(11-17-2024, 01:41 PM)Jag149 Wrote:

(11-17-2024, 01:06 PM)The Real Marty Wrote: I think it will be on both of them.  

Right now, the total stock market capitalization to GDP ratio ("the Buffett indicator") is at around 2.  That is wildly too high.  

The Buffett Indicator: Market Cap to GDP - Updated Chart | Longtermtrends


The total debt, public and private, in the United States is over $95 trillion.   

Total debt across all sectors U.S. 2022 | Statista

What happens when stocks are that overvalued, and there is that much debt? 

Stock market crash, massive defaults, and depression.

I agree there are reasons for concerned.  This is why we cannot continue the direction we are going. Disruptors are needed in government as the entrenched administrators have proved to not be capable of doing anything significant.

Stocks historically have been valued on average around 18 times earnings. Currently they are at 21-22 times earnings. Fortunately there are only a handful of stocks that are pulling that average higher. They are cyclical semi conductor type stocks due to the push for AI. On the other hand we did have a 4 year period where inflation was 20% and  trillions of dollars were printed.  18*20% = 3.6. add that to the 18 and you have 21.6. A very simplistic approach.

Things should be ok as long as the default rate doesn't dramatically increase. It has moved a little in the last month but we need unemployment to stay low for this to work. The Fed has a duel mandate from congress to get to 2% (they are not there) and full employment. They foresaw the softening labor market despite the over inflated Jobs numbers reported by the current administration. They actually were the ones that forced the reduction of 880,000 in the report by saying they don't use the report. This caused the Fed to cut the rate by .50 instead of .25.