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welp time for the pig to talk about reality. #1, you are spot on, with the free money, and ZIRP, it has created 1000s of zombie companies are a live because they have access to the money. There are two valuations to consider when talking about this bubble. a. Companies that make zero $$$ or near to it, and worth billions. Those are the ones that are going to be worthless after the bubble pops.
b. Companies that make money, just not enough to be profitable. There are few out there, but they are ones that will get effected the most. Some have valuations that should be significantly higher, but not.
c. Companies that producing $$$ and can cover expenses. PE ratios are out of sync, they are too high for what EPS they give. What is going to happen? If the ZIRP doesn't come back or too late, you are going to see a lot of money and zombie companies get hurt hard. I think this is necessary, so good companies can transverse to a correct risk vs reward. The biggest problem people living in the west, US, is the multipolar world is coming. US is not prepared for it, and if anything, resisting. Imagine 50% of the world rejecting the USD. It is not far off. US is now 59% of all global trade. Getting below 50% will have devastating effects. Inflation as you see it now, will be hyperinflation. The world is going multipolar, and US is not prepared. |