This is a formal ALERT. We issue those very sparingly here at Peak Prosperity. We only issue them when world events have gotten to the point that we are personally taking new actions to shore up our preparations.
There’s a very high chance of a market crash here, largely because of the recent dominance of speed-of-light computerized trading and its confluence with global markets sickened by too many years of massive speculative flows of 'hot money' sloshing about seeking any sort of relative advantage.
What happens when all those computers suddenly realize that are no relative advantages available, but instead that there’s no place safe left at all? They all sell. And when they cannot sell fast enough, they go dark. Market liquidity evaporates like a drop of water on red hot steel, and markets go bidless. In other words: they crash.
So this is an official ALERT. All of our fundamental advice applies here: have a minimum of 3 months of cash out of the bank, be sure that your material preparations are up to date and topped off, have your spring seeds in hand (which I am ordering as soon as I finish this! – I’m late on that…), move to cash as a portfolio defensive tactic, and be sure that whatever financial capital you have in the market is being as safely managed as possible by professionals who understand the risks in play.
Bubble Trouble
Look, nobody really seems to know exactly what's behind the recent market bloodbath. But bubbles always burst — they don’t ever really need a particular reason to do so.
As I said way back in 2008, when providing the context for the Dutch Tulip Mania in the original version of The Crash Course:
The record shows that the tulip craze ended even more suddenly than it began, collapsing almost in a single day at the start of the new selling season in February of 1637.
On that day, a silent whistle blew that apparently only dogs and buyers could hear, and prices immediately crashed.
This example illustrates two fundamental characteristics of bubbles. First that they are self-reinforcing on the way up, meaning that higher prices become the justification for even higher prices. And second, that once the illusion is lifted, everyone suddenly wants to sell at the same time.
(…)
But that’s just how bubbles are. People take leave of their senses, use all manner of rationales to justify their positions but then, suddenly, one day, the illusion lifts and what seemed to be unassailably true no longer makes any sense at all.
Once that day happens, the fate of the bubble is reduced to measuring the speed of its collapse.
by cmartenson 
