1) Margin debt – the amount of money that investors have borrowed in order to buy stocks – is now at the highest level in history, not only in absolute terms, but also relative to U.S. GDP.
2) The present ratio of total U.S. equity market capitalization to GDP is 2.63. (as in: 263%!) The historical norm (not the low!) is 0.78. (Which is about 70% below the current level.)
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This is the DJIA / Gold Ratio;
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While the Dow - above - should fare the worst of the 3 major US indexes,
S&P500
The Nasdaq that should end up being a little difference without much distinction.
However, where the difference between equity indexes is likely to be (remain) substantial, as well as what is to continue to be the best equities-based trade out there, is this one;
@Bearish-Bulls, This is the time and place to do it! Cheers
SilverChad
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Logic would say this is correct but the Fed would beg to differ.
Nemo_Confidat
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@SilverChad, They can beg all day long, they still would need a tad more than just a Fed. to hold up a 2.63x GDP (current) market cap! - Like an other planet.
SilverChad
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@IanSinclaire, they have a digital printing press
Nemo_Confidat
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@SilverChad, Again, a $7.8 Trillion balance sheet vs. a $65 Trillion market cap. (and an other $150 Trillion or so in unfounded liabilities.) Perhaps a little too much faith in that press, no?! But should that not be sufficient, in itself, the margin calls(forced liquidations) ought to finish the job.