Since 1971 when the USD and most other fiat currencies were not linked to Gold anymore, we haven't seen stocks really go up. Stocks expressed in Gold were already up substantially at the time and after Nixon closed the gold window Stocks dropped 95% against gold. Below I have put the DJIA since 1915 and 1971, as these are the best data we can get. The truth is that on Tradingview I can cleanly analyse only one market at a time as it doesn't have the global combine stock market capitalization. Yes there have been lots of other markets that have gone up since that time and the global economy has definitely grown, but I am here to make certain points based on the fact that the US economy is the largest in the world:
A. Since 1971 the US stock market has dropped 95% and 87% and between those two big drops it had a 4000% increase
B. At the moment it looks like stocks have started their new bull run in 2011
C. In USD terms the DJIA has been going up for time periods that are a bit longer than the total amount of time it was going down & sideways, the time for the next drop might be almost here.
You might be thinking why does that matter? You might think: Gold is pretty useless, it has an inflation rate of about 1-2% and all that matters is that stocks are going up and paying dividends! The truth is that as a whole stocks have performed better than Gold and have provided nice dividends through the years to investors, but Gold has had much less risk and until 2011 it was the best store of value. However you have to understand that this huge rally and these huge drops happened as Central banks and commercial banks globally increased the total money supply (in dollar terms) by about 20-40x. Gold was the soundest money the humanity ever had and moving to a new insane monetary standard distorted things on all markets and created various bubbles. We can see that the global money supply is about 80-90T 'worth of USD' and the total worth of all stocks globally is about 70-80T USD. By following the way new money has been created/printed we can see that stocks have pretty much tracked the global expansion of the money supply. Someone could say that 'look there is 225T worth of real estate', so the global money supply shouldn't matter, however the reality is that: a) stocks pay dividends and their price has some correlation with their dividends and b) stocks need liquidity which comes from money, c) real estate can be used for various things, it is less risky and is market growing with global population and d) there is 245T of global debt makes anyone realize that something isn't right. The funny things is that part of the debt has negative yield and more is going to go negative. This means that Real estate and Bonds are in a much worse bubble that stocks actually are, but they could go much higher.
As you can already see, unsound money from governments and Central banks is causing a tremendous misallocation of capital, it is destroying wealth and at the same time it is concentrating wealth to the hands of those that have already had massive wealth. It should be obvious to everyone that US stocks should had been worth much more than they were worth in 1971... or should they? Given that money is a zero sum game, if there wasn't new money being printed, then stocks shouldn't have really moved up or down much. Only really good investments would succeed and pay a dividend, while bad ones would quickly go away. Essentially the value of our money and investments would go up, without a 'special' number going up. There are many more factors playing a role in this, but overall stock markets going up 20-50-100x up is nonsense created by Central banks. Free and non-manipulated markets don't behave like that and don't do crazy things like have 10-20 years long bear markets during peaceful and prosperous times. What has made things a lot better and have prolonged the ability of Central banks to do these crazy things is the technological progress we've had over the last 50 years.
Below I've put Nasdaq 100 expressed in Gold which is showing for how long the tech stock bull and bear markets really lasted in the US. To me it shows that there is a high chance that we are in the disbelief phase / 'this is a sucker's rally' phase. This fits nicely with the fact that most people are expecting a recession (and rightfully so), as most people get it wrong and the market can stay irrational longer than you can stay solvent. In my opinion this new tech bull run is based on: a) the exponential progress in technology, b) the fact that the market came out of a vicious correction that lasted 12 years, c) gold being controlled by central banks d) gold is 'outdated' in a digital world and e) banning cash, full on negative rates, more money printing, f) a new digital banking system with Central banks creating digital, while they use that money to start buying stocks.
However how large is that upside given the current macro picture? How long can the market stay irrational under the current awful global financial conditions? In my honest opinion the upside here is somewhat limited and the risk quite large. Until stocks many new ATHs I'd stay out of stocks, as we could be moving into a recession which could initially cause a drop in stocks. Don't forget that Central banks will try and fight the recession with everything they've got. Also don't forget that the US still remains the best place to put your money in. So in my opinion we will eventually see a prolonged period of stagflation or simply a period where stocks, bonds etc keep going up on a really unsound basis until everything breaks down. No idea when things start breaking down, but the one thing I am certain off is that I wouldn't want to hold much fiat. It is the first time that we are observing such a crazy period of currency wars with a quite a lot of changes on our monetary and payment systems. As I've mentioned before, USD, JPY, Gold, Silver, Bitcoin and maybe some stocks (i.e US large tech stocks) are the only assets i'd touch.
