, the S&P500 is near historical averages in terms of these metrics. It's not overvalued like it was in 2000 and prior to other major crashes. The US market is at all time highs right now, but corporate earnings support these valuations.

[Spendulus]

Actually if you look at P/E ratio and similar ratios, the S&P500 is near historical averages in terms of these metrics. It's not overvalued like it was in 2000 and prior to other major crashes. The US market is at all time highs right now, but corporate earnings support these valuations.

A simple forecast of what corporate earnings will be with normalized interest rates shows their future.  These companies are all riding on low rates, just like the FED wanted.  That's going to come to a screeching halt.   And with it, comes a halt to the profitability of many companies.

Also higher rates will cause a restructuring of the real estate market.  People that have $1000 per month will buy less house.

[Bonam]

A simple forecast of what corporate earnings will be with normalized interest rates shows their future.  These companies are all riding on low rates, just like the FED wanted.  That's going to come to a screeching halt.   

Why? When central banks finally decide to raise rates, they are likely to do it very slowly and gradually.

[beetcoin]

A simple forecast of what corporate earnings will be with normalized interest rates shows their future.  These companies are all riding on low rates, just like the FED wanted.  That's going to come to a screeching halt.  

Why? When central banks finally decide to raise rates, they are likely to do it very slowly and gradually.

then that would mean the economy would probably start sputtering a bit, which would reflect in the stock prices. my point is that artificial fed money and lower interest rates are in place in order to create an artificial "demand" which makes companies more valuable. the long-term trend is that the middle class is cratering, while the upper tier of earners is rising. weakening middle class = weakening economy = weakening stock market.

[tooil]

"The stock market is at an all-time, but economic activity is not at an all-time," explains billionaire investor Sam Zell to CNBC this morning, adding that, "every company that's missed has missed on the revenue side, which is a reflection that there's a demand issue; and when you got a demand issue it's hard to imagine the stock market at an all-time high." Zell said he is being very cautious adding to stocks and cutting some positions because "I don't remember any time in my career where there have been as many wildcards floating out there that have the potential to be very significant and alter people's thinking." Zell also discussed his view on Obama's Fed encouraging disparity and on tax inversions, but concludes, rather ominously, "this is the first time I ever remember where having cash isn't such a terrible thing." Zell's calls should not be shocking following George Soros. Stan Druckenmiller, and Carl Icahn's warnings that there is trouble ahead.

More good stuff...http://www.zerohedge.com/news/2014-09-03/icahn-soros-druckenmiller-and-now-zell-billionaires-are-all-quietly-preparing-market

This guy probably already position himself for correction and try to talk the market down.

If the market keep going up, he will be in a whoop of pain.

[Bonam]

then that would mean the economy would probably start sputtering a bit, which would reflect in the stock prices. my point is that artificial fed money and lower interest rates are in place in order to create an artificial "demand" which makes companies more valuable. the long-term trend is that the middle class is cratering, while the upper tier of earners is rising. weakening middle class = weakening economy = weakening stock market.

What evidence is there that the middle class is cratering?

In the US, we see income growth in all quintiles:



And in the developing world, we see hundreds of millions of people being lifted out of poverty into a new global middle class.

[zolace]

 Like all confidence tricks and magic tricks keep the people looking over here than looking over there.  Something tells me that a major false flag is being positioned so that can be used to blame the economy imploding.  I bet it will be a that missing plane with a nuclear weapon in it and it will be flown to a city and detonated over it.  Then they will blame ISIS since they are everywhere and are so tyrannical.

[Spendulus]

then that would mean the economy would probably start sputtering a bit, which would reflect in the stock prices. my point is that artificial fed money and lower interest rates are in place in order to create an artificial "demand" which makes companies more valuable. the long-term trend is that the middle class is cratering, while the upper tier of earners is rising. weakening middle class = weakening economy = weakening stock market.

What evidence is there that the middle class is cratering?

In the US, we see income growth in all quintiles:



And in the developing world, we see hundreds of millions of people being lifted out of poverty into a new global middle class.

Bolded above is certainly true.

Rest is based on an assumed "income level".  But also look at disposable income and net worth.

The website from which the chart was pulled, dshort.com, has numerous articles that support the point of view that "the middle class is cratering."

http://www.advisorperspectives.com/dshort/guest/Lance-Roberts-140903-Calling-It-Like-It-Is.php

[Spendulus]

A simple forecast of what corporate earnings will be with normalized interest rates shows their future.  These companies are all riding on low rates, just like the FED wanted.  That's going to come to a screeching halt.   

Why? When central banks finally decide to raise rates, they are likely to do it very slowly and gradually.

They will try to do it slowly and they may or may not success in that.  It doesn't matter, because the market will factor into prices the expectation of future rate increases.

[sana8410]

US stocks are in a secular bull market and they are going way higher. However, I never buy into strength and taking profits into strength is always smart risk wise. Sept/Oct is often bearish for stocks, but I hope that I'm not too much of a pussy to buy into a large reaction in stocks.

[Bonam]

US stocks are in a secular bull market and they are going way higher.

I dunno, with the market at all time highs already and a lot of the public still uneasy about the economy, I doubt that stocks will go much into overbought territory. I would be surprised if the S&P500 exceeds 2500 in the next few years.

[Rigon]

The bubble has been blown, getting quite full and turgid.Just look at the S&P ramp 2009-Present. Those who get out at the right time make a lot of money.Those who don't get out get 2001'd or 2008'd.That is the game (401K/IRA crowd always lose).

[Bonam]

The bubble has been blown, getting quite full and turgid.Just look at the S&P ramp 2009-Present. Those who get out at the right time make a lot of money.Those who don't get out get 2001'd or 2008'd.That is the game (401K/IRA crowd always lose).

Those who buy S&P500 and hold long term (> 20 years) have always done well, historically. Yes there are ups and downs along the way, but for the vast majority of people, trying to time the markets is a losing proposition.

[noviapriani]

The market has been overvalued for some time; the fact that they are all singing in unison now makes me wonder if they have some inside information on the direction of Fed policy. 
It's much easier to time one's bets when one has a pipeline to the source. I'm speculating here, but you have to wonder.

[dadugan]

The market has been overvalued for some time; the fact that they are all singing in unison now makes me wonder if they have some inside information on the direction of Fed policy.
It's much easier to time one's bets when one has a pipeline to the source. I'm speculating here, but you have to wonder.

The current market price is always at "fair" value.

It is the fiat that is usually over or under value in the short term which cause asset price to fluctuate wildly.

[Mr.Bitty]

4 billionaires - 3 Jewish and one guy who made his millions working for one of the Jews, all consummate insiders who might know less about how "the economy" works than a guy trying to sell houses in a Detroit suburb...
Sounds about right - let me study what they have to say, for they are surely out to dispense good financial advice to the chattel...

[Spendulus]

The bubble has been blown, getting quite full and turgid.Just look at the S&P ramp 2009-Present. Those who get out at the right time make a lot of money.Those who don't get out get 2001'd or 2008'd.That is the game (401K/IRA crowd always lose).

Those who buy S&P500 and hold long term (> 20 years) have always done well, historically. Yes there are ups and downs along the way, but for the vast majority of people, trying to time the markets is a losing proposition.

Part of the way they con you citing "facts" such as bolded above is to never use inflation adjusted numbers.

Funniest thing, during each of Argentina's hyperinflations it's stock market did quite well.  Using those ways of calculating it.