Market Update: Flying Too Close To The Sun?

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The disconnect between the accelerating economic damage caused by covid-19 and the reckless exuberance seen in the financial markets is crazy-making at this point.

Prices have been steadily marching upwards in defiance of the ugly data. And in Big Tech, companies are now more overvalued than they were before the pandemic hit.

How, pray tell, can you even pretend to justify these companies trading near the same prices as they did three months ago – after 30 million Americans have been laid off, GDP is contracting the largest rate in history, and household and corporate budgets are being slashed?

The short answer is: you simply can’t.

This is a classic asset-price bubble, being made worse by the recent $trillions being supplied by Congress and the Federal Reserve. Dumping liquidity into the system cannot make up for the tremendous demand destruction that has occurred. It’s not going to help the tens of millions laid off suddenly rush out to buy Teslas, or the millions of soon-to-be-bankrupt companies double their Facebook ad budgets.

The simple truth is these companies are flying too close to the sun. And that always ends with crispened wings and a plummet back to earth.

As we’ve been doing throughout the recent market volatility, we’ve once again asked the lead partners at New Harbor Financial, Peak Prosperity’s endorsed financial advisor, for their latest perspective.

In the below video, we discuss the extreme distortion in today’s markets and how it presents an excellent opportunity for those who haven’t yet to rebalance their portfolios – though the window to do so may be short-lived. In fact, it may be closing right now as we watch today’s sudden market weakness build:

Anyone interested in scheduling a free consultation and portfolio review with Mike and John can do so by clicking here.

And if you’re one of the many readers brand new to Peak Prosperity over the past few weeks, we strongly urge you get your financial situation in order in parallel with your physical coronavirus preparations.

We recommend you do so in partnership with a professional financial advisor who understands the macro risks to the market that we discuss on this website. If you’ve already got one, great.

But if not, consider talking to the team at New Harbor. We’ve set up this ‘free consultation’ relationship with them to help folks exactly like you.

SCHEDULE YOUR FREE CONSULTATION

This is a companion discussion topic for the original entry at https://peakprosperity.com/market-update-flying-too-close-to-the-sun/

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This is a bear market rally for sure.

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One portfolio risk I’ve been wondering about for those of us that may hold a dividend fund due to limited options in a 401k or similar - what happens if a company cuts its dividend to zero? A big part of dividend strategy is just holding and collecting through any downturns. But if it cuts to zero, even temporarily, is a dividend mutual fund forced to sell that stock at the bottom because it’s no longer a dividend stock? If so, that would really hurt the performance of any portfolio that planned to just hold their dividend stocks through a downturn.
My internet searches haven’t turned up any answers to this question.

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There are many newsletters that make an effort to rank dividend safety. One that I think does a decent job is Simply Safe Dividends.
https://www.simplysafedividends.com/intelligent-income/posts/1-living-off-dividends-in-retirement
If you go to the bottom of the page and hit latest (above the shell), you can read their evaluation of various companies.

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Long time fence sitter here.
My wife and I have a single, rural homestead property on which we list a domicile for short term rental on various listing sites, including Airbnb.
Our singular listing on Airbnb has Superhost status. The description in the video of a “Superhost” is inaccurate (as taken from the article) in that it assigns (or implies) number of rentals as the primary metric used to assign that status. The actual metrics are things like ratings, response times, cancellation ratios and relative market performance. Perhaps number of rentals is used for hosts who have multiple, but it’s not required and it’s not the primary metric. The article is either willfully mischaracterizing (which it does do in several other instances), has misinterpreted the designation, or it’s just bad journalism. The “hosts” they are profiling are essentially amateur leveraged real estate speculators. Just wanted to let you know for clarification.
 
As an aside, while our business is down, we have taken a number of steps to mitigate the effects from both a health and business standpoint, including cancelling bookings from our end, raising the price to discourage high traffic (we provide a premium product), and blocking three days after checkouts to allow for management of the half life on various surfaces. Those are a few in conjunction with the obvious ones. In addition, our acreage provides natural buffers for social distancing. We rarely even see our guests, let alone personally interact with them.
Thanks for the great work both of you do. You are are helping a lot of people listen to their intuitions and trust their better judgement.
 
 

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People have been led to believe that a stock market that is performing well means the economy is healthy. However, this has flow away in the face of the pandemic. The DOW Jones and NYSE are performing well, but this doesn’t reflect what is really happening in the ground - the medical community in crisis and the general population on the brick of a race war. People are distracted and no one is paying attention to anything beyond their health and that of their family. The question is:“how long is this going to last?” https://www.toppaperwritingservice.com/review-123helpme-com/

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Nice temporary-mail post

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