US Inflation and What To Do About It Message Board

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Strategies & Market Trends : US Inflation and What To Do About It

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To: Rarebird who wrote (1140)	10/6/2019 2:44:41 PM
From: RetiredNow	of 1504

BTW, forget about politics. That's not a very interesting topic anymore, because no one is convincing anyone of anything. The left and right are too far apart and I don't see that getting any better. To more interesting topics, check this out. I have been pouring through the Financial Statements of some of the tech companies that had big cash piles overseas before Trump gave them a tax break for repatriating their cash. The reason I started looking into that is because I have been utterly amazed at the seemingly never ending stock buybacks by corporations. So I've been trying to find out how this could continue. Turns out that the answer is not that much longer. What I found in the balance sheets and cash flow statements of these companies is that in some cases, they have burned through 50% or more of their cash and investments over the last two years in buying back stock and paying dividends. Many are now reaching that threshold where they can only do that for 6-12 months more before they simply don't have enough cash and investments and free cash flows to keep it up. So you know I think we are within 6-12 months of a recession. Add to that 6-12 months until stock buybacks get cut in half, at least. Then add to those two things, the fact that the Fed doesn't have much room to lower rates, and even though they can do QE, they may be reluctant to help Trump. I know at least one Fed member said exactly that and many more are probably thinking it. So I think the stock market is about to get monkey hammered. I think before the end of the down cycle, this stock market will lose 50% at least and maybe as much as 60-70% of its value. It'll be good to have some dry powder for those lows.

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