The Top of the market is Looming?

With the rising of real estate eventually the last indicator in the Top of the Boom as show in the attachment .
There is alot more indicators that will need to happen before i conclude this.
The early Tell tale signs that the market is topping or starting to bubble :
* Stocks like Tesla and SPACS and crypto like Bitcoin which made the largest gains are the first to the first to make large daily drops and then recover, Then again large daily drops and slightly recover (rinse and repeat)
Usually the last two sectors that finish well in the Top of the Boom is Energy stocks and precious metals / commodities,
Well , It's really hard to predict the market, No one really can,
Tho with past indicators we can hypothetically come to a near conclusion that the top of the boom is nearing .
Markets always crash, its not a matter if , it"s when?
R.kiyosaki and Jim pickards - the new depression , a great watch indeed , If you get a chance, a must watch for any savvy investor
And pls DYOR , not financial advice by any means, Just my personal take as long term investor

We have had 6 and 12 - falling and rising property prices in one year. We are at 9 with rising commodity prices. And who knows when 1 - rising interest rates are going to happen.
Best defence is run when share prices fall - because price is actually all that matters at the end of the day. As as self directed investor this is your major advantage - being able to get out quickly.

I went to an optometrist yesterday to check out my eyes. He bustled around doing all sorts of checks and then asked me to look at his computer to work out the optimum prescription for close work.

I notice that the open page was on a stock so I lightheartedly said "How are your investments going ?"

Immediately got a 3 minute rundown on just how profitable his investments in cryptocurrency were at the moment. 4 Fold increase. Worth a motza. Sees it as his next treasure trove.

When your optometrist is punting furiously on cryptocurrency, and spruiking it, maybe its time to get out.

I just want to mention, that if you are a long term player, living off dividends, and you own good portfolio of day 6 or 7 strong companies or a broad Whole of market index, you don’t actually have to worry about if of when a market crash is going to happen, you can just hold those shares, watching the underlying performance of the companies over time, and just collect your dividends ignoring the ups and downs.

The only people that really get hurt are the once that’s panic sell during a crash and never get back in.

take my Mum for example, she bought into CBA in 1996 for $12.50 per share, did the dividend reinvestment plan,

She has never sold, and Today her shares are worth $80+ and have paid over $60 in dividends as well.

Sure in 2008 they dropped from $50 to $25 and that caused her some alarm, but she didn’t sell and she actually picked up some cheap shares from the dividend reinvestment plan through the crash.

Some people will immediately say she could have made more money selling at $50 and re-buying at $25 which is technically true, but if here strategy was to trade she also may have sold at times when crashes didn’t come, and ended up paying capital gains taxes and had to buy back in higher.

I guess my point is that trading activity isn’t necessary, and neither is trying to time when crashes will happen, you will be wrong just as often as you are right, and suffer higher taxes and trading fees that offset the gains you might make.

Market dynamics have changed. I am not sure if there are tops and bottoms anymore. I dont see a sustained selling or buying at any point. Instead, there is a lot of sector rotation(quick) and flash falls and quick recoveries.

This was not the case during late 2000's when you would have an event, market responded over a period of time and it actually took time for markets to recover from event.

Value Collector said:

I guess my point is that trading activity isn’t necessary, and neither is trying to time when crashes will happen, you will be wrong just as often as you are right, and suffer higher taxes and trading fees that offset the gains you might make.

Click to expand...

While I agree that Trading Isn't necessary I think it can be very beneficial even with the Tax and fees.
My trading account is currently +520% on capital at risk. Since September when I started using this
smaller funded account.

But I agree timing crashes and re entry may not be perfect but I think opportunity exists on both sides
Getting out early enough to save serious damage to your Financial health and getting back in when
momentum returns. Again you dont have to but I think you should be able to at least be in a position
anticipate then act.

Limit downside and maximize up side.
Its what businesses do every day.
There will be those with very good business skills and those with very bad skills.

Value Collector said:

I just want to mention, that if you are a long term player, living off dividends, and you own good portfolio of day 6 or 7 strong companies or a broad Whole of market index, you don’t actually have to worry about if of when a market crash is going to happen, you can just hold those shares, watching the underlying performance of the companies over time, and just collect your dividends ignoring the ups and downs.

The only people that really get hurt are the once that’s panic sell during a crash and never get back in.

take my Mum for example, she bought into CBA in 1996 for $12.50 per share, did the dividend reinvestment plan,

She has never sold, and Today her shares are worth $80+ and have paid over $60 in dividends as well.

Sure in 2008 they dropped from $50 to $25 and that caused her some alarm, but she didn’t sell and she actually picked up some cheap shares from the dividend reinvestment plan through the crash.

Some people will immediately say she could have made more money selling at $50 and re-buying at $25 which is technically true, but if here strategy was to trade she also may have sold at times when crashes didn’t come, and ended up paying capital gains taxes and had to buy back in higher.

