oftwominds-Charles Hugh Smith: You Want a Solution? Try Not to Get Hurt When It Collapses, Then Start Over

MarginDebt-NetCredit-040814-2Smart money flees and dumb money piles in–the play is the same, over and over and over again. How long does it last? 

Main Street and Wall Street are moving in opposite directions.

Individual investors are plowing money back into the U.S. stock market just as professional strategists say gains for this year are over. About $100 billion has been added to equity mutual funds and exchange-traded funds in the past year, 10 times more than the previous 12 months, according to data compiled by Bloomberg and the Investment Company Institute.

The growing optimism contrasts with forecasters from UBS AG to HSBC Holdings Plc, who say the stock market will be stagnant with valuations at a four-year high. While the strategists have a mixed record of being right, history shows the bull market has already lasted longer than average and individuals tend to pile in at the end of the rally.

“If Wall Street, after poring over all known data, comes up with a target and we’re already there, and you still see individual investors buying and they’re typically the ones that are late to the party, it would seem there is limited upside,” Terry Morris, a senior equity manager who helps oversee about $2.8 billion at Wyomissing, Pennsylvania-based National Penn Investors Trust Co., said in a July 8 phone interview.

[gview file=”https://troutinmilk.com/wp-content/uploads/2014/07/Individuals-Pile-Into-Stocks-as-Pros-Say-Bull-Is-Spent-Bloomberg.pdf”]

via Individuals Pile Into Stocks as Pros Say Bull Is Spent – Bloomberg.

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You Want a Solution? Try Not to Get Hurt When It Collapses, Then Start Over

Once the deadwood piles high enough, the random lightning strike ignites a fire so fast-moving and so hot that it cannot be suppressed, and the entire financial system burns to the ground.

In discussing our broken healthcare system with a 22-year college graduate, I opined that Obamacare hadn’t fixed anything that was broken. She observed that real reform was impossible due to vested interests and the only real solution was to “start over.”

Exactly.

People constantly ask me for solutions to our all-too visible ills. You want solutions? Here’s the solution for every systemic, structural problem we face: Avoid getting hurt when it collapses, then start over.

[gview file=”https://troutinmilk.com/wp-content/uploads/2014/07/You_Want_a_Solution_Try_Not_to_Get_Hurt_When_It_Collapses_Then_Start_Over.pdf”]

via oftwominds-Charles Hugh Smith: You Want a Solution? Try Not to Get Hurt When It Collapses, Then Start Over.

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