Sadly with suppressed rates you see everyone chasing yield despite the risk, which the author is correct that it is big in EM debt. Stay away.

Sadly with suppressed rates you see everyone chasing yield despite the risk, which the author is correct that it is big in EM debt. Stay away.

Sadly with suppressed rates you see everyone chasing yield despite the risk, which the author is correct that it is big in EM debt. Stay away.

Sadly with suppressed rates you see everyone chasing yield despite the risk, which the author is correct that it is big in EM debt. Stay away.

Sadly with suppressed rates you see everyone chasing yield despite the risk, which the author is correct that it is big in EM debt. Stay away.

The issue is that many run ups in the past were driven by excessive risk taking whereas this market run up is more a case of putting money in one of the few last asset classes that make decent returns more than a desire to take on risk. Because of this the move has been longer and more sustained and the risk has stayed hidden far too long.

It takes a trigger event to unwind it. For now, an obvious and predictable trigger has not presented itself. We will see if one appears on the near term horizon the next 12 months.

This is a nice starting point, however, at some point you must weight risk with reward. Right now many are correct in seeing the risk much higher than the reward, yet the Fed's low rate game has shoveled many people and their assets into stocks and real estate as the only game in town. This has made the risk much greater as the past reward has been pushed up.

It is uncertain how much more the reward can and will be paid out.

Generally, I would only buy high PE stocks that are growing revenue and profitability and whose debt is shrinking or non-existent. On the low PE side, I'd only buy them if either revenue or profitability is growing and the debt in their balance sheet is dropping.

That said, it's hard to find a golden Easter egg, but you can still find them if you look hard enough.

Thanks ^^.

Economic cycles exist to create long term stability and support growth. What we have now is low growth and short term stability. I fear this leads to rot just like if there were no tides in the ocean and/or a catastrophic event when the short term stability ends much like a fault that hasn't had a quake builds up pressure making a quake more likely and larger.

The simple fact is, more and more people are unaccustomed to cycles making me worried those in the market can't handle the losses associated with a large cyclical downturn when it comes. The longer we go without a correction the worse it will get.