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    Market Update: Decision Time!

    The window to act before the next market break is likely very, very short
    by Adam Taggart

    Friday, May 29, 2020, 4:18 PM

As the market continues to seek out its maximum stupid price limit, it’s now decision time for investors.

If you’re still long stocks and bonds at this point: Do you now sell to protect your gains?

If you’re skeptical of today’s prices and sitting in cash: Is now the right time to start shorting the market?

If you’ve recently been laid off: Do any of the new options offered by the CARES Act that enable you to access retirement funds without penalty make sense for you?

With markets this overextended, your window of time to take action will likely be quite brief. An end to the currently rally could happen extremely quickly and brutally.

What make us say this? Because here’s an example of the level of overvaluation we’re dealing with:

Russell 2000 P/E ratio chart

The Russell 2000 index — at a P/E ratio of 70x(!!) — has never been so richly valued. Remember: these are the smaller, weaker publicly traded companies, a material number of which will likely be going bankrupt later this year.

Over 40 million US workers laid off (so far). Q2 2020 GDP now expected to be down over -50%(!!). And half of all US small businesses expected to close down permanently.

And if you believe that fundamentals don’t matter, that only Fed liquidity does; note that the Fed’s buying spree has been tapering off for a month now:

Fed Treasury/MBS purchases

Without sufficient liquidity, how long can the market remain at these ridiculous prices?

Not long, we predict. Which is why time is now of the essence.

As we do each week, we’ve once again asked the lead partners at New Harbor Financial, Peak Prosperity’s endorsed financial advisor, to share their latest insights into the road ahead for investors.

In the below video, we address the risks and rewards offered by shorting the market, retirement fund tapping/rollover strategies, and how the Fed is inflaming societal instability as it continues to dangerously deform prices:

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Anyone interested in scheduling a free consultation and portfolio review with Mike and John can do so by clicking here.

And if you’re one of the many readers brand new to Peak Prosperity over the past few months, we strongly urge you get your financial situation in order in parallel with your ongoing physical coronavirus preparations.

We recommend you do so in partnership with a professional financial advisor who understands the macro risks to the market that we discuss on this website. If you’ve already got one, great.

But if not, consider talking to the team at New Harbor. We’ve set up this ‘free consultation’ relationship with them to help folks exactly like you.

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17 Comments

  • Fri, May 29, 2020 - 4:28pm

    #1

    Mark_BC

    Status: Bronze Member

    Joined: Apr 30 2010

    Posts: 409

    2

    The Fed is buying everything so there is no air under the market

    The Fed came out and said they are actively buying stocks now so why does there ever have to be a correction?

    Of course I was saying the PPT would prevent the crash from the Coronavirus back in January which didn't happen... but at that time the Fed wasn't saying it was buying stocks. Now with infinite money printing there is no upside limit.

    I was long AAPL in January and I got burned. Earlier this week I again went long AAPL so we'll see how that goes...

    The markets are divorced from reality so what's the difference between 70x PE and 1000x P/E? How can TSLA have trillions (or whatever it is) in market cap when it continually loses money? Nothing makes sense except markets will keep going up from money printing until the currency is destroyed.

    There may be another crash. But only if the Fed decides it wants one. In which case it's hard to predict.

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  • Fri, May 29, 2020 - 4:28pm

    #2

    Adam Taggart

    Status: Platinum Member

    Joined: May 25 2009

    Posts: 5916

    0

    Market Of The Gaps

    At the 37m:45s mark, I talk about how the market has no more gaps above left to fill, yet numerous open ones below.

    Here's a visual example of what I'm referring to (in this case, the $NDX index):

    (source: Northman Trader)

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  • Fri, May 29, 2020 - 7:03pm

    #3
    jerryr

    jerryr

    Status: Bronze Member

    Joined: Oct 31 2008

    Posts: 93

    0

    Do you call bottoms too, or just tops?

    I'm not sure if this is true, or if it's confirmation bias on my part. But it seems to me that I see alerts near market tops, and you guys at PP are getting pretty good at calling those peaks. But then I never see any alerts that say "cover those shorts, BUY BUY BUY!!".

