I wonder how long into 2024 this rally will carry?

Investing Strategies Technical Trader's Sanctuary
1

Doc,

I took the liberty to create a new thread for your question.

image
image911×634 88.7 KB

I think the current stock rally is speculative, election-year, declining empire nonsense for all the reasons people like Jim Rickards lay out in their interviews, and I’m expecting --and hoping for-- the mother of all market crashes in 2024 due to US’s financial and foreign policy stupidities. Then, I get serious again about trying to put money to work. Meanwhile, I’m just trading small postions for the fun of it.

But also, my situation isn’t that of most Americans. I’m retired, in good health, and my current incomes (SSI, pension, and investments) are 5x current expenses. I can sustain a lot of market damage without it affecting my beer-and-bait lifestyle. Therefore, I can ignore markets --or engage them-- as I choose. I don’t need 2024 to be a good year, or a bad year, and what I might want doesn’t matter.

Now for some reasons the current rally won’t continue:

#1, US debt is $33.8 trillion and accelerating. Yeah, interest rates are backing off a bit. But soon enough, the US won’t be able to service that debt. Hence, Banking Crisis 2.0 comes and with it tanking stock and real estate markets.

#2 The US is losing its now nearly 10-year war with Russia, is getting its b^tt kicked in the Middle East, and has lost Africa and South America to China. Meanwhile, BRICS Plus is gaining effective control of the world’s commodity markets and is increasingly bypassing the $US dollar in trade settlements.

Charlie

3 Likes
2

So what do you mean by “mother of all market crashes”? Bigger than 2000? Bigger that 2008? More like 25% give or take a bit?

3

FCorelli,

Jim Rickards --and many others-- lay out in detail why the coming market crash will be worse than 2008 or '29.

Basically, their reasoning comes down to this. If the US won’t stop spending beyond its revenues, and if the world increasingly bypasses the $US dollar, then the worst of two worlds hits US consumers summed up in one word: Stagflation.

How soon? How deep? Who know? But do you really think the US presently is a well-run economy and that stocks are reasonably priced?

Charlie

4

It’s no worse than anybody else and better than many. That doesn’t mean it’s “good” though.

I am not an economist and if I were it probably wouldn’t matter anyway, ha ha. However, If the US won’t stop spending beyond its revenues…
nobody anywhere does this. Whenever I hear people start talking about balanced budgets and gold standards etc, I think of what kind of economy we’d have and what the country would look like if we had those things.

Just start spending only what we take in. The world would explode. Nothing could get done. Business will not tolerate it, so that right there tells you it cannot happen. And if by some fluke it did get implemented it would be the shortest experiment in history.

There’s never enough money to do all the things we need to do now. Schools, prisons, SS, Medicare, subsidy after subsidy, direct or indirect, for industry after industry. Banks themselves almost by the laws of banking physics run largely on money that doesn’t exist anyway and still need propping up. In short take all the “promise money” out of the system and just spend what you have. Nothing but death and destruction will ensue

The predictions referred to are way too hand wringy and someone “making a case” means little. Lawyers do that in court all the time. It’s just swaying the jury.

Now, replacing the US buck worldwide would be a problem but I’ve been hearing that since I was a little boy. Still waiting. Even though it did look plausible if not likely / imminent at various times.

4 Likes
5

FCorelli,

'Replacing the $US dollar’ has two meanings. One is its role as the world’s current ‘reserve currency’. The other is as a favored ‘settlement currency’. Replacing the $US in international trade settlements is increasingly happening, which affects how quickly its role as a reserve currency will be diminished, though that’s not the only factor. Regardless, the net effect to US consumers will be persistent inflation, which will negatively affect stock prices.

Secondly, if national debt is kept within a country’s ability to service it, then servicing it is manageable. When debt to GPG exceeds 90%, a tipping point is reached, and default is all but ensured. The US is currently at 130% and headed higher. (Cf, the Reinhart/Rogoff thesis.)

