by Phoenix Capital Research
First and foremost I want to emphasize that the market is currently in a bubble. This bubble can and will burst at any point. Predicting when is impossible. All I can say definitively is that the bubble peak is forming as I write this.
Stocks:
1) Margin debt (debt investors borrow to buy stocks) is at $382 billion. The last time investors had borrowed this much money to buy stocks was July 2007, roughly three months before the peak hit and the bubble burst.
2) Mutual fund cash levels are near all-time lows. Mutual funds are not only fully invested in stocks, but they are borrowing money to buy stocks at levels that exceed those at the 2007 top.
3) High yield debt has begun to diverge sharply from the stock market (see below).
There are other signs of a bubble showing.
I recently heard about rent-backed securities. These are securities in which lots of rental properties are packaged into an investment.
Just like the now infamous mortgage backed securities these investments are meant to reduce risk (what are the odds that all of these people stop paying their rent at the same time?). And just like mortgage backed securities, these items are a disaster waiting to happen. Maybe not this year but possibly the next.
This is a very dangerous time for the markets. While you cannot predict a top with great accuracy, something major is developing right now.
Be Prepared!
For more market insights and commentary, visit us at:
www.gainspainscapital.com
Best Regards
Graham Summers
Read more at http://investmentwatchblog.com/three-signs-of-a-market-top-forming/#RB02ShWgKSTIBc7c.99
First and foremost I want to emphasize that the market is currently in a bubble. This bubble can and will burst at any point. Predicting when is impossible. All I can say definitively is that the bubble peak is forming as I write this.
Stocks:
1) Margin debt (debt investors borrow to buy stocks) is at $382 billion. The last time investors had borrowed this much money to buy stocks was July 2007, roughly three months before the peak hit and the bubble burst.
2) Mutual fund cash levels are near all-time lows. Mutual funds are not only fully invested in stocks, but they are borrowing money to buy stocks at levels that exceed those at the 2007 top.
3) High yield debt has begun to diverge sharply from the stock market (see below).
There are other signs of a bubble showing.
I recently heard about rent-backed securities. These are securities in which lots of rental properties are packaged into an investment.
Just like the now infamous mortgage backed securities these investments are meant to reduce risk (what are the odds that all of these people stop paying their rent at the same time?). And just like mortgage backed securities, these items are a disaster waiting to happen. Maybe not this year but possibly the next.
This is a very dangerous time for the markets. While you cannot predict a top with great accuracy, something major is developing right now.
Be Prepared!
For more market insights and commentary, visit us at:
www.gainspainscapital.com
Best Regards
Graham Summers
Read more at http://investmentwatchblog.com/three-signs-of-a-market-top-forming/#RB02ShWgKSTIBc7c.99