Warning: Markets Reaching Extreme Leverage

Now, could have Home Depot’s revenues and profits increased tremendously since 2012 to suggest a price of $201? According to Home Depot’s financial reports, their revenues grew from $70 billion in 2012 to over $100 billion in 2017. Furthermore, Home Depot’s net income has increased from $3.8 billion in 2012 to $6.8 billion in the first three quarters of 2017. But does a $30 billion increase in revenues and $6 billion increase in profits translate to a 700% increase in Home Depot’s stock price over the past five years?

Okay, let’s look at Boeing Airlines.What’s going on with Boeing’s share price?On Jan 5th, Boeing was trading at $308… nearly three times higher than what it was trading at $112 at the beginning of 2016:

As we can see, Boeing’s share price is up 9,200+% over the past 34 years. If we go by Boeing’s 2007 peak of $80, it’s up nearly four times. However, if we check the trading activity over the past two weeks, Boeing’s stock price is moving well beyond bubble territory to a new record high of $337:

Boeing’s severely pointy price chart resembles the antenna on the Empire State Building in New York City. Good heavens, Boeing’s stock has gone up 10% in just two weeks. If investors don’t see anything wrong with this chart, you probably have been hanging around too many “Cryptocurrency Aficionados.” People, if you think the only direction is UP with stocks or cryptocurrencies, you need to get your head examined.

Here’s another chart worthy to compete with the tremendous gains in Bitcoin, Ethereum, and Ripple. However, this is one of those industries that should NOT BEHAVE like a high-flying tech stock or cryptocurrency. Why? Because it’s a healthcare stock. United HealthCare’s (UNH) stock has surged from $53 in 2012 to $223 on Jan 5th:

If you were clever and started buying United HealthCare’s stock in 1990, you would be enjoying cryptocurrency type gains of nearly 43,000%. But that is all history now. United HealthCare’s price is up another 6% to $243 in just the past two weeks.If you look at the chart below carefully, you will see that its current two-week trend is virtually a STRAIGHT LINE higher:

United HealthCare and Boeing’s stocks represent a market that has gone completely insane. Unfortunately, the leverage in the market will likely increase from the current extreme levels to “outrageously” extreme… if there is such a term.

Investors need to understand that the Fed and Central Banks realize by rigging the market higher, it can only go in that direction. Ever since the 2008 U.S. Housing and Banking Market collapse, the world has been living on borrowed time, money and a massive amount of debt. By increasing the value of Stocks, Bonds, and Real Estate, the Fed and Central Banks not only give investors the impression that they are wealthier, so they spend more, it also allows governments to collect more taxes.

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Cynthia Decker 2 years ago Member's comment

Good article, very well done. Interesting comparison between $UNH and $BITCOMP. But I'd say the former is a far safer bet. Plus #bitcoin has been crashing for the past month.