    And furthermore I agree with Chris when he says that the end game here is hyperinflation. At the end of the day, "great" near-monopoly companies like Amazon and Google are probably going to retain a lot of value, possibly expressed in 2020 dollar terms in billions per share. That is, unless it's the end of the world as we know it. So it seems a lot safer to me to be long most of the time.

    Actually I mostly invest for TEOTWAWKI. But considering the crazy volatility I see ahead, I'm seriously considering doing some market timing.

    If I see some article here that says "Massive Fed Money Printing Operation, QE Infinity Underway", is that code for "cover your shorts, folks"? Or are there explicit buy alerts that I'm missing?

    I confess that I don't watch the "Market Mayhem Update" videos. I often just read the headlines.

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  • Sun, May 31, 2020 - 6:15am

    #4
    lorro14

    lorro14

    Status: Member

    Joined: May 15 2010

    Posts: 12

    0

    lorro14 said:

    Thanks for these videos, they're really interesting to watch. I have to admit most of this stuff goes over my head but it's still very helpful to get an idea of things.

    Apologies if this question has been asked a lot already, I was wondering if anyone can give any recommendations for financial advisors outside of the US? I contacted New Harbor Financial a couple of weeks ago but was disappointed to find out that they can't help as I'm from the UK.

    I spoke to another financial advisor the other day but he said that the economy must be doing well otherwise gold would have gone up in price. Based on what I've been hearing from these videos, and also from Mike Maloney, I'm not really convinced it would be a good choice to go with them.

    Any suggestions would be appreciated. Or even just suggestions on what to look out for would be really helpful.

    Thanks

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  • Sun, May 31, 2020 - 3:41pm

    #5
    planfortomorrow

    planfortomorrow

    Status: Member

    Joined: Dec 28 2017

    Posts: 155

    3

    I got out of the market...

    ...on Friday right after Trumps news conference about China. I think there is something there that could turn pretty ugly but we'll see. I stay all in with the cash allocated in oil however.

    I enjoyed this Podcast but, again, everyone speaks the same tones and concerns they felt in 2009 until now, 2020. It does feel strange though, these times but, the Fed or someone will announce another major spending spree before to long and the engines of deception will rev up again. Until this stops working this will be the plan. If Chris is thinking Hyperinflation first then I think we have a better chance of more time to get RESILENT than we are. I pray to God we get at least a year and we won't have Hyperinflation for this crash to happen for quite a bit longer. I say none of this to upset anyone, I see what's going on and have the wisdom to know that nothing goes exactly as scripted. So vigilant is what I will be. I wish you all well and I hope none of this happens because it will not be pretty for anyone. We will have more than others , this means we will have to protect it at some point. Perhaps I can turn a bad situation into something good. In our neck of the woods it would NOT be a good idea to mess with the "CREW", we have our neighborhood thing going on and I believe we will help each others during a time of crisis. Nuff of this talk though. Peace

    I went back in again today, this afternoon. I still believe the Fed is in control. I believe China didn't even react to Trumps comments on Friday, they really don't want to escalate it seems. The economy is opening up much more and even the riots are not moving the market. Once again, while this time could be different I believe we are seeing another run like we did in 2009 and until the Fed loses control which will be the time everything blows up, I feel they can still do a whole lot by using what they still have in their tool boxes. Nothing has to make sense is what I have learned the last 12 years and applies today. Peace

     

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  • Sun, May 31, 2020 - 4:17pm

    #6
    Redneck Engineer

    Redneck Engineer

    Status: Bronze Member

    Joined: Mar 16 2020

    Posts: 112

    1

    Redneck Engineer said:

    Thank you for discussing shorts.

     

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  • Mon, Jun 01, 2020 - 5:29am

    #7
    dryam2000

    dryam2000

    Status: Bronze Member

    Joined: Sep 06 2009

    Posts: 417

    3

    In other news...

