So lets get started with this.

So what are we seeing? There is a big question mark in the air right now about what is really happening in the stock market. Some people, especially the news television like CNN and CBS are talking about a stock market correction. The truth of the matter is, it is not only a correction, but what has happened in the last week of February 2020 is the fastest decline in stock prices since the crash of 2008.

It is hard to imagine a worse set of circumstances to hit the stock market, especially now when we haven't imagined for it to take place in this way. But it can and does take place, and our eyes are certainly not deceiving us in what we are seeing, what we are witnessing is certainly a top tier stock market price decline, and the time frame in which it has taken place cannot be called anything but a short term decline.

Now there are many things that we could call the instigators or elements that preticipated this decline in the first place, but are we correct to assume that these have taken place the way they would take place in the first instance. I believe the answer to this question is negative - we cannot assume to know what the real instigators to this decline have been.

Some have called it purely a flash crash based on the fears of the Corona Virus that is spreading across the world. Well I have a different assumption that I would like to claim as the starting reason for this decline. It is in fact not the Corona Virus but it is the culmination of what we can call a bubble in the stock market. Many factors have lead to the creation of this bubble. The main factor has been the reduction of real interest rates to the negative level which has taken place since 2008. And indeed this interest rate policy has been active now for around 12 years. Although more recently, in the last couple of years the interest rates set by the American Federal Reserve have risen, this cannot be confused with the bubble whose creation has been led by the low interest rate policy, to simply go away. Instead what has happened is that the policy has caused the bubble to stop extending. And a bubble is driven purely by intertia. That means it either has to keep growing, or it has to burst, there is no middle ground. And what has happened is that this bubble, due to the increase in interest rates, has run out of steam to keep growing with. Instead there are more forces now in the economy that are likely to make that bubble burst. And that is what we are seeing, it is nothing but a classic boom and bust cycle, and we have reason to believe that we are crossing over from a latter part of the boom part into the bust part. As said before, it is mainly brought about by the increase in real interest rates, and the resulting decline in the amount of hype surrounding the stock market growth. Once the hype dies down, it is necessary for the growth to also die down. So what can we expect?

We have reasons to assume that we will see a decline over the course of the next year or two, which is how long the effect of the higher interest rates will be, it will indeed be only a bump in higher interest rates, but its effect does not last for longer than an inertia-stopping stage of around two years. Once that inertia stopping stage has finished, the stocks are likely to start increasing again.

But make no mistake, we are still far away from those events to start taking place, instead we are at the stage where the decline is sure to continue for a further year or two. So let us rejoice in the stock market carnage as it unfolds. The financial news channels, such as Fox Business and CNBC are sure to provide healthy destruction-fantasy material for us to engorge in, and rejoice as the market meltdown takes place. As for our assets, those are best kept in high grade blue chip corporate bonds, or in government bonds, which are likely to weather much better than stocks or any real growth-driven asset classes in general.

Now some people have started speaking about gold, as in whether gold is a good place to keep your money in during this decline in asset prices. This is dubious, as gold, as much as it is a safe haven for money to be kept in, generally still weathers better during an era of stock market growth, rather than that of destruction. As an example is the rapid increase in gold prices between 2000 and 2008 during the real estate bubble. The real estate bubble is over now, but that is not to say that gold cannot grow in situations other than a real estate frenzy, in fact gold can also grow well in a general broad based economic upturn. But in a downturn, we are likely to see assets moving away from the precious metal sector and instead moving into bonds to weather the storm. But make no mistake, gold and silver are still far from the worst place to be in, that is especially considering that gold has not grown as fast as what some of the commentators might have expected it to do. Like Peter Schiff and Ron Paul for example have forecast the gold price to hit values like 2000 dollars or even 5000 dollars per ounce. While this is still unrealistic the outcome remains to be seen. During the current stock market crash, Gold and Silver have been declining alongside with stocks, which suggests that indeed the safe haven status of these metals is slightly dubious, and a suggested place to be in might instead be in the bond market.

Anyway that is all the commentary I have for today, I will resume production of new material as the current events unfold, stay tuned for further updates.