Gonna Party Like It’s 1999

Here’s The Contrarian on the current asset bubble we’re in:

  • The U.S. stock market and U.S. bond market are historically overpriced, and real estate is at the high end of the valuation scale too.
  • Starting valuations are so poor that seven-year real return forecasts are direr than they were even in 2000 and 2008.
  • In contrast to past periods of market weakness, bonds are unlikely to offer the same safe haven.
  • Thus, where can an investor turn in order to enhance their investment allocations and prospective future real returns?
  • How about the third major asset class, specifically commodities, and commodity equities, which are historically non-correlated and still historically out of favor?

Want another point of view?

OK, let’s recall Permabull Jim Cramer a year ago when the infamous and notorious Dr. “Death” Fauci was still recommending people take cruises:

We are buying some of every one of these this morning as I give this speech. We buy them every day, particularly if they are down, which, no surprise given what they do, is very rare. And we will keep doing so until this period is over – and it is very far from ending. Heck, people are just learning these stories on Wall Street, and the more they come to learn, the more they love and own! Most of these companies don’t even have earnings per share, so we won’t have to be constrained by that methodology for quarters to come.

– Jim Cramer, February 29, 2020.

Recall how Cramer did back in 2000 when we saw the last bubble implode

In contrast, GMO says don’t get Cramered – there’s a desert ahead. And this is what they think it looks like:

Bears get rich, bulls, get rich, pigs get slaughtered.

What to do?

Well, The Contrarian says commodities.

Then, there’s always Max who focuses on the explosion in Federal spending from The Party making us all “Venezuelans”. Which makes sense since The Party aligns with Venezuela.

That means more hard assets immediately and hope your real estate appreciation outpaces food inflation.

So let’s party like it’s 1999:

Reference:

https://seekingalpha.com/article/4399955-time-to-go-to-cash-for-next-7-years

https://www.gmo.com/americas/research-library/gmo-7-year-asset-class-forecast-4q-2020/?source=content_type%3Areact%7Cfirst_level_url%3Aarticle%7Csection%3Amain_content%7Cbutton%3Abody_link

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