Tuesday, May 21, 2013

The Largest Asset Crash in History

Parabolas and markets don't mix:

Wilshire 5000 Total Market Index
In order to generate the largest market crash in human history, the following steps must be taken...

1) Add maximum amount of leverage and liquidity - Check
> $9 trillion+ of global Central Bank dopium and 500+ interest rate reductions - so far...

2) Lower interest rates to 0% to incentivize maximum risk taking - Check

3) Levitate all asset classes giving no opportunity for value-based diversification - Check

4) Lower volatility to minimum, making hedging wholly unprofitable  - Check

6) Reduce volumes to multi-year lows making it easy to get in, but impossible to get out - Check 

7) Ensure largest demographic cohort is near retirement and has been systematically brainwashed to buy and hold stocks - Check

8) Hire as many vacuous blowhards at CNBS as possible - Check

9) Eliminate market makers in favour of momentum-based HFT bots  - Check

10) Continue as long as possible until the overwhelming majority are convinced that the inherently unsustainable is the *new* normal - Check