I’ve sin Father…again! (watched CNBC-TV with the sound on again). The last 90 minutes of trading brought back memories of happier days at Wall & Broad St. Harry’s may actually have a patron or two tonight who won’t be drinking just to drown their sorrows. If the gitty picture looked familar, you’re right. We saw this same excitement just two weeks ago when the DJIA rocketed up from under 7,900 to 9,500. Unfortunately, it didn’t last long and I don’t expect this rise to either.
Yes, I’ve been looking for a tradeable rally. In bear markets, rallies are very sharp but don’t last long. i wanted to see the market test the October 10th lows and in time, I believe we shall see that. I have no doubt we can see follow through and believe it or not, the DJIA could rally all the way back to 10,400 and still be in a bear market pattern. I doubt this will occur but if it did, I would look to go short again.
It’s critically important to realize that we’re going to see some of the worst economic quarters in decades. Corporate earnings estimates are way too high. Bear markets dramatically shrink P.E. ratios. In addition, there are tens of millions of baby boomers who are now very much underwater in their retirement accounts. Trust me, they will be sellers going forward.
The vast majority of financial advisors and investors were weaned on only bull markets. To them, it always comes back. Before you buy into that know two things:
- There have been several periods where it took years to get even again including investing in the 1920s. If you did back then, you weren’t even until 1957. Baby boomers won’t have the luxury of years.
- The Japanese market hit 36,000 in the 1980’s. Ever since then, numerous advisors have predicted the bottom was in. It fell Monday to a 26year-low and Japan didn’t have one-tenth the probems we do.
Let the Rah-Rah crowd on CNBC-TV do their thing. Just remember, you don’t want to be someone’s dinner
Tags: Bear+Markets, CNBC-TV
You know the old saying if there is a shortage of something, make more of it … or reduce demand by making it cost too much.
Item 1 … skilled workers …. the many boomers now under water … will just have to work a few more years – freedom 55 – thats 55 more years.
Item 2 … money for old age security … the gov’t could print more … (after all that is for the bankers) … instead reduce demand by allowing a system to wipe out the savings of those poor boomers. (instant less demand as they stay in the workforce)
There is a bright side to everything … unfortunately most of us are not on it.
Orgy
Peter,
Thanks so much for your valuable insight into the markets during these scary times. Given my present age and years to retirement, I appears that I am not going to be able to rebuild my retirement account anytime soon, at least not from relying on a rapid market recovery.
I’m counting on catching a portion of tradable rallies and a portion of subsequent declines (with short ETF’s) in order to have any hope of rebuilding my account. How frequent would you expect these opportunities to be and what are the key indicators to look for in deciding when the risk/reward is appropriate for entering the market, on either the long or short side? I will certainly keep your blog in my daily reading list. It’s a real blessing in these turbulent times!
Dave
Interesting article link….we seem to be in an deflationary atmosphere……..is this pointing to inflation in time or a true blue depression…this article discusses this…..kinda upsets me….I’m already questioning why I’m so hesitent about putting my toe in the water even when I see the gold and silver stocks at what looks like decent prices. I remember reading an article about this oncomming crash some years ago stating that if you thought that stocks you paid 10 and 20 bucks for couldn’t ever trade for 10cents…think again. The market crash will make you think very different before it’s over. Very depressing to think all this could possibly lead to a depression. Maybe staying liquid until spring or at least until more daylight can be seen might just be a move to consider. Anyways here’s the link to an article that has some accuracy to it when compared to what is taking place in the last year.
http://www.financialsense.com/fsu/editorials/laird/2008/1023.html
This financial system is a real joke, farce, total circus. I mean, come on!!! Japan now cutting it`s interest rates to 0.25%!!! US to 1%, China , Canada, UK, etc…etc…
Like interest rates don`t need to exist no more to fight inflation!!! And these clowns have PHD`s ! What a disaster for what`s coming. And on top of that these Governments are printing , giving away money to anyone with 2 arms and 1 head!!!
This is a total disaster
Anyway, to listen to any of the Business Chanels, it is now nothing but a big casino: BUY BUY BUY, SELL SELL SELL, we are going to new highs…..today to new lows….
Also they are now changing accounting rules (to try to show that things are getting better) . On top of that, illegal shorts pounding to zero many decent companies, and FED (Governments ) manipulating just about all financial entities.
My opinion: forget the stock market period. Why ? no more confidence whatsoever in it from the population, therefore money will come out of this casino on any rebound with a vengeance. We have clearly started a World wide depression imo.
