Back Again: Bubble-Like Markets

A lot of people are worried that stocks are headed for another crash. Stocks have been rising almost daily, but the missing component is the expected backtracking that comes along with health ascents. And so the questions loom, when is the crash going to occur?

Why is this happening is and what can we do to prevent it?

Larry D. Fink, whose company, BlackRock Inc., is the world’s largest money manager ($4.1 trillion in assets), has recently stated that the Federal Reserve Policy is contributing the “bubble-like markets”. Fink is quoted as saying, in October 2013, that “We’ve seen real bubble-like markets again. We’ve had a huge increase in the equity market. We’ve seen corporate-debt spreads narrow dramatically”.

The most apparent danger for stocks is, in essence, the Federal Reserve; and, because of the contributing factors, it is now imperative that the Fed starts to reduce their heavy presence in the bond market.

An increase in the equity market is good, right? Rising stock prices are a positive sign, correct? The answer is not black and white – the real answer is dependent upon the ‘why’ the increases are occurring.

The economy has been deemed ‘not quite right yet’ to curtail the $85 billion-a-month bond-buying program by the Federal Reserve. With the Fed regularly rigging the bond market, interest rates are hovering unusually low. As a result, investors are running to stocks, even though basic stock logic would tell them to examine corporate earnings before doing so (which, by the way, are only rising moderately).

To read more about Fink’s recent assessment, please see http://ow.ly/qtrnm.
Albert Edwards was one of the few individuals who predicted the global financial crisis in 2008. The well-known originator of The Ice Age thesis, he substantiates Fink’s predictions.

Edwards has noted asset bubbles inflating around the world, particularly in London and China. He makes comparison to 2008 bubble, and questions why the current situation can be denied, or even ignored. “Exactly the same bozos who missed the last bubble deny there is one now”, states Edwards.

Edwards goes further to state “Here we go again…and once again no-one is listening”.
When Edwards released his latest report (Oct. 2013), he states that he is continually annoyed by the overall denial of the existing bubble market. He goes back to the basics: central banks currently have no other option than to keep printing money to avoid default. He attributes the recent bubble as being driven by loose monetary policy.

Our final word on advice? Good luck, but get out of the bubbly, soon-to-crash stock market on a good day, when you are up. Get out before the crash hits. Alternative investing strategy, once again, is where to find stability. You can read more about your options here: http://ow.ly/qtt99

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Brian Davison
Thank you for visiting our blog. I'm very active on here, so if there is a topic you would like me to cover, please let me know.

I am the CEO of EquiAlt: real estate based alternative investment firm with activities in equity, debt and private equity. Since 2008, EquiAlt's management has demonstrated a high level of competence in hundreds of distressed asset transactions, recapitalized companies while lending on landmark Las Vegas projects.

We understand that there are several strategies and goals in the area of real estate investing. Based on our experience, we offer education and offerings that are truly investment grade. Available products for investors range from totally passive to the traditional active.

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