As for having all the money it needs to run a country responsably and to care for the needs of its citizens, the US clearly has that. We’re a rich, rich country, blessed with abundant natural resources, a reasonably well-educated workforce, an unbeatable entrpreneurial spirit, etc. What the US can’t afford is both 'guns and butter" and its endless foreign follies. Now the hawks want to take on Iran and China. Well, good luck with that project, given that the US has lost every war of choice it has taken on since 1945 (except for its invasions of Grenada and Panama).

Lastly, my crystal ball isn’t any brighter or more accurate than anyone else’s. So the way I look at the future is this. If my negative forecast is wrong, then I don’t make as much money as I might have made. But if my negative forecast is correct, and if my preparations for the downturn are sufficient, as in zero debt, multiple income streams, good health, then my life continues without financial hardship.

Right now, the so-called “middle class” is being downsized, and they aren’t fighting back. Heck, they’re not even very aware of the financial serfdom headed their way, much less their continuing losses of freedoms.

Charlie

6

And all this time I’ve been hearing that we’re bankrupt and xx trillions in debt. We can’t be both. Have enough to do all we need to do (which many would tell you is socialist and communist anyway and we shouldn’t do them) and have no money because we have lots of debt.

I doubt trimming (eliminating) the defense and possibly the State dept budget (the guns) would free up enough money to put a chicken in every pot, “make every man a king.”

2 Likes
7

Supporting evidence?

Interest expense as a percentage of GDP is lower today than it was for ALL of the 80s and 90s, yet we survived. Why is default now unavoidable?

BRICS Plus is gaining effective control of the world’s commodity markets and is increasingly bypassing the $US dollar in trade settlements.

There is no supporting evidence of that. The Dollar is still the single dominant player in foreign transactions.

Even if the dollar eventually becomes the majority minority, how does that necessarily equal a massive sell off in equities? The logic does not follow. We have gone from roughly 80% of all trade being settled in US dollars to something less than 70%, all the while the equity markets have continued to grow - recently setting new all time highs.

3 Likes
8

Hawk,

Roughly what is GDP? It’s just the sum of national spending. right? and not a meaninglful measure of economic productivity. What percent of current GDP is due to our dear gov’t’s activities compared to prior years? If spending exceeds revunues, how can it be carried out? By borrowing, right? But what happens when borrowing can’t be done? That train wreck is headed our way.

Supposedly, interest on last year’s national debt exceeded $1 trillion. Even if interest rates back off a bit, next year’s interest is likely to increase, and unmanageably so, because natonal debt has increased (as has consumer debt).

Opps. Game over and a new Bretton Woods in which terms will be dictated to the US, not the other way around.

Charlie

9

Sure it is. It may not be absolutely perfect but there is no question that it is meaningful. It certainly isn’t arbitrary or fictional.

But what happens when borrowing can’t be done?

What evidence do you have that borrowing cannot be done? The demand for government debt recently spiked. 10 yr Treas rates fell by 1% in less than 60 days. That indicates relatively strong demand. What evidence do you have that demand is going to crater?

next year’s interest is likely to increase, and unmanageably so

I agree it IS going to increase next year, I don’t think that is in dispute but you have yet to offer any evidence that suggests that such an increase is suddenly unmanageable.

5 Likes
10

I mean I am in the belief of economic downturn sometime in 2024 as well, however not for the two reasons Arindam listed. Kicking the can down the road has been in play for so long that it will still be the game that is played. I expect a worsening of geopolitics will cause a new surge of inflation due to government spending (war time effort spending), which is not the best increase for GDP as it always turns around to haunt the biggest part of GDP, the consumer.

1 Like
11

Dent tends to be an alarmist. But Hussman does solid macro work, as does Rickards. Both are saying to expect a crash. Argue with them, not me.