We shall see with time, but in JAnuary when companies report, it will be bad. Consumption is falling all over the world like mad.
I think the bottom in the DOW will be anywhere between 1000 and 5000 depending on quantities of printed money, interest rates, etc…but DOW:gold will be 1:1 or 2:1
Consumer confidence at 41 year lows (all time low since they only started in 1967 tracking it)…well people normally will spend like their confidence. And housing bottom? MOUAAAAAAAAAAAAAAAAAAAAAAAAAAAAHAHAHAHAAHAHA
only when it`s 10 cents on the dollar like Japan…and they are still making NEW lows matching 1982 and they are no 2 economy. So we have the no1,2,3 economy in the tank, with no4 China cutting interest rates and starting to slow with both feet on the brakes…and we won`t talk about Europe…
Currencies are now going all over the place making gold junior stocks seem not that volatile in comparison!
WHAT A FARCE. Bottom line, the FEDs are in a war, trying to amke people buy US dollars that no one in hell wants, and those who have it, want to puke them by the truck load (the Governments are the largest holders)
Marco
I posted this on Georges blog as well;
Have recieved an email alert from Jay Taylor, He has a inflation/deflation watch it consists of components of the real world and charted together to produce a indication of whether inflation is happening or deflation is pressuring, Anyway the alert was sent out to cover short position on Ultra Short S&P 500 ETF today (symbol SDS) as IDW has bounced and up 4.95 % sugesting a temporary bottom has hit in stocks and a rally is setting up.
The deflation senario is still very much a force as even thought the world banks have inflated the system with great gobs of money,they have staved off the depression II but what is happening now is people and coporations and many institutions are holding onto their money and this is have the same effect as a illiquidity senario because the exchange of cash is slowing or even stopping because it is being held.{horded}
This is why having a report of real world inflation/deflation battle is important. At the weekend Taylor’s IDW dropped 70% to date, that is extremely deflationary, to have a bounce today of 4.9% is really good news regardless of how short lived it might be, … coswil
well, with gold now DOWN with US cutting rates by 0.5% this clearly shows it is totally manipulated by Central Mobsters.
Anyway, the end result won`t change. People aren`t buying anything especially this totally stupid 0% World they want us to live in. This is stupid, and destroys the financial system.
anyway, the banks aren`t lending at 0% last time I`ve checked
Until I see 0% morgages, nothing will change.
Peter, I am reading that John Embry thinks gold might take off if the Dec gold contracts cannot be delivered. What his your opinion and when do they expire?
Coswil – Jay is an old friend and one of the rare honest newsletters writers out there. He’s a gold bug and both he and I want to see our day in the Sun before the good Lord calls us away.
Power – Hang in there. Gold has weathered a tremendous amount of selling and increased bearishness and is on it’s way back to $800. One of these days the Crimnex ( Comex) will see an explosion to the upside.
** SUPERSTITION **
It’s premature to role out the missives heralding the start of the fabled ‘Third Wave’ for the Gold Mining Shares, Silver & Gold, with some of the other resource sectors. Obviously, that very sharp U.S. Dollar rise was an important part of the ‘Super Storm’ that imploded the metals & commodities. Mr. Peter Grandich’s very recent call for a possible peak in the U.S. Dollar looks good here. The question in my mind is whether it will pull back a bit and rise again toward 92 -93 on the U.S. Dollar Index or has it started down again? Market superstition tells me to cut it short right now.
Peter; I have subscribed to his letter for some time not for his stock picks or DD on the companies but for his economic explainations and he has taught me much about gold, currencies, and how it all works. I have never met him but really appreciate the understanding and insight I have gained throughout the years from hom and Roger Wiegand. Yours as well and others. When you combine the knowledge of a whole bunch of smart people together the end results is a deep knowledge. That is what I seek.I am a retail trader/investor and use all the helps I can get. I lean toward Technical Analysis once I have discover fundamentally sound company for exit and entry points useing swing trading methods. Quite a number of posters have requested I write a book on my tenniques on the Noront board here so am in the process of doing so.
