I find the deep divide in America to be uniquely disturbing. But none of it is distracting to me.

In the midst of everything that is happening, and that means the chatter of a pending Trump-induced market crash, we must stay focused. How do we do that?

By focusing on what matters. Ultimately, liquidity matters more than valuation to professional investors, and it is far more important to the market than any of the noise we are hearing.

As a result, try to focus on the source of liquidity in the world. The ECB is printing money like the Federal Reserve did during its massive, years-long stimulus program, which propped up stocks. Billions are flowing directly into corporate debt on a monthly basis, and we can see a tangible relationship between market direction and the initiation of this corporate-bond-buying phase of ECB stimulus, suggesting that part of that money flow is going directly into equities.

This is difficult to quantify, but this example helps make sense of it. The current average yield on A-rated two-year corporate debt is about 1. United Technologies UTX, What seems to be happening is that when the ECB buys debt from institutional investors, those investors are evaluating the yield of the underlying equity and reinvesting directly in the equity with a higher yield instead of buying back debt.

We do not know the exact ratio, but this appears to be what has happened since the ECB began buying corporate debt shortly after Brexit.

Back to all this noise: We need to ask ourselves what is important. Are the current debates of a market crash, polarization or presidential tweets more important than identifiable current and future money flows? Our opinion is that money flows and price are, by far, more important.

Everything else is distracting and should be discounted when evaluating investing opportunities.

Warren Buffett's Advice for a Stock Market Crash in -- The Motley Fool

A crash will come, but not until that spigot is turned off. For now it is still flowing at full capacity. That may change in March , but today the money is flowing as strongly as ever from the ECB, and asset purchases like that support equities, even at lofty valuations.

In fact, fabricated demand is arguably why valuations are so high in the first place. Valuations are unlikely to adjust materially until the ECB slows or stops its stimulus program.

Here’s why a Trump-induced stock market crash is unlikely to happen - MarketWatch

Amid this noise, that's all that really matters to the market, and it should matter to all investors as a result. Periodic retracements of prices are reasonable, but expectations of a crash should be tempered until the ECB stops the presses. Trump bump to Trump dump? By using this site you agree to the Terms of Service , Privacy Policy , and Cookie Policy. Intraday Data provided by SIX Financial Information and subject to terms of use.

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80% Stock Market Crash To Strike in , Economist Warns - The Sovereign Investor

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