And, again, let me repeat what I said before. If my forecast of a downturn is wrong, the worst case for me is that I might miss out on some investing opportunities. If I’m right and a '29-style crash does occur, as I know I will happen, because it’s already beginning, then I won’t suffer the financial hardships that most will because I 've insulated myself from the worst of the damage that will occur.

Auto loan defaults up 25? 62% of Americans living paycheck to paycheck? Etc. There just isn’t any reason to be optimistic about 2024. Even a Trump win isn’t going to turn things around, though it might cut down the number of wars of choice on the neocons’ list.

12

But you are the one making the claim HERE. If you cannot support such a claim, then what value does your prediction hold?

But I digress. Let’s take a comment from Dent since you are quoting him in this latest article:

"I think 2024 is going to be the biggest single crash year we’ll see in our lifetime…
“It’s going to be more in the '29 to '32 level. And anybody who sat through that would have shot their stockbroker,” Mr. Dent said, making references to the stock market crash in 1929 that led to the Great Depression throughout the 1930s.

"If I’m right, it is going to be the biggest crash of our lifetime, most of it happening in 2024.

I always find it humorous that someone can definitely predict that we are going to see a depression not felt since the 30s, but then backs out on such by qualifying it (i.e. “If I am right”).

But I like this little nugget further down in your article:

Mr. Dent’s predictions of a market crash are nothing new. In 2009, he wrote “The Great Depression Ahead,” a book that forecasted a significant market crash.

We have waited over 14 years for Mr. Dent to be correct. “If I am right,” I bet we will be waiting just a bit longer.

And of course, there will be no consequences if Mr. Dent is wrong, yet again. Someone will be back here next year quoting him again.

5 Likes
13

I might be more interested if it were anybody other than Harry Dent. His track record is entirely too unreliable. His generational spending model “system” if that’s the word for it, just isn’t granular enough to use to time in’s and outs. Is 2024 gonna be a bad year for the stock market? Yeah, maybe. Could be. I guess. Is it going to be a 1929-style wipe-out followed by the 1930’s? A little extraordinary an assertion to swallow without extraordinary evidence. Not the usual “this is up, and that is down, and spending this and pay check to pay check that…” That’s been going on forever and here we are thriving like the dickens.

Reminds me of an exchange in an episode of the old TV show Barney Miller:

Wojciehowicz: Hey Nick, how much money would you have if you didn’t bet on horses?

Nick Yemana: If I never bet on horses? About $60,000. If I never bet on losers…, about 2 million

2 Likes
14

This is what you would have missed out on if you had listened to Dent since 2009.

image
image1573×812 135 KB

Andy

6 Likes
15

As I said, "Dent tends to be an alarmist. But Hussman does solid macro work, as does Rickards. Both are saying to expect a crash. Argue with them, not me. "

1 Like
16

Just checking back in on how that crash is going. S&P 500 up about 15% and the NASDAQ up about 19%.

Still waiting on that crash.

2 Likes
17

To paraphrase the Sage: “to be fearful when others are greedy and to be greedy only when others are fearful.”

You sound a bit greedy :stuck_out_tongue_winking_eye:

For the record, I’m not fearful, just aware of my surroundings.

18

If greedy is defined as simply buying an index fund and forgetting about it while I enjoy the last couple of years of above average returns, then ya, you are welcome to call me greedy.

2 Likes
19

Peter Lynch: “Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves”

4 Likes
20

The S&P 500 rose 14.5% in the first six months of the year, nearly identical to the index’s gains for the same period last year. In 2023, it rose 15.9% in the first half. Historically, that is a good sign for the rest of the year.

Almost every year that the S&P 500 climbs more than 14% in the first half, the index closes the year with gains, according to Dow Jones Market Data. But most of those gains come in the first half. On average, the S&P climbs 24.5% for the full year, but only 2.8% in the second half.

It’s different in election years like the current one. The S&P historically has climbed 0.9% in the first six months and 7.2% in the second half.