INTRODUCTION-
Well, this is July 15th, 2024, I am writing this blog to share my opinion on the conditions where every single person (investor) is thinking and questioning why the asset prices are damn high.
I would like to introduce everyone across the last five years post covid, if we can observe that what are the incidents that took place we can understand what is about to happen!
we should understand that the cause generates effects and which generates more causes to bring more effects, this is how I understand – to observe where we are in the present situation we need to understand the cause and effect that led us to this situation of high asset prices.
EFFECTS POST COVID –
Now you can ask me a question why am I considering post covid why not before that? to answer this I would like to say that after the debt bubble burst of 2008 and the actual amount of gold came on to its fair valuation in 2013, there was peace in the macro environment where every country was having socio-economic relations with each other.
Then arrives the pandemic of COVID-19 and due to which all the asset prices went down drastically, which gave approximately 30-40% correction in all assets and no one was aware of it.
After the Influenza flu of 1920 people faced yet another pandemic of this century, and everyone was surprised to see it just not people but the governments of all countries since this pandemic affected a macro – environment.
What we observed after this pandemic is ——
- MONEY PRINTING
- MAKING THE INTEREST RATES LOW
- OVERPAYING FREE MONEY TO ALL PEOPLE ACROSS THE WORLD BY THEIR NATIVE GOVERNMENTS.
- THEN THE RISE OF INFLATION SUDDENLY HITS ITS PEAK.
- AS A RESULT, THE MAJORITY OF IPOS AND FPOS WERE ENTERING THE MARKET.
- IN 2022, 1-3 JANUARY WE OBSERVED A HUGE WAR BETWEEN UKRAINE AND RUSSIA, WHICH CAUSED THE HUGE INFLATION ON NATURAL GAS AND CRUDE OIL.
- THEN EVERYONE OBSERVED THE CRISIS OF SEMI-CONDUCTOR SHORTAGE- WHICH LED TO THE RISE IN THE PRICE OF ELECTRONIC DEVICES.
- WHICH LED TO INTEREST RATES HIKE IN 2023, IN ORDER TO CONTROL THE INFLATION
- IN 2023, THE ECONOMY SHOWED A SLOWDOWN BY 2.8% WHICH LED TO MORE MONEY-PRINTING.
EFFECTS TURNING TO CAUSES-
we observed the effects, and now we are about to observe the effects turn into causes, which we can see in today’s world as I have written in my previous blog here! those effects mentioned in the points are going to be the causes of all the problems that we facing or are about to face.
If we observe the interest rates in the last five years or last 5 decades we observe history and analyze it, we might see that we are at the peak of high interest rates that we have ever seen in history.
tHIS IS SOMETHING YOU SHOULD READ FROM THE GREAT INVESTOR HOWARD MARKS AND WHAT HE HAS TO SAY IN HIS THEORY
You can also visit the full PDF here!
CONCLUSION-
due to all the above causes, we can say that the hike in asset prices is due to the above-stated reasons, and history.
now after reviewing all of these, we can say that the market ( Assets) is eligible to face yet another bull run and more hike in prices or will we observe a correction of 40-50% downturn due to a big bubble of debt?
so, basically when it comes down to these contradictory factors stating that – 1- the market will observe a massive crash or correction as everyone is saying, or 2- will there be a big bull run which only rare personality is thinking.
I’ll share with you what I am doing because predicting the market is next to impossible, but What we can do is stay prepared!