Big Risk of a Collapse Happening?

A quick look at these US, European Stoxx, German Dax, Spanish Ibex, Italian, Hong Kong charts below and decide for yourself. 2008 redux or…er, ahem… worse.
More than a few sharp cookies think if we get a washout here it will mark the end of a secular bear that really started in the late ‘90s and some think it will be a generational buying opportunity. Liquidate real estate in Canada while you can, pay down or refinance debt with exceptionally low interest rates and build a sum you can deploy when things get so extreme some stocks will sell for less than their net cash in the bank.
“With Manic Markets, it is crucial to evalue both long and short term charts and levels often. We wrote of the Squeeze set up three days ago. Once again, the markets bounced off the support levels, and fooled too many of the new “smart” shorts. Our long term scenario is intact, and we still believe the big dynamics on the downside will evolve later this autumn. There is a big risk of a Collapse happening, just when everybody is sucked into the long trade, and shorts have given up. For now, let’s review the short term charts, all hitting resistance levels”. Charts & Big Risk of a Collapse Happening HERE
(Ed Note: Latest comments including Oct 7th at the bottom of this post)

5 Replies to “Big Risk of a Collapse Happening?”

via Nomura, that shows, as simplistically as possible, that even as corporate cash is at all time highs, corporate debt is just below all time records (and the recent decline in gross debt has only occurred courtesy of banks pushing up stock prices to artificially high levels, which has afforded many with equity refis opportunities to pay down existing debt, as well as asset dispositions). In other words, and this goes to shut up all those “cash on the sidelines” chatterboxes, net debt has barely declined from all time records. In a nutshell: total debt of over $7 trillion versus total cash of $2.6 trillion

I have been telling everyone that will listen this mantra fir the past year. I have liquidated my RRSPs and on our families recent relocation back to Calgary we are renting. The market is way over valued
We have zero debt and 6 figures in the bank waiting in the bank for the crash to buy a house and buy to-be-undervalued stocks on the cheap.
We have a small amount loaded up in regular and TFSA accounts to short a broad range of sectors (financials, Asia, , gold, the broader markets etc.) that will see exponential growth during the next crash which will pale in comparison to 2008. I am up 35% alone in my TFSA in the past few months alone. I hope to add a zero to that percenge.

A collapse is likely in the US, the longer the US Federal deficit remains. At some point, financing will become impossible, and the deficit will be eliminated by raising taxes $1.5 trillion. Now, who might a bold community organizer tax, first? Businesses of all sizes, because they aren’t part of the Democrat base. The confiscation of their earnings will end dividend pay outs, causing a collapse in share prices. End result: the deficit is closed, and the ” wealthy” suffer a 60%, 70%, who knows how much drop in their net worth. A progressive twofer! If America remains in the grip of radicals, or timid Republicans, the only question is when, not if, this devastation unfolds.

There are millions of investors sitting on trillions of dollar in cash, waiting for this “once in a lifetime” investment opportunity.
They are not the same people, and companies, who are in debt trillions of dollars.
That’s the single biggest reason why it won’t happen as dramatically as people think.
The 20% of people who are not indebted, and sitting on cash, will be there to buy stocks as the collapse starts in earnest, and they will form the floor of the market. There are a lot of us, myself included, waiting for that opportunity, but as the TSX and Dow and S&P drop 10, 20, or 30%, and not knowing where the bottom will be, we will start buying slowly and steadily. We will be buying blue-chips with massive cash assets that can survive any economic disaster short of complete national collapse (and even then)
It’s very likely that the bottom will be at the 2008 bottom. It may go lower, but I’d bet against that.
The same goes for real estate.

Just in case anyone needs a refresher what a trillion dollar looks like:
http://www.tomax7.com/thoughts/trillion.htm

RFB says:

October 7, 2011 at 4:37 pm

via Nomura, that shows, as simplistically as possible, that even as corporate cash is at all time highs, corporate debt is just below all time records (and the recent decline in gross debt has only occurred courtesy of banks pushing up stock prices to artificially high levels, which has afforded many with equity refis opportunities to pay down existing debt, as well as asset dispositions). In other words, and this goes to shut up all those “cash on the sidelines” chatterboxes, net debt has barely declined from all time records. In a nutshell: total debt of over $7 trillion versus total cash of $2.6 trillion
Dan Tappin says:

October 7, 2011 at 4:39 pm

I have been telling everyone that will listen this mantra fir the past year. I have liquidated my RRSPs and on our families recent relocation back to Calgary we are renting. The market is way over valued
We have zero debt and 6 figures in the bank waiting in the bank for the crash to buy a house and buy to-be-undervalued stocks on the cheap.
We have a small amount loaded up in regular and TFSA accounts to short a broad range of sectors (financials, Asia, , gold, the broader markets etc.) that will see exponential growth during the next crash which will pale in comparison to 2008. I am up 35% alone in my TFSA in the past few months alone. I hope to add a zero to that percenge.
small c conservative says:

October 7, 2011 at 4:42 pm

A collapse is likely in the US, the longer the US Federal deficit remains. At some point, financing will become impossible, and the deficit will be eliminated by raising taxes $1.5 trillion. Now, who might a bold community organizer tax, first? Businesses of all sizes, because they aren’t part of the Democrat base. The confiscation of their earnings will end dividend pay outs, causing a collapse in share prices. End result: the deficit is closed, and the ” wealthy” suffer a 60%, 70%, who knows how much drop in their net worth. A progressive twofer! If America remains in the grip of radicals, or timid Republicans, the only question is when, not if, this devastation unfolds.
old Lori says:

October 7, 2011 at 5:25 pm

There are millions of investors sitting on trillions of dollar in cash, waiting for this “once in a lifetime” investment opportunity.
They are not the same people, and companies, who are in debt trillions of dollars.
That’s the single biggest reason why it won’t happen as dramatically as people think.
The 20% of people who are not indebted, and sitting on cash, will be there to buy stocks as the collapse starts in earnest, and they will form the floor of the market. There are a lot of us, myself included, waiting for that opportunity, but as the TSX and Dow and S&P drop 10, 20, or 30%, and not knowing where the bottom will be, we will start buying slowly and steadily. We will be buying blue-chips with massive cash assets that can survive any economic disaster short of complete national collapse (and even then)
It’s very likely that the bottom will be at the 2008 bottom. It may go lower, but I’d bet against that.
The same goes for real estate.
johnbrooks says:

October 7, 2011 at 7:25 pm

Just in case anyone needs a refresher what a trillion dollar looks like:
http://www.tomax7.com/thoughts/trillion.htm

5 Replies to “Big Risk of a Collapse Happening?”

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