I guess my point is that trading activity isn’t necessary, and neither is trying to time when crashes will happen, you will be wrong just as often as you are right, and suffer higher taxes and trading fees that offset the gains you might make.

Click to expand...

I enjoyed reading your post ?, and agreed with many of your points ,
Personally I wont be totally selling out of my positions, I'm actually just leveraging down,
For e.g IF last week I had a portfolio of $900K,
as of today today I am only 200k in long term investments and leveraged more in to cash,
Putting myself in a better position to buy the lows,
I'd prefer to be" 5mins early " than "5 mins late"
On another note, the volatility is great for day trade ?
I hope this isn't regarded as financial advice, Just my own personal view, I could be totally wrong !
Just as in chess, my position is castling at the moment to protect my position.
PLs Dyor

vharik831 said:

Market dynamics have changed. I am not sure if there are tops and bottoms anymore.

Click to expand...

I wouldn't be to sure about that, human nature has not changed, there will be another mass panic at some stage, and this will eventually be followed by another bout of mass greed and FOMO. You can choose to profit from that by trading if you are skilled or lucky if you wish or you can choose to ignore it and profit throughout the cycle via the companies output, but you just have to try and avoid being swept up with it.

I feel that in general, some people that try and time markets are a bit more likely to be swept up in the panic or greed than people who are more agnostic to the movements and focus on value or long term dollar cost averaging.

You can see on threads in various forums peoples panic and pessimism set in, it can be entertaining to watch, its a real three ringed circus sometimes, but I generally ignore the fluctuations and basically do not "Trade", my biggest profits in the share market have all been in shares I have held for 5 years + and never traded.

vharik831 said:

flash falls and quick recoveries

Click to expand...

Ask someone to name the dates of stock market crashes and you'll most likely hear 1987, the dot com crash, the GFC or 1929 mentioned.

Most seem to have already forgotten that we had a pretty decent crash less than a year ago. The speed and extent of recovery is such that it seems to have wiped the occurrence of it from the minds of many.

indeed this is the XAO:

if you are breakeven with the beginning of 2020, you did very good;
obviously many here made an actual killing in the last year, and i do not complain myself but the correction was severe for the average Joe in his super fund, worse even if he exited and was late to reenter

Smurf1976 said:

Ask someone to name the dates of stock market crashes and you'll most likely hear 1987, the dot com crash, the GFC or 1929 mentioned.

Most seem to have already forgotten that we had a pretty decent crash less than a year ago. The speed and extent of recovery is such that it seems to have wiped the occurrence of it from the minds of many.

Click to expand...

True. In March last year all the stock markets collapsed while business tried to work out how they would survive either a collapse of society or a closing down of industry.

The only reasons the market recovered were the trillions of dollars of free money thrown into the economy that essentially stopped economic collapse.

Thats great. So far. But I suspect many of us are wondering what happens next ? And frankly I think the roaring back of the stock market on teh back of much of this stimulus isn't healthy. My comments on the madness that is cryptocurrency speculation still stand.

basilio said:

And frankly I think the roaring back of the stock market on teh back of much of this stimulus isn't healthy.

Click to expand...

As someone who remembers the dot com bubble and crash pretty well, I'm definitely seeing many parallels here.

A lot of general public interest and involvement directly in the market is one that was present then and is present now.

An overall sense of invincibility and that nothing can go wrong, whilst truly bizarre in view of actual recent world events, also seems to exist now and was present back then.

Meanwhile the real economy has seemingly done the equivalent of someone being in a head on car crash at high speed, getting out, brushing some dust off themselves then immediately proceeding to board a bus that just happened to be coming past. That's what it looks like but I'm not convinced that there isn't a serious fracture or two that'll become apparent in due course.

Some sort of major fraud usually becomes apparent around the time of a market top. That's another one to look for.

basilio said:

I went to an optometrist yesterday to check out my eyes. He bustled around doing all sorts of checks and then asked me to look at his computer to work out the optimum prescription for close work.

I notice that the open page was on a stock so I lightheartedly said "How are your investments going ?"

Immediately got a 3 minute rundown on just how profitable his investments in cryptocurrency were at the moment. 4 Fold increase. Worth a motza. Sees it as his next treasure trove.

When your optometrist is punting furiously on cryptocurrency, and spruiking it, maybe its time to get out.

Click to expand...

That's the state of cryptos and EVs. We're in a K-type market recovery so there are still some sectors heavily beaten down and not even close to pre-COVID prices.

With fee free brokers we're seeing more speculation, small-time gambles than ever. More newbies, more traders, less investors. Faster moves up, and as a consequence faster moves down once we do get in a crash scenario. We can see this lately with GME. Everything's gravy when the stock is going up everyone is buying, but panic when it goes down and everyone is trying not to be the last one through the doors.

One thing I'll note is that if you simply get a list of ASX stocks and manually start going through charts, that is actually look at charts not use any kind of software to scan for whatever but actually look at the chart yourself, you'll pretty quickly realise that there are some stocks in clear uptrends doing very nicely but there's plenty of others that are going nowhere or down.

