Unpayable Debts in the U.S.A., Eurozone, China & Japan virtually guarantee Mega-Moves in Key Sectors are coming.
“Financial assets now represent over 82% of the net worth of both households and US non-financial corporations (data: Federal Reserve Z.1 Flow of Funds). Except for periods where total net worth had itself retreated (for example, 2008-2010), the concentration of private net worth on financial assets, rather than real assets or productive capital, has reached the highest extreme in history in recent years. In our view, this is just temporarily overvalued paper masquerading as something durable.
The previous extreme (again, outside of periods where net worth itself had retreated) was, not surprisingly immediately prior to The Tech Wreck.
Yes, indeed “Temporarily Overvalued Paper” accurately describes many “Markets.” And that which is Overvalued does not stay overvalued! Thus Mega-Moves are Impending and those who are prepared will Profit, and those unprepared will Suffer.