AI
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Tuesday, April 26, 2022 1:20:55 PM
The closest we have come to that in recent history was the sub prime mortgage bust around 2008-9.
Those who bt homes on adjustable subprime mortgages couldn’t refinance them when they needed to and lenders foreclosed .
This is not 1929 repeating
No, it is worse! In addition to easy credit leading to weak mortgages, you now have 3x as many national an international retail investors gaining access to online trading, and individual margin accounts. The result - margin debt is near an all time high
It’s a market responding to higher interest rates due to the Fed trying to reduce inflation .
Higher interest rates make long duration assets ( tech / biotech ) less attractive .
At some pt this gets priced in
Fed "trying" to reduce inflation. They are stuck between two BAD outcomes; crash the economy or crash the market. What we have today is truly a perfect storm (margin debt + national debt + runaway inflation + clueless investors about to capitulate once they witness free fall).
Yup, it will get priced in alright... but at extreme lower levels. I believe we are about to witness the photonegative of the 2009 - 2021 bull market. The difference will be the speed at which the liquidation event will occur.
As they say, "stocks walk up stairs... and fall out of windows."
...and the music played on
