When will the bubble burst

15 September 2018

Dear Fellow Investor,

When will we have a debt crises which will sink world stock, property and bond  markets ?

Ray Dalio, a  hedge fund manager was interviewed on CNBC to get his views. He also comments on the Trump/ China trade war which he does not think will have much impact.  

https://www.cnbc.com/video/2018/09/11/ray-dalio-bridgewater-financial-crisis-economy-debt.html

He said that all major countries world wide are increasing debts to fund growth, welfare and entitlement spending and wars to finance asset bubbles. The bubble keeps increasing.   

When will the bubble burst ? He gives it about 2 years.

He recently published a book The Big Debt Crises a 460 page book which details the dynamics of the crises. You can download via PDF free of charge from his Bridgewater Hedge Fund website. He suggests you read at least the first 60 pages to get the overview and the early warning signs.

Gary Dorsch, a former market maker on the CME and producer of Global Money Trends, a  newsletter I have subscribed to for more than 10 years has many of the same views as Ray Dalio.

Gary runs a personal bond portfolio and is very much in tune with interest rates and his interest rate forecasts have been spot on.  His bottom line view is higher rates plus quantitative tightening will burst the US stock market bubble.  It will affect the whole world.

He recommends taking defensive action now by :

Positioning in high quality value stocks with low debt, low PEs, and dividend payers.  The high flier bubble stocks will get hurt the most. With interest rates going up many growth stocks will be hit.

Based on traditional valuation metrics there is value in Singapore, Malaysia, Japan, Thailand Australia, Hong Kong and China.  If we diligently research we can find opportunity. As Peter Lynch would say we need to turnover 10 stones to find one grub.

Invest well and grow your wealth
Bill

Critters of the week are some exotic animals on stamps from Australia. Next month we will be visiting Perth for a week to check out a value investing opportunity in the natural resource space as well as visit some local attractions.