    “In other news, WW3 has broken out with multiple nuclear strikes in the U.S., Europe, Russia, and China.  The largest cyclone ever has hit India.  Drought in Africa has caused the highest levels of famine ever.........and the markets were up on the day with the Dow ending up 1.4% after Fed chairman Jerome Powell made comments at his luncheon reassuring market participants that the Fed has many more tools in its toolbox to move the economy in the right direction.”

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  • Mon, Jun 01, 2020 - 7:29am

    #8

    Adam Taggart

    Status: Platinum Member

    Joined: May 25 2009

    Posts: 5916

    3

    Euphoria: Maximum Stupid Version

    Does this seem defensible when GDP is dropping -50% and cities across the nation are burning with riots?

    Market Sentiment chart

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  • Mon, Jun 01, 2020 - 8:00am

    #9
    dryam2000

    dryam2000

    Status: Bronze Member

    Joined: Sep 06 2009

    Posts: 417

    6

    Wylie Coyote Moment

    I should have clarified my post above as it was meant to highlight the ridiculousness of the “markets”.  There was no other point I was trying to make other than very sarcastic humor as I have a highly warped sense of humor which has only been sharpened by the extremely warped world we live in.

    The “markets” will levitate in thin air until the point they do not; the so-called Wylie coyote moment.  My bet is on a sudden violent market turn not unlike the social unrest that started literally overnight less than a week ago.  That market turn could happen today, or a year from now.  In any event, playing the timing game is highly ill advised.  I’m in complete agreement with all of your market assessments Adam, and the folks at New Harbor.

     

    Btw, I’m excited that my PP Resilience shirts should be arriving today.

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  • Mon, Jun 01, 2020 - 12:43pm

    MKI

    MKI

    Status: Member

    Joined: Jan 12 2009

    Posts: 253

    0

    Does this [market value] seem defensible

    Does this [market value] seem defensible when GDP is dropping -50% and cities across the nation are burning with riots?

    Most of life is just asking the right questions. Market valuation has got nothing to do with "defensible". But it's got everything to do with predictable. This was quite predictable. Hell, I predicted this since 2008.

    Always be on guard against morality plays when investing. The market (as a whole) has been "inexpiable" my entire lifetime. It's just that way in a fiat system.

    But there is actual, real wealth being created today. Real technological advancement. Myself, I use less energy, have more information, better systems, and live a better & healthier lifestyle, than I have in my entire previous lifetime.  And the markets (the blue-chip stocks that actually make money for dividends) may indeed reflect many others are experiencing the same thing. Normal people are wealthier today than ever before in human history; many don't even have to work!

    It's been pretty easy to make money over the last 50 years in the stock market, and I plan to make a lot more in the next 50. A good way to look at stocks behavior? They are like the USD where the government has powerful interest in keeping both high. This is predictable. And as long as the nation does not fall into civil war, this could go on for the rest of my lifetime.

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  • Mon, Jun 01, 2020 - 2:36pm

    #11
    dryam2000

    dryam2000

    Status: Bronze Member

    Joined: Sep 06 2009

    Posts: 417

    1

    Healthy, Wealthy, & Wise

    MKI,

    I’m curious to know why such a wealthy guy who writes in a manner such that he has most things all figured out visits PP?
    I’m all for diversity of thought and input.  PP thrives on it.  I’ve disagreed with Chris M before and went back forth with our different points of view.  However, most people here have some type of shared view or variation that the next 20 years will be very different than the past 20 years.  I first heard Chris M express this in the Crash Course in 2008. Many of your postings seem to reflect you believe the financial system is going to keep plowing along on a similar trajectory as it has in the past?  Is that correct?
    I personally believe the Fed is intent on buying/owning as much as they can.  It’s not incompetence.  It’s by design.  The more the Fed lends, the more it can buy.  These private bankers started from nothing & now they own more than any other entity in the world.  Having said that, everything in life has limits.  That ever doubling group of cells in the body may look like abundant life when actually it’s terminal malignant cancer.  Ultimately, complex systems start to unravel in unpredictable ways when pushed too far.  Maybe the Fed and their believers think that they can print to infinity, but IMHO this is not the case.  Central banks, the financial system, fiat currency do not live in a vacuum.

