Royal Bank of Scotland to investors: 'Sell everything'

I don't have anything "going for me." This isn't a college basketball game where I am rooting for my alma mater.

You have this narrative in your head where I make random doomsday predictions or I am rooting for something. And you have little understanding of anything I post on these threads. You just do this yippy act, where you distill my posts into a third grade, "He predicted doomsday" thing and ignore every bit of substance I actually take the time to put into some of my posts.

I'll try once again.

On a fundamental basis the U.S. stock market is way, way, way overvalued -- ridiculously overvalued on a fundamental basis. There have been no earnings (what should drive stock prices in a normal environment) to support the run up we saw. It has been that way for at least the last 3 years and stock prices are well beyond where they were 3 years ago. It has all been very extreme monetary expansion -- nothing fundamental (our economy has been stagnant, which is what drives earnings) and as a result we are floating in asset bubbles run up on the back of massive debt creation -- it not just U.S. stocks, there are other asset classes and several areas of our economy that are swimming in debt and facing looming defaults. There are excesses all over the place and it is dependent on endless debt creation to keep it going. There is a limit to that.

Stock prices are all going to have to come down -- and are going to, hard. There is a massive deleveraging coming that is going to bring down more than just stocks. There are other asset classes that turned into gambling ventures on the back of monetary expansion. I can explain all day long why that is so -- make a reasoned case for what is just reality. And you 1) won't take any time to even try to understand what I actually post or respond about WHY you don't see what I am pointing out, and 2) you will trail me around from thread to thread with attempts at stupid snark and digs at me. So have at it. You are who you are.

The timing of your resurrecting this thread makes zero sense again. That dead cat bounce stalled. The U.S. stock market has gone nowhere. I had to do a double take with reality just now -- you'd think we had surged since the last time you started this dumb game. And that is with Janet Yellen having blatantly given the all clear signal that she is not tightening anytime soon (she blinked, no surprise -- her empty threats were making the markets buckle) -- which is the only thing left that can hold off collapse for the time being (if you would actually read and respond to what I actually post, you would have seeing me say that during the sell off).

Earnings last quarter were horrible and we are heading into second-quarter earnings season where earnings are going to be miserable -- way down year over year. The economy is at a crawl at best, and possibly already in recession. The Atlanta Fed, which has been the best forecaster of the regional banks, started the quarter at 2.7 percent -- which sucks except in the depression they put us in. And they have revised it down ever since -- to 0.1 percent yesterday.

We still have the remnants of stock buybacks on the cheap borrowing holding up the market some, but that is drying up. The only way that valuations at the prices of U.S. stocks are justified are with the Federal Reserve pumping in more and more liquidity -- monetary expansion and more debt. And even that might not be enough now.

Since QE3 ended a year ago, stocks have gone nowhere. The bubble they blew is still inflated, though. Even if they come in with QE4 it may not going to be enough to blow the bubble any bigger at this point. Markets are fatigued and not being snowed by it all anymore. The BOJ expanded its asset buying more recently and surprised by going to negative rates. And the yen -- and their markets -- are just not buying into the frenzy anymore. The yen has surged recently -- the opposite effect of what that kind of monetary expansion should create. It is all getting toxic and markets are spooked now. Of course if they do announce QE4 and stocks do surge as a result (which is possible), you will miss the point of my posts. Because all you are seeing is, "Ragu predicted doomsday!" And you'll be back with a "You predicted post," having no clue what I really said.

However long they can keep it going, the game ends eventually -- and the bigger the bubble they manage to blow before losing control, the bigger the fall.

With regard to U.S. equities. ... take this for what it is worth. They are going to be at prices way, way, way below where they are today. The only thing that can hold off a collapse is more monetary expansion -- if it even works now. Either way, stocks need to drop significantly from where we got to, for valuations to be in line with earnings and the actual shitty economy we are now stuck with due to the anchor they unwittingly put on it. I know you think there is no "cause and effect" when it comes to things like this -- it's all just random to you. But it's not. Eventually huge excesses like the one that has been created -- and it is more significant than you understand -- need to correct. And in this case, for stocks to be even remotely fairly valued on a fundamental basis at the ridiculous levels they got pumped up to, they are going to be SIGNIFICANTLY lower than where they are today. There is nothing fundamental (and fundamentals eventually take control of markets) supporting anything close to where we are at right now.

If you think I am wrong about that, stay loaded up in the IBB (which should be spooking you, since it is leading the way down -- something like 30 percent off its highs) or whatever high flyers you think makes for smart retirement saving in a portfolio that is balanced on a risk-reward basis. I'll wish you the best of luck, even though I know you have no understanding of valuation or risk (from your other posts).

