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: John Vosilla who wrote (1145)	10/7/2019 3:31:13 PM
From: RetiredNow	Read Replies (1) of 1504

John, here's a reprise of the post I sent over to Rarebird....it explains my thinking on what happens in the next 6-12 months: ----------- 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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