    Good luck with all your wealth and such.  It all works until it doesn’t.

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  • Mon, Jun 01, 2020 - 11:00pm

    MKI

    MKI

    Status: Member

    Joined: Jan 12 2009

    Posts: 253

    0

    Healthy, Wealthy, & Wise

    why a wealthy guy who writes in a manner such that he has most things all figured out visits PP?

    Odd comment. Just because one makes money in the stock market (it's been dang hard not to over the last 50 years, actually) doesn't mean they are "wealthy". Whatever "wealthy" means, anyway. To one man, it is $50k. To another, $5 million, or even a billion. What does this have to do with commenting on blogs and learning from others? Myself, I deliberately seek out those who do not agree with me so I  can test/question my opinions and try to learn from others. Do you? You should!

    ...most people here have some type of shared view or variation that the next 20 years will be very different than the past 20 years. I first heard Chris M express this in the Crash Course in 2008.

    Another odd comment. The "next 20 years" beyond 2008 is 2028. It is now 2020! We only have 8 years left for your "very different" event to appear. Will you keep up hunting heretics beyond 2028 too?

    Many of your postings seem to reflect you believe the financial system is going to keep plowing along on a similar trajectory as it has in the past? Is that correct?

    Again, it is my opinion that a fatal flaw in investing is to make it personal, or into some sort of morality play. It's actually neither. It is just "is what it is".

    I'm with the New  Harbor guy who said he cannot predict the future. I agree. I have absolutely no idea how long the US financial system can last. It could collapse in a year, or last over a hundred more years. I'm not arrogant enough to claim to know that all stocks are currently "overvalued" or not. Whatever "overvalued" means with an activist Fed.

    One thing I do know: it's much easier to live today than 50 years ago. We are wealthier, we know more, and even if one wants to be a bum and max out their social welfare options, life is pretty dang good in the US. Especially if one eats whole foods, stays fit, kills their TV, and has a garden. Oh, and keeps 10% NW in physical PM. YMMV.

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  • Tue, Jun 02, 2020 - 3:17am

    planfortomorrow

    planfortomorrow

    Status: Member

    Joined: Dec 28 2017

    Posts: 155

    0

    planfortomorrow said:

    Adam it makes zero sense but it doesn't mean we are going to crash this week, next month or the next years. I totally agree with you but I am still going to work to grab whatever it is I think is ahead of us. In the next 3/6/9 months I see an economy broken starting up again. Not all of this will be negative and I expect a lot of positive surprises and I'm starting at the low so the risk to an upside surprise is just ahead. Who knows though right. I have a high tolerance for risk and will just do my best. I know this, I feel horrible when I'm not in the game. I also know I can sit and wait a long time out of the market but I'm not there yet. I am not kidding, I need only one year and I can walk forever, get more Gold and Silver to hedge my bet for the future as I won't need any of the value of my precious metals as they will be left for my family, used for taxes or mainly to assure that whatever happens that Gold, Silver and Oil will participate positively. The value of my life has now been sustained and paid for so my risks will only be picking the right assets so we survive relatively easily. I look forward and see everything we have worked for able to support us for as long as we have the energy to sustain what we have in place. Having my new tractor has duplicated our efforts and then some. I needed to replace our physical labor by a machine and having a bucket, back hoe, most implements and the ability to fix it has improved our productivity and our loss of strength do in large part to aging. Love our tools, accept our future will be terrific. Be Good Adam, just know I hear you, I just have to do this how I see this.

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  • Fri, Jun 05, 2020 - 8:31am

    #14

    davidwhitehead

    Status: Member

    Joined: May 05 2009

    Posts: 1

    0

    Unemployment Down - Jobless Claims Up

    I'm hoping a PP member might be able to help me understand the relationship between the unemployment number and jobless claims. It looks like there were over 15 million jobless claims filed in May, yet in today's news the unemployment number went down from 14.7 to 13.3% and that "employers added a shocking 2.5 million jobs". If there were 15 million claims filed and 2.5 million jobs added, isn't that a net loss of about 12.5 million. Wouldn't the percentage of unemployed go up instead of down?  I'm grateful if employment is rebounding, but the math doesn't working for me.