As far as gold bugs finding their day in the sun, that could fit in the senario of becareful of what you ask for cause you might just get it. I think the social and moral effects that this is going to have on the world wide population will be devastating and will certainly be not a happy day for anyone. But it is enevitable I think IMHO…coswil
Okay so you have to wonder……Germany started to curtail the use of credit cards…what the…???? Starting to envision groups of people huddling around an oil drum of burning garbage , outside, on a cold winter with any piece of cloth wrapped around them to stop the chill of the winter winds and fights breaking out over what’s left of a poor pigeon that innocently landed amongst them with hopes of taking in some of the warm glow of the fire but was consequently ripped apart by a desperate hungry mix of bankers and main street people alike………..Gosh that’s depressing or is it more depression???…………….Anyhow read where the taiwaneese were heavily selling US bonds….most likely to buy Can. dollars which had a thrashing last week. So if this doesn’t go unnoticed, will others start to follow realizing maybe, just maybe that the US economy is on the brink of bankruptcy and the bonds are really junk? This could start the much dreaded nightmare senario especially if China and others follow suit. What’s that saying the last one out please close out the lights or as Bob Majority says the last on holding is dumb.So Peter, I take it that according to what I am reading here on your Blog and others that most likely even though there is currently some smoke and mirrors going on with the US dollar created by a rush to what seems to be still a perception that the dollar is a safe haven by global markets or more pointedly european markets, that when the realiztion that the US may indeed falter in some manner to a much greater extent then it already has,that the dollar will then become the last or next shoe to drop and if so is this not going to create more a deflationary atmosphere or more possibly tilted to depressionay times?Are we looking for a infaltionary or hyper inflation to kickstart gold or will a deflationary atmosphere also kickstart gold after some time?
Good question Chris …. I don’t think there is any history that can teach us what will happen … as you have stated all you can do is try to understand the facts and given there are much “greater minds” who have analyzed such things after the fact … who knows …. I must interject my thoughts for those interested … others stop reading now and I look forward to Mr. Grandich’s comments as well.
There was a massive move to th US$ ,,, but perhaps why has been misinterpreted (the media is just an arm of the message gov’t wants to spin) – Given the US has been the world reserve currency it is the defacto business currency …. there are mega transactions needing to be closed out and that required US$ … the more a country trades with the US the greater the impact on the currency shifts. IMO there can be no legitimate business organization who believes the solvency of the US economy …. but no one wants an immediate evacuation …it serves no useful purpose.
The US with all of the paper will suffer from inflation but worldwide demand will be down …. that demand will cause world prices to drop even while things are more expensive for those trying to pay for them in reduced value US$. Thus you have both. Deflation occurred in the 30’s after the bubble burst and Bernanke … the academic saw that the response in the 30’s was to constrict the money supply (without money you can not buy so deflation occurred …simply more supply then demand). To avoid the same thing from happening, instead of taking the meedicine required to turn things around (i.e. people and govt living within their means) they will exacerbate the crisis … stimulus programs (in other words promoting more irresponsible spending). The only reason this can occur is the the fact the US is the reserve currency and instead of fixing the problem … they are buying time …. it would be interesting to get a public accounting of the 700 billion rescue package … not just what was bought by whom and from whom …. this would tell us much more … but of course why would the public need to know that … just keep saying it is all fine.
My conjecture from the start was that the money was necessary to “buy off” or reimburse those countries most likely to push the US govt (and dollar) to the brink by saying gives us our investment back or we convert or reserves to euros, gold … whatever. Nobody in the west wants that and unlike the chinese and arabs … nobody in the wets can afford that.
The acknowledgment by world banks to work together will be the slow evolution away from the US$ … there may be a transitionary phase (i.e. basket of currencies) but eventually gold will be the ticket. This will occur without revolution it must be doner orderly and everyone knows that or the consequences for all wealth will be tremedous, the political fall out can not even begin to be predicted …. I think Machiavelli indicated it best … you must take care of your arms or risk losing them … patriotism(brainwashing) aside … if they are not eating, if theie loved ones are not looked after, you ultimately ask the question what am I fighting for?
This is just a temporary respite from the storm … we so far have experienced a tropical storm which through the actions of the fed is currently off shore but building up steam … we will hit class 5 hurricane before this is over.
