Are You Overpaying for Stocks?

“The US is in recession now. After a weak rebound, it is not at all far-fetched to believe there could be another shorter double-dip coming.”

…

Shorter?

Don’t know about that. If anything “shorter”, it will be the rebound. Put me down for a long hard slog … with NIRP.

Whether or not anyone is overpaying, depends crucially on how close they are to the Fed and government. Goldman Sachs is not overpaying, since any meaningful downside risk is covered for them. While at the same time, peripheral buyers are most certainly overpaying, since, after all, the substantial cost of putting a floor under Goldman needs to be paid for by someone.

The Fed will no doubt, as they have always done, try to pass as much of that cost as possible onto people who aren’t in a position to buy stocks at all. After all, redistribution from them to stock owners, hence transferring resource control from people who produce and create, to people whose incomes are solely dependent on Fed welfare, is what The Fed exists to do.

But as those transfers have left more and more of the productive classes destitute, The Fed is increasingly facing “Thatcher limits,” meaning they are running out of other people’s money to steal. At which point, they have no choice but to start peeling off the outer layers of the once-were-protected-class onion.

They started that process in earnest in 2008, where the most peripheral of those who were at one point beneficiaries of the redistribution, were peeled off and relegated to the “redistribute from” side. Such that the 5% who used to be beneficiaries, are now down to perhaps 3% or less. All justified by the propaganda apparatus, by changing their status from supposedly positive sounding platitudes like “risk takers”, “job creators”, “investors”, “developers” blah, blah; to supposedly less positive sounding slurs, like “house flippers.”

As the theft and redistribution is leaving more and more once juicy targets with less and less to steal, The Fed will have no choice but to continue such peeling off of outer layers. Such that some of those who used to be members of the N%, will now be thrown under the bus in order to prop up the N-d% which is all The Fed can now scrounge up enough loot to keep afloat by redistribution. It’s how all kleptocracies always end up circling the drain in ever tighter circles, at the end of their lives.

So, while there is no way of determining precisely whether someone is overpaying as of current, what can be said with certainty, is that more people are overpaying now, than were overpaying prior. And more people than that, will be overpaying in the future. It cannot be any other way. Since as more and more of those who The Fed used to be able to rely on robbing to keep the charade going, have been rubbed to destitution; new fresh blood, in the form of some of those who used to be net beneficiaries, will always have to be thrown under the bus and robbed, in order to afford propping up those higher up the “Fed Closeness” ranking than themselves.

2010 was a mere kitten sneeze. There already were a lot of major changes in the pipeline before CV.