Most people now a days are pretty optimistic on the direction of the markets. If you’re not rather than being a realist you just might be labeled as a conspiracy theorist. The prospect of the market actually going down almost feels like it’s along the lines of a hokey conspiracy as it just doesn’t happen now a days.
All of the major news outlets, government reports, and financial experts seem to be in agreement that markets will continue to move higher. Just a few months back the US government former Federal reserve president (now retired) had stated that market downturns were a thing of the past. This wasn’t because the business don’t go bankrupt any more or that the laws of supply and demand aren’t in effect but because the government will intervene and prop things up. This isn’t exclusive to the US, it’s a new normal and a standard practice now for central banks with the ability to inflate to stop any sizable down moves and buy their own debt back to keep things steadily higher.
This sounds pretty good I suppose. It has been working for the most part for the past 10 years. Most people don’t know about it and the other half of the people don’t really care. Everything is historically the best it has ever been market wise so why question success?
I question the success of the market for the same reason I question gravity. “What goes up must come down”. Now, I’ve read how no one likes these FUD peddlers but let’s stop and consider what kind of a situation we’re in. The market success has been a result of “emergency monetary policy” which has been in effect since the 2007-2008 market crisis. The emergency status had never been lifted dispite the market rising. This should tell you something when normal = an emergency.
The other thing that we need to take into consideration is that since we are in an artificially propped up market how do we know what the market value is of the assets that we are investing in? The answer is that we don’t. All investors know is that the governments are back stopping their losses until they can’t. The $64,000 question is when can’t they continue. Nobody knows, probably not even them.
So, will the markets sky rocket anytime soon? Maybe, perhaps if some new technology came out it could. The problem is what about the current global emergency monetary policy status everyone is in, they can’t just end it because there is al the money that they created into existence to keep this going. Even if there were another rise or future gains they would still only be kicking the can down the road.
Would cryptos be able to allow the markets to transition out of the inflated fiat situation? Maybe, the question would then be what would the value of the said crypto be and how would it be able to establish and maintain this value. Some may make it and others may fail. It’s hard to gauge yet especially with investors being so fickle.
My thoughts on the matter is to consider what would hold value as a result of the damage caused by the constant government intervention. We know that that there is a limited supply of physical assets but a growing supply of currency. As the supply of one outpaces the other the value of the asset that continues to grow in number out paces the demand of the other asset thus lessening its respective value in comparison. Commodities are of a limited quantity and are currently historically cheap because they are seen as hedges against inflation. According to the current markets there isn’t much inflation right now. Perhaps the time to transition into a different asset class may be very soon…
** This is not financial advice, it is my opinion. Before making any financial decisions contact your financial advisor and find out what investments may be right for you.**
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