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  • Fri, Jun 05, 2020 - 8:54am

    #15
    dryam2000

    dryam2000

    Status: Bronze Member

    Joined: Sep 06 2009

    Posts: 417

    3

    Math

    Math is only useful when the numbers being used are reliable.  Apparently TPTB are determined to push forward with their narrative which goes squarely against what is happening in the real world.  We have all seen the grotesque attempts at distorting reality with various narratives relative to what’s happening in the real world.  It’s been hard to see any glimmer of good real world news, but yet the narrative of CV-19 being defeated is being pushed, the economy is roaring back, “science” has been caught outright falsifying data on various treatments for CV-19 (I used to have high regard for the NEJM & Lancet, and that has changed literally overnight), it’s nearly impossible to get balanced “news” reports from any entity, social media continues with progressive heavy censoring of content including science (since when did social media get the right to determine what science is credible and what is not?), etc.  It’s hard for me to believe much these days.

    To answer your question, I highly doubt anyone can say exactly why the BLS employment models came out with the numbers they did.  At this point how can anyone believe any numbers put out by any government agency?

    Here’s what I wrote in another post....

    The 10-year was exploding higher prior to the most bogus job numbers ever, the Dow closing in on being up 1000 points today, the ““markets”” being up every day for the past week despite worldwide chaos internationally and domestically, and gold getting decimated.  I guess all is well in the world.  Looks like we are back to the roaring 1920’s again.  🤔🤔

    And, as dtrammel pointed out that Dr. Fauci is so confident in the potential effectiveness of a vaccine for a completely novel virus that there will be mass manufacturing of the said vaccine prior to whether the vaccine has been proven effective or not.  That’s so good to hear because I was a bit skeptical on getting an effective vaccine in a timely fashion given the fact there’s never been an effective  vaccine developed for the common cold or HIV despite many many $billions spent and tremendous research in those efforts for the past 40+ years.  Just when I thought the world was descending into chaos miracles are happening in front of my eyes.  That will teach me to be so skeptical.  🤔🤔

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  • Fri, Jun 05, 2020 - 8:56am

    Mohammed Mast

    Mohammed Mast

    Status: Silver Member

    Joined: May 17 2017

    Posts: 788

    0

    Normal People?

    I usually don't get involved in these discussions since it revolves around gambling but I just dropped in for a peek.

    Your comment "Normal people are wealthier today than ever before in human history; many don't even have to work!" I really got a chuckle out of that since I thought normal was only a setting on a washing machine.

    I think I need a definition of normal people. I also would need some data to back up that assertion. Everything I see and read is saying "normal people" don't own stocks. "Normal People" live paycheck to paycheck. "Normal People " are falling way behind the rentier class in terms of wealth.  The "Normal People " seem to be ever grateful for a $1200 handout from the Government. I guess the 45 million receiving food stamps are abnormal.

    It seems you are projecting your experience on "normal people" with a very broad brush.

    I am very happy that you are doing well.

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  • Fri, Jun 05, 2020 - 10:28pm

    MKI

    MKI

    Status: Member

    Joined: Jan 12 2009

    Posts: 253

    1

    Normal people

    By "normal people" I mean the not rich, but also not on drugs or criminals. These people can pretty much live on welfare and still survive and have families and a life. Look at the employment numbers! We have never worked so little, yet had so much.

    This is unique in human history. In no other time can huge numbers of people remain without work and still have children and survive. We are living in truly unique times. This is why millions and millions flood into the USA and Europe; the life here is amazing. Even the poor today (who stay off drugs and crime) have more access to food, shelter, and clothing than the middle class did several hundred years ago. This isn't some slant or posturing; these are basic facts.

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