Although the vast majority of the economists believe the bull market in stocks and real estate will continue there is factors that all investors must be aware.
-There are too many people without jobs and the labor participation rate is at its lowest level in decades. That means as the large number of unemployed enter the work force we are going to see downward pressure on wages.
-Interest rates for US mortgages dropped to their lowest level in over a year this month, but that wasn’t enough to move potential purchasers to buy houses. Total mortgage application volume rose just .2 percent this month from the previous month according to Mortgage Bankers Association.
-The biggest concern that will cause a massive selloff in the Real Estate Market and the stock market is if investors were to lose international confidence in central banks. We would see inflation rise and the Feds would be forced to raise interest rates.
-We continue to have a spread between the middle class and top 1%. The Federal Reserve has created stocks market and real estate bubbles as they have poured free money into the economy, benefitting the banks, financial institutions and the top 1%. The Middle Class at the same time has stagnated and in many cases declined.
According the the Feds own numbers in 2013 the top 3% owned 54.4% of all of Americas wealth. That is substantially higher from the 44.8% in 1989.
-There is still no control over the debt and America continues to spend more than it takes in revenue. Neither the President or Congress will act to curtail spending and balance the budget. America will continue to add Trillions of dollars to the debt until creditors will only lend to America at very high interest rates..
-My biggest concern is that we have created a MEGA BUBBLE in real estate and the stock market caused by prolonged low interest rates. The rebound to the negative side will be extreme upon a correction caused by higher interest rates. I believe that the next financial crisis will be much worse that 2008.
-George Soros is one of the best know investors on the planet. Soros increased his short position on the S&P 500 from 2.96 to 16.65 of his entire portfolio. That is approximately $2.2 billion dollars.
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