A lot’s driving this bubble we’ve been in since 2009, but good fundamental trends and things like demographics and technology are not among them.

The biggest inflator has been the $13 trillion worth of quantitative easing (QE) courtesy of central banks. Thanks to their significant gift to all but retail investors like you and me, speculation has become the norm.

With higher cash flow and cheaper borrowing rates – all in a slow growth economy – companies quickly learned that the best way to increase their earnings per share (EPS) was to shrink the number of shares available.

Just look at this…

In 2018, Trump added the massive tax cuts to the stimulus plan. That created even more direct cash flow to corporations, who responded with record stock buy backs of $806 billion last year, which was a 56% increase over 2017. JP Morgan expects we’ll see about as many buybacks this year. The 2019 number is an estimate. Regardless, it’s insanity.

Since 2009, corporations have done more than 90% of net buying in the stock market. As The New York Times accurately describes it, “This stock market rally has everything except [individual] investors.”

Institutional buyers – aka the smarter money – have been net sellers.

Individual investors – you and me – have been neutral while foreign buyers have been only slightly involved in stock purchases.

Rather, the dizzying gains the U.S. stock market has enjoyed are a result of $5.6 trillion worth of stock buybacks over the last decade!

That’s an average of $500 billion per year. It’s no wonder democratic politicians like Senator Tammy Baldwin have introduced a bill to ban open-market stock buybacks. Senators Bernie Sanders and Chuck Schumer are on this bandwagon as well, as Rodney has mentioned before.

The Stark Disconnection Between Markets and the Economy

All this while U.S. GDP between 2007 and 2018 only reached a cumulative 19%. That’s lower than GDP during the Great Depression, which came in at 20%, cumulatively, between 1929 and 1940.

The financial asset bubble is, in fact, even greater than the one we enjoyed in the 1990s, when the internet was moving mainstream on an S-Curve (as we predicted) and the Baby Boom spending cycle was at its strongest (as we also predicted).

It all just goes to show that this 21st century market bubble is built on nothing but B.S. And it’s risen so high on all the resultant methane, that the inevitable crash will be mind-numbingly devastating.

Imagine the nightmare the CEOs, CFOs, and boards of executives –stockholders of these companies – face when they realize that they soaked up more than 40% of their cash buying back their own stocks at the highest prices and valuations in history.

What the hell are they going to do when they desperately need that cash to survive the greatest economic shakeout since the 1930s?

They’re not going to be laughing all the way to the bank… They’ll be crying, many crawling on their hands and knees.

And their shareholders are going to be pissed!

Who’s the dumb money now? It’s not the shoe shine boys and housewives.

While this bubble experiences it’s last hurrah in an extreme blow-off rally into the end of this year, make sure you’re taking advantage of the Dark Window opportunities. We’re in the final stretch of this low-growth, stimulus-driven, something-for-nothing, gravy-train ride.

Harry

The Truth Exposed: The Future of the Markets & Your Wealth

During this ground-breaking FREE presentation, controversial economist and bestselling author Harry Dent will deliver the hard truth about our economy that you'll never hear in the mainstream media... Read More>>
Harry Dent
Harry S. Dent Jr. studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of his chosen profession that he turned his back on it. Instead, he threw himself into the burgeoning new science of finance where identifying and studying demographic, technological, consumer and many, many other trends empowered him to forecast economic changes. Since then, he’s spoken to executives, financial advisors and investors around the world. He’s appeared on “Good Morning America,” PBS, CNBC and CNN/Fox News. He’s been featured in Barron’s, Investor’s Business Daily, Entrepreneur, Fortune, Success, U.S. News and World Report, Business Week, The Wall Street Journal, American Demographics and Omni. He is a regular guest on Fox Business’s “America’s Nightly Scorecard.” In his latest book, Zero Hour: Turn the Greatest Political and Financial Upheaval in Modern History to Your Advantage, Harry Dent reveals why the greatest social, economic, and political upheaval since the American Revolution is on our doorstep. Discover how its combined effects could cause stocks to crash as much as 80% beginning just weeks from now…crippling your wealth now and for the rest of your life. Harry arms you with the tools you need to financially prepare and survive as the world we know is turned upside down! Today, he uses the research he developed from years of hands-on business experience to offer readers a positive, easy-to-understand view of the economic future by heading up Dent Research, in his flagship newsletter, Boom & Bust.