Am an ardent Bear and believe that one needs 3–4 bear markets during his/her professional life to retire. I saw my first one in 2008. Since then , I have hummed to myself: “Burn Baby Burn”, “Burn More”, just like The Beat Of McConaughey’s Drum.
From an Indian context, a steep correction in the markets in the next 12–24 months looks likely. While the Indian economy has sound fundamentals, a large part of correction in the markets is due to FII hot money being pulled out. What may be a trigger event is unknown, but one can make sound portfolio strategy basis the data available.
Based on the comparison with the last two down-cycles: 2000/2008, it seems likely that a correction is pending at a global level.
Excessive liquidity has thrown caution out of the window in the global markets.
Govts, round the world (except India) have used debt to justify their spends.
Narratives of private equity fund managers, equity analysts and bond yields are looking more like pre-2008.
I follow Howard Marks. This publication of his is a more elaborate vision of whats happening on the ground.
US corporate debt is piling up to the levels seen 2008.
CLOs are at an all time high
Debt to equity of the US is nearing the last trough…
Share of BBB-rated debt in US IG universe, % is at an all time high:
Fed interest rates are moving up, indicating money will taken away from the markets.
Tech bubble is compounding the problem
Tech Stocks’ health is frothy. We are near the peak if not there yet, will lead to a major correction in cap markets. Last 3 corrections in the markets (2000, 2008, 2014) are related to things heating up in the tech world in particular and in markets in general ….
Expensive listings for tech stocks is not sustainable.
Number of Tech IPOs also indicating that markets are beginning to heat up:
