Trifecta predicts Financial Crisis 2.0.........................from Rico

Bubbles always end with stock price collapses. Here is a trifecta of indicators that spell "Financial Crisis 2.0" for anyone paying attention.

 

1. The Buffet Indicator (market cap to GDP) is currently at 130%. OK, the Dot.com bubble was higher at 153% but that was THE single largest stock bubble of the past 100 years.

 

2. The CAPE (cyclical adjusted price-to-earnings) says the market is overvalued like it's 2007 again. The Dot.com bubble and the 1929 bubble are the only two times it's been higher.

 

3. The OIL crash. Remember 2007-2008? This is NOT good.

 

In simple terms, the current US market is:

- overvalued, yet the Muppets are more bullish, and invested, than in 2007.

- overbought, with insider selling to buyers back to 2007 levels. Insiders are selling everything with both hands.

- overextended, with mutual fund cash levels at record lows.

- overleveraged, with margin debt nearly at record levels.

- nearly OVER. Whether it will be a "correction" or a "collapse" the prudent mariner would be getting ready for "Financial Crisis 2.0" with all haste.