by Doug Casey, Casey Research:
“It’s a very dangerous time” to be an investor.
You might think is a quote from Casey Research founder Doug Casey. But Paul Singer actually said this last week at the Delivering Alpha conference in New York City.
Delivering Alpha is one of the most anticipated investing conferences of the year. Investors from around the world attend it to hear from the “who’s who” in the investing world.
This year, many of the world’s top investors agreed on one thing: the markets are very dangerous.
Singer, who manages $28 billion at Elliot Management, said investors are in more danger than they realize.
Ray Dalio, who runs the world’s biggest hedge fund, said the bond market is “in a dangerous situation.”
Carl Icahn, one of the best traders ever, said there are “tremendous risks” in the market.
Singer, Dalio, and Icahn are Wall Street legends. It pays to listen to them.
Today, we’ll take a closer look at why these all-star investors are so worried. As you’ll see, you need to take steps to protect your wealth if you haven’t already.
• Stocks have lost touch with reality…
A month ago, the S&P 500 hit a new all-time high. It’s now up 216% since March 2009.
If you’ve been reading the Dispatch, you know stocks have rallied against all odds.
They’re trading at record highs despite a weak global economy. The U.S., Europe, Japan, and China are all growing at their slowest rates in decades.
They’re rising while profits fall. Profits for companies in the S&P 500 are on track to fall for the sixth straight quarter.
And they keep climbing despite sky-high valuations. The S&P 500 trades at 18 times “forward” earnings. U.S. stocks haven’t been this expensive since 2002.
Normally, these problems would drag down stocks. Instead, stocks are trading at record highs.
• Easy money has levitated stocks…
Central bankers have cut interest rates more than 670 times since 2008. They’ve pumped more than $12 trillion into the financial system over the same period.
This massive “stimulus” effort stoked a historic rally in stocks. But it did nothing for the “real” economy.
Singer says this disconnect between stocks and the economy has put investors in serious danger:
Eight years of ever-declining rates and ever-increasing radicalism in other monetary policies have not created a sustainable, accelerating uptick in growth. What they have done is created a tremendous increase in hidden risk, risk that investors don’t exactly know or have faced about their holdings…
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