The collapse of the greatest stock sector superbubble continues to unfold, with losses spreading from sector to sector, and a wave of panic and pessimism starting to take over Wall Street. New research tracking real-time data exposed that the number of equities that crashed over 80% is no longer in the hundreds, but in the thousands. However, experts say and indicators show that despite the catastrophic drops seen so far, the sector has a lot further to fall in the coming weeks, and things are going to get even more turbulent as liquidity gets tighter and corporate earnings miss investors’ expectations. A day of reckoning has arrived, and from now on, we will watch the implosion of the biggest speculative bubble in history as the wild bull sector switches into a hibernating bear.
After the September CPI report was released, it became clear that the most aggressive monetary tightening cycle is nowhere near its end, and that means more downside for equities both in the short and long term. That’s really bad news for investors, especially considering that nearly one in six equities have already crashed by 80% or more, according to a new study tracking real-time data published by WolfStreet.com. The examination showed that as of October 15, 2022, 1001 of the 6281 equities traded on US financial markets have “imploded,” meaning that they’ve dropped 80% or more from their highs.
It is estimated that over 50% of the sector is still overvalued, which is to say that many more zombie equities are set to collapse as the Federal Reserve raises finance charge rates even more. And despite all that tightening, inflation isn’t coming down and economic imbalances aren’t fading away. Instead, slower consumer spending is silently driving a myriad of companies an edge closer to financial failure. At this point, it’s getting harder and harder to deny reality. Global equities and fixed-income securities have already lost a record $46.1 trillion in value over the past nine months, as a wild selloff steamrolled numerous resources across the hazard spectrum.
For indexes that started the year with valuations at multi-year or even record highs, the liquidity pullback has been pretty much like pressing a reset button. From a math standpoint, the situation is so bad, liquidity is so tight, that’s only a matter of time until the whole house of cards comes down, and when it does, millions will be left empty-handed, according to precious metals expert and financial writer Bill Holter.
“The action you are seeing now is exactly what you saw in 1987, and this is what you saw in August and September of 1929. This is what happens prior to crashes. It’s massive volatility both ways… people are losing both ways. The longs get stopped out on the downside, and the shorts get stopped out on the upside. Then, the whole floor gives way, and that’s where we are. We are right on the doorstep of a crash that will make 1987 and 1929 blush… Many people are going to lose everything overnight,” Holter alerted.
When the sector falls as dramatically as it has since the beginning of this year, suddenly all of these semi-believable stories about making easy money will stop making sense. Investors will be forced to confront cold, hard reality and look for cold, hard cash. There’s no way to avoid a disaster that is already underway. So be ready for the most devastating asset bubble collapse of this entire generation!
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