Tuesday, 16 January 2018

The Bigger The Boom, The Deeper The Bust...

The ratio between stock market prices and personal saving has by now climbed vertically almost every single month for the past two years. As a result, the gap between the two has never been wider based on data going back to 1979.

And since the only way stock market prices can continuously outpace saving growth is by way credit expansion (see here for a detailed account), such rapid and continuous expansion of the ratio between simply are not sustainable.

The ratio may expand further still of course, but the eventual bust will likely be yet deeper. In any case, the current record high reading should be discouraging news for stock market bulls whom now appear to be participating in a U.S. stock market crack-up boom. And such a boom usually ends as it must; with a bust.

Stocks as of 15 Jan-18, Personal Saving as of Nov-17

For more charts demonstrating the current U.S. stock market euphoria, see:
11 Charts Exposing The Madness Of The Stock Market Crowd

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