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Remember How Bad It Looked January 2016?

|Includes: QQQ, SPDR S&P 500 Trust ETF (SPY)
Summary

Markets have had a nice run since March 2016.

All the investments I look at are very expensive. Market participants seem to have left no stone un-turned.

I loaded up at the market lows in March 2016 when risks appeared high but were not. I see no way for the market to continue performing at that level.

Low interest rates have pushed investors into risky investments in search of returns. Some of those bets have paid off, like shale. Others never will.

Tech has attracted more capital than it can return over a reasonable period of time. There will be a shakeout.

Corporate debt has also attracted a lot of money into poor risk situations. As interest rates rise these investments are coming under pressure. Businesses with increasing debt service costs due to rising interest rates will be severely impacted if economic conditions deteriorate. If there's a rush for the door in credit markets, watch out! Note that old metrics of interest rates aren't as important as the percentage rate of increase.

Employment levels are signaling a late stage in the economic cycle. Inflation isn't confirming that signal. Inflation is partially caused by consumer debt over heating, particularly mortgages. Perhaps we will never see mortgage borrowing levels go very high this economic cycle due to the wealth gap. Business debt that inflates asset prices but doesn't cause price inflation in the broader economy could be the catalyst that bursts the market price bubble.

Nothing has really changed or been fixed in China, the E.U., or Japan. My best case for the EU is a gradual loss of member countries.

I've waited out these poor risk to reward ratio markets before with good results. I'm selling into strength and raising cash.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: This is not investment advice. It would be crazy to base investment decisions on the opinions of a nobody like me.