A. Since 1971 the US stock market has dropped 95% and 87% and between those two big drops it had a 4000% increase
B. At the moment it looks like stocks have started their new bull run in 2011
C. In USD terms the DJIA has been going up for time periods that are a bit longer than the total amount of time it was going down & sideways, the time for the next drop might be almost here.
You might be thinking why does that matter? You might think: Gold is pretty useless, it has an inflation rate of about 1-2% and all that matters is that stocks are going up and paying dividends! The truth is that as a whole stocks have performed better than Gold and have provided nice dividends through the years to investors, but Gold has had much less risk and until 2011 it was the best store of value. However you have to understand that this huge rally and these huge drops happened as Central banks and commercial banks globally increased the total money supply (in dollar terms) by about 20-40x. Gold was the soundest money the humanity ever had and moving to a new insane monetary standard distorted things on all markets and created various bubbles. We can see that the global money supply is about 80-90T 'worth of USD' and the total worth of all stocks globally is about 70-80T USD. By following the way new money has been created/printed we can see that stocks have pretty much tracked the global expansion of the money supply. Someone could say that 'look there is 225T worth of real estate', so the global money supply shouldn't matter, however the reality is that: a) stocks pay dividends and their price has some correlation with their dividends and b) stocks need liquidity which comes from money, c) real estate can be used for various things, it is less risky and is market growing with global population and d) there is 245T of global debt makes anyone realize that something isn't right. The funny things is that part of the debt has negative yield and more is going to go negative. This means that Real estate and Bonds are in a much worse bubble that stocks actually are, but they could go much higher.
As you can already see, unsound money from governments and Central banks is causing a tremendous misallocation of capital, it is destroying wealth and at the same time it is concentrating wealth to the hands of those that have already had massive wealth. It should be obvious to everyone that US stocks should had been worth much more than they were worth in 1971... or should they? Given that money is a zero sum game, if there wasn't new money being printed, then stocks shouldn't have really moved up or down much. Only really good investments would succeed and pay a dividend, while bad ones would quickly go away. Essentially the value of our money and investments would go up, without a 'special' number going up. There are many more factors playing a role in this, but overall stock markets going up 20-50-100x up is nonsense created by Central banks. Free and non-manipulated markets don't behave like that and don't do crazy things like have 10-20 years long bear markets during peaceful and prosperous times. What has made things a lot better and have prolonged the ability of Central banks to do these crazy things is the technological progress we've had over the last 50 years.
Below I've put Nasdaq 100 expressed in Gold which is showing for how long the tech stock bull and bear markets really lasted in the US. To me it shows that there is a high chance that we are in the disbelief phase / 'this is a sucker's rally' phase. This fits nicely with the fact that most people are expecting a recession (and rightfully so), as most people get it wrong and the market can stay irrational longer than you can stay solvent. In my opinion this new tech bull run is based on: a) the exponential progress in technology, b) the fact that the market came out of a vicious correction that lasted 12 years, c) gold being controlled by central banks d) gold is 'outdated' in a digital world and e) banning cash, full on negative rates, more money printing, f) a new digital banking system with Central banks creating digital, while they use that money to start buying stocks.
However how large is that upside given the current macro picture? How long can the market stay irrational under the current awful global financial conditions? In my honest opinion the upside here is somewhat limited and the risk quite large. Until stocks many new ATHs I'd stay out of stocks, as we could be moving into a recession which could initially cause a drop in stocks. Don't forget that Central banks will try and fight the recession with everything they've got. Also don't forget that the US still remains the best place to put your money in. So in my opinion we will eventually see a prolonged period of stagflation or simply a period where stocks, bonds etc keep going up on a really unsound basis until everything breaks down. No idea when things start breaking down, but the one thing I am certain off is that I wouldn't want to hold much fiat. It is the first time that we are observing such a crazy period of currency wars with a quite a lot of changes on our monetary and payment systems. As I've mentioned before, USD, JPY, Gold, Silver, Bitcoin and maybe some stocks (i.e US large tech stocks) are the only assets i'd touch.