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While the mainstream media cheers the new record stock market highs and encourages trend following risk taking, excessive risk at that. Net equity flows or the ratio of stock purchases to sales is falling deeper into the red, down 4-consecutive months to levels not seen in over 3-years and matching the depths of the crisis in 2008, based on data from the Investment Company Institute.

The 1% grows increasingly alarmed in the post Brexit vote period as it marks the first real example of the people standing up and saying they have had enough of corporate directed democracy and globalization. Interestingly of late former champion of globalization and the status quo The McKinsey Global Institute did an about face condemning both and noting that between 2005 and 2014, real incomes in advanced economies were flat or fell for 65 to 70% of households, or more than 540 million people. While government transfers and lower tax rates mitigated some of the impact, up to a quarter of all households still saw disposable income stall or fall in that decade. From a historical perspective it is very well documented that the more unequal a society becomes from an income and wealth perspective the more socially unstable it becomes. With developed economy inequality at or near record highs the 1% is indeed playing with fire, and have been for quite some time now.

This is Caleb Lawrence Registered Investment Adviser Scotts Valley Drive and Willis Road in the Scotts Valley Plaza, Suite 202 or call me toll free at 888-RICH PIG / 888-742-4744.

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