Saturday, November 4, 2017

I want to go on record about the eventual fate of the stock markets.

Right now the DJIA, SPX, NDX are all at or near record highs and so I think it is a great time for me to lay out my detailed vision for the long term fate of global stock markets.

First, the basic premises:
  1. Stock markets are a relatively new thing in history.  To think they must now somehow be an indelible part of the future going forward is to not think very hard.  It's like a 20 year old man who is young and strong.  Does he think about his eventual death?  Almost never, especially if not participating in dangerous behaviors.  Thinking something does not make it true.  Like the cycle of human life, there was a time before and there will be a time after.
  2. Stocks have no intrinsic value.  None, zero.  They trade for what the next greater fool will give you for them.  Even those which pay a divvy today could cut it off on zero notice tomorrow.  Having the shares entitles you to nothing.  Your "claim" on the company has no weight unless you own a huge percentage of the shares and even then the best you can hope to do is to change the direction of the company.  
    • Think about it.  Let's say someone owns 51% of a company but the shares crashed into the dirt for whatever reason.  Maybe it was something as stupid as the CEO's past liberal sexual behavior being spread all over the news and as a result shareholders no longer want to hold the shares.  Let's say the shares trade at 50 cents when book value is $50.  Does a shareholder with even 51% share get to go into the offices and take out half the desks, lab equipment, sell half the buildings and other real estate, etc.??  NOOOOOO!  They do not have the right to do it.  Even a 100% shareholder of a public company cannot do that!  He would have to go through the process of taking it private first.  If a 51% shareholder has so little real rights in a company, what rights do you and your piddling 100/500/1000 shares have?  Essentially none.  That is the ugly truth about stocks that Wall St will not tell you but if you can argue how I am wrong, feel free to do so in the comment section as long as you don't mind it when I respond.  I'm not guessing that I'm right here folks, I know I'm right.
  3. Stocks are not a store of value.  If they were then they could never go BK.  Has gold ever gone BK to the point where it was perceived to be of no value?  No of course not.  Not yesterday today or tomorrow.  Not in the entire history of mankind.  But stocks? They BK on a regular basis.  So stocks are not money, they are just another fiat currency like fake paper dollars.  And fiat currency is not money either.  It also goes BK on a regular basis.  No fiat currency - not one in the history of our planet - has lasted forever.  Even the USA hyperinflated the Continential Dollar into nothingness.  A fair historical review would, from a purely economic standpoint, conclude that Lincoln used the "connie" as a taxation scam to pay for the civil war. Taxation without representation.
  4. Fundamentals do not directly control the share price, the mood of the herd does.  Look at all the companies in the dry bulk sector that are trading at 10 cents of book value.  Is global shipping a worthless service??  Look at the 2016 low of junior miners that were in the same boat.  Look at Amazon shares and Tesla shares today trading at many multiples of what are supposed to be reasonable "fundamentals".  Stock prices are essentially a popularity contest.  Popularity is cyclic.  Nobody is popular forever.
  5. Real money does not self multiply without the addition of work.  Thus, when you are told that your money is working for you it is 100% certain that you are involved in a Ponzi scheme.  Very few participants of a Ponzi can see this truth because they are caught up in it, flowing with the herd.  But after the fact they all come to understand what really happened and they become very angry about it.  A Ponzi is a form of confidence game, a con job.  Participants have confidence in the system even though the math is clear: If N people each put X value units (dollars) into a system, the most real value that can be extracted from that system is X*N value units.  Those who get out first can exit the con game with more value than they put in but it always comes at the expense of someone else.  The last ones out are the Marks and Patises who lose everything.
The ugly truth today is that Americans and many others in the world think that gold is risky and that the dollar is sound.  They also believe that the stock market is a safe and sound storage for their life savings. I assure you, they are brainwashed and when it comes to pass in the future that markets collapse we will find that markets are a faith based currency - a con game if you will.  Con games require confidence.  No con ever runs forever.  When confidence is lost so will the entire savings of most people that have any retirement savings (itself not being a very big number).  The reason for "stair steps up and elevator down" is that this is the model for how confidence works in humans.  If you don't know someone then at first you will not trust them.  But over time if they seem to be doing the right thing then they earn your trust.  That takes time.

However, when it comes to light that they are doing/did things to ruin your trust then the fall is rapid.  Confidence and trust are hard won and easily lost.   Look at Bill Cosby, Harvey Weinstein and now Kevin Spacey.  Even Hollywood legend Dustin Hoffman is teetering precariously on the curb in front of an oncoming bus.  The reason in all cases is that the illusion of confidence is shattered and it hurts people's sense of self worth for having liked the person, believed that they were a very good person, etc.  The ugly truth demonstrates to the herding fools that they really have no idea what they are talking about and that hurts the ego.  So they lash out hard.

You know, just like I said was going to happen well in advance of any of this shit going down.

When people finally wake up to these truths that I have been posting about the markets and in fact the very currencies (fake money) that everything is priced in, so many people will get so badly screwed and be so emotionally impacted by the breech of their trust that at least 1 subsequent generation will pass in which nobody considers stocks as anything more than gambling and certainly not a safe store of their life savings.  It has to happen before most boomers stop working and try to cash in on their supposed savings.

 If these words sound a bit familiar then perhaps its because I said very similar things were going to happen to the democratic party when Hillary lost.  I wrote,"...according to my socionomic models, she will not win.  In fact, it should not even be close.  I think the 2016 elections will change the long standing view that money can buy any election and I think it will be a shock to the global political elite who are used to using Mammon Money to buy everything, including fake/temporary loyalty.  I think the herd is awakening in a way where it will vote principles over false promises.... If I am right, Hillary will not win despite record spend and those doing the spending will be weakened financially and politically.  It will hurt them so badly that they will think twice before trying it again because I suspect they will go "all in" on Queen Hillary."

The same mechanisms that have underpinned and signaled the end of the Clinton crime dynasty will be at play when the markets collapse.  Namely, loss of confidence in a mass shit show con game.

At some point the fake money will be viewed for what it is as well.  The Marks and Patsies of the world will wake up very rapidly once the awakening begins - the process of losing confidence in the corrupt system will be exponential in nature just like the sex scandals being outed in Hollywood right now.

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