People are talking about the second wave of the Corona outbreak. At the same time are people rioting and looting. Are shops closed and is the economy heading towards a collapse. At the laboratory are the policymakers (politicians and central bankers) desperately. They are trying to ensure that all gets back to normal. Thanks to the stimulus. The effect of this can you see in the stock market. A big bubble.
Thanks to apps os Robin Hood is investing popular. You can invest with only a few Dollars. But a wise lesson is to watch out when something is highly popular. At the same time is the stimulus from central banks are giving away money. The ECB is doing the same. Well, it is not gifted. If a heroin dealer gives you a shot, it is not a good thing. He wants something in return for it. Or he expects to make it up from you with future sales. Alternatively, he wants something else or has a different agenda.
Thanks to all the money are bubbles the standard. We are having big problems with it. Market signals are no longer taken into consideration. Why are people investing in Hertz? The company declared bankruptcy. They say (based upon the prospectus) that they expect the shares to go down.
If we look at what happened in the past than it is not something I didn’t expect. All goes up. After the stock market crash of 1929. From November to April the market went up, to 20% below peak level. Just to crash another time due to the oil and commodity crises.
At the moment is the USA stock market around the pre crises levels. So we could stat that the central banks are working. The collapse of retirement programs, which will happen around the world, is delayed. nOthing more and nothing less.
But this has a side effect. By nature, prices tend to go down. Thanks to all this money printing are we running to higher prices of consumer goods. Hyperinflation. Just like we see in Venezuela and Zimbabwe. Despite the belief that central banks will stop this when it is over, it is nog going to happen. Central banks are buying at the price they need to pay. They are rolling over investments, they are not selling them.
You better prepare for the hyperinflation scenario. Get ready, before it is too late.