Orgy
I’ve noted on a recent renovation of my kitchen a couple things. One…I shouldn’t do the work myself…lol It’s quality finishing but it took me forever which leads me to the second thing I noticed. I had the luxury of time to shop prices. My wife wanted to switch to stainless steel which of course they like to price like it was gold. I like or rather enjoy the art of price negotiation but first you have to put all the ducks in a row. Anyhow to make a long story short and leave out the part where most sales people scatter when I walk in the door..lol…I noticed the second item…..that since the time when I began shopping…and we replaced all of our appliances…….by the end of it all of the appliances not only went on sale numerous times but the price was actually reduced permanently by the end of the year. ie I bought a top of the line steam kitchenaid dishwasher. It started out at $1599.00. Over the year it would go on for $100. off. But combining different store sales and utilizing there beat the other price mentality I paid in the end $1150. But before I signed on for the washer I said if they included delivery to the house they had a deal. They agreed which saved me a $50. delivery. So in the end I paid $100.00. The dishwasher is now full retail at $1300.00, a $200 . permenant price reduction. The reason I mention this story is as we talked here about deflation and also the fact yesterday Whirpool mentioned how they were getting battered. They now own Kitchenaid btw. So major household appliances including my fridge and stove have plummeted in percentage terms to there retail price. Same goes for cars which ahve not price increased in 3 years and for 09 actually selling for less than 08 model msrp. Canadian housing has held solid in comparrison to US housing but cracks are starting to show and people rushing to buy US housing from Canada may yet be taught a lesson about falling knives. Anyhow our housing should not be affected as severly but we did have for the last 2 years bidding wars virtually on every house that went up for sale so you have to know that extra 10-15 percent was bubble material. Well halloween is here and bought my candy for 25 percent off…..ha there is some good about deflation as long as our canuck buck doesn’t get hit too hard.
Correction Full retail now 1399 not 1300…a full 200 less and my end price after delivery was 1100………sorry fingers not working this am
So after more earnings reports come out….maybe we will be throwing the word Stagfaltion into the mix…..anyhow…question…if and I say if….things got to there worse case senario and banks started to fail again……if the banks hold your stock certificates in your trading accounts should a guy be thinking about removing those certificates so you have access to them and return them to the bank only when you want to sell or are they safe with the bank to hol. Currently I just leave them with the bank but since stocks are not protected in any gov’t insurance….are they in any kind of danger to get back if a bank runs into trouble?…thks for any comments…
Hery Orgy don’t the 2 of us bring cheer to the day..lol
I would think the disposition of assets must be done by qualified bankruptcy experts. The holding of assets in trust would certainly be higher in the pecking order than shareholders, but it still is a debt instrument and if the collective holdings of debt holders is huge or is senior debt ahead of this debt t.. could be at risk. It would undoubtedly get caught up in courts one way or another and that would mean log delays in accessing you assets.
If it is an option I would get physical and or the actual certificates for holding that silver and store them myself in a safety deposit box or 2.
Correct me if I am wrong anyone.
Yes Chris we may not be the most optimistic …. we could be the most pesimistic … however we may not be and time will tell if we are the most realistic. Safe than sorry is always good … since the financial markets are quite arguably in a historically unique sitaution we should all be good boy scouts meaning “BE PREPARED”
Orgy
Prepared yes, I’v gone to the extent of diversifying into 4 diff. banks so far. I have cash ready to grab and was one of the lucky ones…I saw the rounded topping happening on the indicies charts and sold all mutual fund holdings way back in Jan. which was a fair amount. Sold all stocks that had a return and kept some that maybe I should have sold but not many. The certificates do worry me but I’ll wait just abit. So prepared as I can get and hoping to more or less time an entry into gold and energy [gas,oil, uranium and solar]. Gas stocks will be my first buy since winters comming and gas seems to be holding in comparison to oil. Hopefully this black hole starts getting a light at the end of the tunnel in the second qtr or so….if not then holding powder as long as need be I guess.
btw orgy do you invest in diamonds at all?
chris, i have invested in a diamond mine, sgf … shore gold … they have a large mine in sask. I have done quite well with the stock and continue to hold although it is another junior in which I have been hammered. At its current price it may be worth a sniff after you do dome dd. The creation of an operating diamond mine is very very expensive so my guess is only the extreme cream will win … In the future I will propbaly limit myself to prodcuers or juniors entering production. Diamonds will increase in importance as the increase in borders re-merge and countries do more to protect wealth being moved away. They are the ultimate form of transporting liquidity and will always have their place especially as states become more totalitarian for our own good …. lol
Gold has been my primary interest since 02 when I first decided I needed a hedge against a severe downturn …since then I have become somehwat of a gold bug after years of insisting investing in gold was for fools. LOL
Speaking of preparedness … I have begun stocking up on dry goods … pails of rice and beans … spices will come around the time you want your certificates …. lol
All the best … enjoy your preparedness … after all the great thing is … if I am dead wrong like I am hoping … I can help the food banks and shelters by donating the dry goods I`m currently buying to take care of neighbours and friends.
All the best.
Orgy
I hold 3 diamond palys currently. Posted a comment on the diamond blog here….ck