Buffett’s Favourite Market Indicators Is Sending A Signal… And It Could Leave Traders Scrambling For A Foothold By: James Adams

Foothold

By: James Adams

AI

When the value of all stocks is 80% or less than the size of the economy, “buying stocks is likely to work very well for you,” Buffett wrote in an article for Fortune back in 2001. Right now, the value of all the equities in the US domestic market stands at $26 trillion – 135% of GDP, according to figures tracked on a quarterly basis by the Federal Reserve Bank of St. Louis.

That makes for an interesting situation – with stocks being well over 135% of US GDP, one might predict a sudden drop sometime in the near future.

But there’s been one market that has been spiraling out of control recently…

With the release of more and more cryptocurrency exchanges, the launch of futures trading, and crazy bull markets, many traders have been agonising over which course of action to take with cryptocurrency – be it in or out.

Contributing to these market conditions, many of the central banks along the world have taken a hard line against cryptocurrency:

The Central Bank of China has taken a hard line toward cryptocurrency, issuing a straight ban on its private issuance – including exchange trading of all coins.

In Germany, the Bundesbank board member Carl-Ludwig Thiele suggested that a shift of deposits into blockchain would “disrupt banks’ business models and could upend monetary policy”.

India’s Central Bank is heavily opposed to cryptocurrencies, because they can be a channel for money laundering and terrorist financing – use of cryptocurrencies is currently a violation of foreign-exchange rules.

Despite the lack of embrace from some of the largest financial institutions in the world, t’s no secret that the price of various cryptocurrencies have been yo-yoing up and down over the past year, and the whole blockchain sphere has attracted a lot of attention from public and regulators alike.

More specifically, the rise and fall over the past three months has been something few saw coming – including banks.

The revolutionary concept of the “blockchain”, allowing for decentralised online currencies based upon mathematically verified transactions, has taken the world – and regulatory bodies – by storm.

The various cryptocurrencies have minted many a young millionaire – but also lost many millions in poor investment decisions or exchange hacks (see: Bitfinex losing $72,000,000 in Bitcoin in 2016)

Since the rapid takeoff of Bitcoin, the world has seen the minting of several alternate coins – altcoins – each similar to Bitcoin but with their own unique characteristics:

    • Greater privacy
    • More efficient profit from mining
    • Faster transactions
    • More relevant regulation
    • Registered in a jurisdiction more friendly to alt-currencies

    This has got the financial markets in an interesting position which we’ve never seen before.

    It understandably has many people feeling very unsure, and so were we.

    But we’ve done a lot of the legwork for you, sifted through the garbage to find the gold, and…

    We’ve laid out a FREE report on where we think the markets are headed given these recent developments.

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