US Bubble Gauge
Kevin Brunner
I help people turn capital gains taxes from large asset sales into income. Contact me before selling real estate, a business, or other highly appreciated asset!
This chart is from Ray Dalio. He is not the only person to successfully call market bubbles. Yes, it’s true you cannot ’time the market’ - BUT - you CAN know the 'season’. And we are in Fall going into Winter.
As recent history proves all assets are connected to the market through security instruments used to invest in them. Real estate, stocks, bonds, it’s all connected.
Dalio's method (as well as others) has systematized the study of bubbles over time into a “bubble indicator” based on six influences. This chart shows the aggregate reading for the stock market going back to 1910. It shows how the conditions stack up today in relation to past times.
In brief, the aggregate bubble gauge is around the 77th percentile today for the US stock market overall. In the bubble of 2000 and the bubble of 1929, this aggregate gauge had a 100th percentile read. That’s a ‘bubble’. However, many severe market corrections in the past, had a lower percentile, before the drop came.
In 2006 - 2007 I warned clients this cannot continue, and when asked when I thought, I said about 2010 or 11. Notice 2008 on the chart above. It all came apart much faster and more severe than we thought.
What does this mean for you?
- We are closing in fast on the next bubble, prices cannot continue as they are.
- The wave of Baby Boomers retiring at 10,000+ a day will be selling investments for income, further driving down prices.
- Talk to Business Brokers, in the last 12 months 50% of their listings are no longer in business, with nothing left to sell.
- Entire law firms are reorganizing to profit from the coming wave of bankruptcies.
- The debt default wave will pass through the economy, especially real estate, landlords not collecting rents, shopping malls vacant, etc., etc., it all trickles down through the economy.
- The ’safety’ of even real estate is again in question.
- We are being intentionally flooded with immigrants, one party wants the voters, the other wants cheap labor. Either way, it’s flooding schools, driving down wages and thus rents, and they send much of their income home, depleting the economy further.
- Pension Accounts and Investments, many of these apartments are owned by Wall Street REITS (your 401k).
- Low-wage people pay less taxes yet use more social services and government benefits and do not invest in things like 401k, further driving down the economy.
- This will drive down real estate prices and rents. Your expenses, cost of maintenance, taxes, and vacancies/losses will increase, your net-net income will decrease.
- Huge cities and even states are already technically bankrupt. Politicians will increase taxes on the ‘wealthy’ (you) to pay for the social services and wasteful administrative state.
- Big money is moving offshore, fast.
- Having employees in the USA is becoming a serious liability, many high-tech jobs are moving off-shore, leaving low-wage service work on-shore.
- Virtual offices and virtual jobs are here to stay as it is actually more efficient.
- China is Rising. Facts are, they used the pandemic to reset much of the world's economy in their favor and regardless of what the lying politicians and paid pundits say, that is not good for the USA.
- The Fed is printing money by the $Trillions.
… I can go on for pages, but you get the idea. It’s all changing faster than you are adapting.
So ask yourself
- Do you have a plan for this? Are you sure?
- Do you have enough confidence in your plan to get a second opinion?
- Or will you just hold your head down and ride it out?
- Is that the 'most profitable less risk' thing to do?
- What if you cannot ‘ride it out'?
Schedule a 5 minute Q&A Call with me here: https://calendly.com/kevinbrunner/5min
Our process is educational;
Learn how to reduce risk, how to lock in your gains and income, and still have future increases/growth, for generations. With the right plan, the right efficiencies in place, you can do extremely well during this time.
And this includes real estate investors as well. For RE Investors, it’s easy, for most of you we can increase your net-net income by 30% today.
Schedule a 5-minute call, the worst thing is you’ll learn something.
Kevin Brunner, President
Qualified Financial
o: (800) 694-5133
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