I personally have been sitting in cash for something like a year and a half. I have never been a huge trader in equities -- and I do a lot of trading. I invest only for my retirement. My preference would be to keep a huge chunk of my retirement savings invested in global equities -- broadly diversified using large indexes. I'd prefer to NEVER try to time markets when it comes to investing (as opposed to trading). But the central banks around the world created a mess that was as plain as the nose on my face, and in the process created massive asset bubbles. Equity valuations got so ridiculous that I decided to step aside, wait for an inevitable crisis to play out and then step in when there is a buying opportunity when a massive deleveraging occurs. Stocks could have run up 10 or 15 percent higher than they actually did before they topped out almost a year ago (and things were beyond ridiculous then), and I would still have had the conviction that we are heading much, much lower than where we even are today -- people are going to be spooked again. I will be back in buying when we get there. The conditions that ran up stocks over the last 3, 4 years are artificial and unsustainable. See it the way I am, or don't. If you don't, you'd think you would give me a reasoned response about what I am missing other than the, "Stocks didn't collapse this week. Wrong! Wrong! Wrong!" inanity. I promise when the S&P is down below 1500, likely much more than that, it won't be about a dumb gloating act-- that isn't what this is about to me. I'll be back with the same posts I have already given -- trying to explain what I understand -- what created massive excesses that created some very distorted markets, and why the deleveraging happened that created yet another "financial crisis."

In the mean time I am sure you will be you. It is what it is. There were people a hell of lot more knowledgeable about markets and investing than you are who were doing a similar act in 2005 and 2006 and 2007 when there were people pointing out the excesses that led to the 2008 financial crisis.

 

My post from 3/10.

LTL's understanding of that post:

For what it is worth. The S&P 500 got a bit higher than it was at that point, but it stalled. Which is why the timing of this redux makes zero sense (except when it involves someone obsessed with having to tell me how wrong about everything all of the time). Here is the chart:



If your idiotic understanding of my post was, "He predicted so and so," because you don't actually read my posts (but then why spend so much time responding to them?) and not the macro picture I have laid out, which is the point of all my posts, why not at least wait for a break out of some sort to confirm how wrong I am? (absent more monetary stimulus -- the condition that could inflate the bubble further before it pops, although it won't matter that I have said that over and over again because he will just be back with "wrong wrong wrong" regardless.)

It's tired.

 

I didn't "call the end of the dead cat bounce."

I said that the dead cat bounce (which has hit a wall) had probably already run its course by then. You call me stupid. ... but you have to be an absolute moron to read into that sentence me having called a temporary market top that day (I would never have done that). ... and an even bigger idiot to ignore the actual point of that post and key into that one sentence for yet another attempt at a pissing match.

A dead cat bounce ends with another leg down. Or if I am wrong about what I actually HAVE said on this thread and others -- that stocks will see a major move down before we ever see 2200 on the S&P 500 (absent more monetary expansion, and even that might not be enough at this point) -- then we'll see some new highs. That is from where this all began last spring /summer when the threat of tightening pricked the balloon.

You are trying to make this incomphrensible case that stocks have taken off, and it's not the case. In fact, most areas of the stock market have gotten slaughtered in the past year -- for example, biotechs. Stocks on the whole have gone nowhere in more than a year, and we have seen two major blowoffs during that time with lower highs each time. If you would read my posts -- rather than creating your own narratives that ignore what I say--you'd have seen me say that bear market rallies can be violent. In multiple posts. I am wrong about a lot of things. It's just moronic that I am sitting here responding to someone who endlessly argues with everything I post on here -- even though he never responds to what I actually posted. But it won't stop you from trailing me around with snarky little put downs.

 

I post way too long -- 2,000 words, yah yah yah. You'd think the endless bullshit you trail me around with would show up somewhere in my actual posts.

I'll respond on point (something you will never do to my ACTUAL posts)

1) I didn't tell anyone to do anything -- let alone 2 months ago. Not that this conversation is about trading or market timing -- which have zero to do with long-term investing. Regardless, I have never given a shred of market timing advice to anyone on here. So stop already. In fact, when it comes to investing, I have taken pains on threads (and often put effort into my posts) to suggest that for most people it makes sense to find a comfortable mix of assets and dollar cost average in -- and rebalance every quarter. To the extent they are saving for some long term goal. My posts read basically the way a competent CFP would post. And I know I give good advice when it comes up on here. Do it in a way that tries to get the return you need, while minimizing beta or risk. Emphasis on the risk because it is where most people go wrong. As I pointed out earlier on this thread, one time that actually came up, you popped in with your brilliant suggestion of finding the highest flying funds -- biotech and computer software -- and overload on them rather than looking for broad diversification in a retirement portfolio. If I was doing the kind of jackass posting you do endlessly, I'd be trolling you all over the board pointing out that the IBB (the biotech index) is down something like 30 percent and trying to tell you how your "advice" has bankrupted anyone who listened to you over the last several months. For what it is worth -- because you will be back with another post cherry picking returns -- as if you invested everything you own on the first day some mutual fund was available because you knew THAT was going to be THE fund in THE right specialty sector (not any of hundreds of other funds in dozens of other specialized sectors) -- even if something is up 10,000 percent over some time period, it may not have been a smart way to put your money at risk for your goals. You can put your retirement money on black on the roulette wheel. If it pays off, it doesn't mean you did a smart thing.

2) I have not predicting a recession every day for the last 6 years (and counting). What does that even mean? The economy goes through business cycles. You get a recession when you get a recession. I have posted lots about how the recovery we got off of the crater has been brutally bad -- we are in a depression and the economic expansion has been anemic. That isn't an opinion. It's ostensibly why the Federal Reserve has been flooding the economy with credit.

Stop trying to characterize my posts. Your kindergarten version of anything you think I have ever said is always two planets away from what I actually said. It's so tired.