The current market isn't one where simply randomly throwing money at it will work.

More often than not, energy's an issue around major market tops. Either the price of energy commodities or physical supply constraints.

Thus far in this cycle we've seen some localised problems with electricity supply in China, Japan, France, parts of the US and a few other random places. Those however relate to local technical or logistics issues, they aren't caused by any lack of availability of coal, gas, fuel oil or uranium at the global level.

Nor is price an issue. Prices are trending up but at present thermal coal, oil and natural gas are all at what could be described as pretty normal sorts of prices. There's no crisis, there's no shock.

So that's one factor often seen around market tops that's missing at present - pay attention though since prices are creeping up.

Note in that regard that oil's more important in this sense than gas or coal. The other two are important as such, but oil's the key one to watch.

Smurf1976 said:

More often than not, energy's an issue around major market tops. Either the price of energy commodities or physical supply constraints.

Note in that regard that oil's more important in this sense than gas or coal. The other two are important as such, but oil's the key one to watch.

Click to expand...

Going to be interesting on oil. International travel is still on its knees. I suggest sea trade is still sluggish.
The big push at the moment is EV cars so it seems likely oil use with cars will not continue on its previous trajectory and in fact could fall away within a few years.

If/when heavy transport becomes electric that will also reduce underlying oil demand.

But the most significant element will be a stronger world wide push to reduce fossil fuel use to tackle CC. Now that Biden is President of the US the internal and external politics of tackling global warming via reductions in carbon use will be accelerated. Even the industry is acknowledging that demand will not continue to rise.

And of course renewable energy has now become far more competitive than fossil fuel.

The other question is how much permanent supply destruction there has been in the oil industry as prices have fallen?

......

Some other concerns for myself that wasn't posted originally as there's so much to digest!

Firstly let's look at the Dow jones and the
S & P 500,
Well as its very well known for traders, That our XAO ( ASX ) markets virtually mirrors the Dow charts ( not always) but typically if you pulled up 10 year charts you would see the comparison like a mirror (see att)
There's a old expression I learned early in trading, " when America sneezes , The world catches a cold"
So hence my research is always invested heavily on what the American Economy is doing / inc politics, involves 2-3 hours per day,

So we move on to my first issue , The three trillion added by the Fed in early covid , Which was Amazing amount added, which we look 9 months later @ the current highs, Concerning?
Tho how many dollars were added last year?
Well infact if u look @ 200 years of amercian history as dollars, last year 20% of all American dollars created last year alone,
That's right 1 in 5 of all money created in u.s history was created last year ? Concerning?
Will not debate if it causes high inflation/ pull- push deflation/ stagflation (cause this is a whole topic alone )
My point being is America's Debt level vs GDP
Will show attachments,
The stock market only looks at futures and not at current, Tho come April 19th the real GDP numbers will come in, This is my concern.
With another 2trill stim to come, Concerning?
We will digress further,
With past crashes from 1987 through to 2009, Greenspan has two options that worked well, which seen one of the longest bull runs in history,
Tho the cash rate is @ 0% - so the lever is broken on one option, So hence we can't lower rates to give a injection spark as we have in the past 20 years,
Leads my to there last option : printing more money? This can only last so long, As the U.S dollar is losing its status quo , And with Debt levels never seen since World War 2 ( see attach)
With crypto booming dawning the new age of future curriences, I see alot of countries racing to set to new polices! Are we looking at a currency reset in the future?
Cause personally this time right now reminds me of 1972 where nixon took the u.s currency off the gold standard.
Because right now , I can't see America paying its debt levels due to GDP levels,
As I linked the first video with Jim prickards ,
He discusses The S & P is market capp indexed , So altho 6-7 of the largest companies like Google/ Microsoft/ amazon etc represents 40% of the S & P , like Jim reminds us, What about 30-40 % of sole trading business that represents the other half of GDP , Some restaurants and cafes are closed and may never come back.
Anyways more input later, Tho i think we haven't seen what's behind the curtain yet?

Dark1975 said:

And with Debt levels never seen since World War 2 ( see attach)

Click to expand...

Compounded growth works like that.

The USA economy is the largest it has ever been in the last 200 years, so you would expect debt to be the highest its ever been, everything grows as the economy grows including debt.

Yes there is more money in circulation, but there is also more avocados, cars, movies, etc etc etc being consumed than ever before, and the money can be removed from circulation if needs be, the Fed has the ability to shrink or expand the money supply when ever it wants.

Value Collector said:

Yes there is more money in circulation, but there is also more avocados, cars, movies, etc etc etc being consumed than ever before, and the money can be removed from circulation if needs be, the Fed has the ability to shrink or expand the money supply when ever it wants.

Click to expand...

Agreed but if Fed did shrink the amount of money then what happens to the market?

My expectations is that any shrinkage is going to prove extremely difficult in practice without blowing anything up.