Tuesday, 30 June 2009

General: Your source for news

Hyperinflation Nation

I don't necessarily agree that we are going to see hyperinflation this year (or even in the next 3 years). I actually think we are in a deflationary bust that isn't over yet, but when deflation ends (around 2012-2014) I think that high rates of inflation or hyperinflation is coming.

The Herd Mentality

Sunday, 28 June 2009

Money, Credit and the Federal Reserve: Your source of info on banks, credit, Federal Reserve, and money

Five Banks Are Seized, Raising U.S. Failures This Year to 45

Come on. I just talked about this last saturday. In just one week another 5 banks have gone bust. Go read the article for yourself on Bloomberg. This is getting ridiculous. For all the people who see an economic recovery, I would REALLY like to know what you are basing it on because it can't be REALITY.

Friday, 26 June 2009

Dividends, Hmm.....

This is a follow up to the previous post. The most recent chart I could find is one going back to November, but it still applies because I think the dividend yield is around 3%-4% right now. "A picture says a thousand words." To approach any of the other major historical bottoms companies need to start hiking up their dividends at an unprecedented pace OR stock prices need to come down at an unprecedented pace. Which one is more likely in the next two years?

Dividend Paying Stocks Lose Ground This Year

These guys don't know what they are talking about. Bloomberg should be worried about the data-crunching they are doing. Essentially, investors want stocks for capital appreciation (not cash flow, that's irrelevant) instead of dividends. Signaling a continued frenzy for stocks in this so-called "green shoots" bull market. Major cyclical bottoms occur in the stock when the dividends reach double digit percentages. Go do the research. Dividends for the DJIA right now are still around 4%-5%, not characteristic of a major bottoms. A worrisome sign if you are looking to get fully invested right now. (Also, all the stocks he mentioned are trash! Go look at their charts. E-Trade, Sprint, etc.)

Thursday, 25 June 2009

Jobless Claims

Bloomberg reports today that Initial U.S. Jobless Claims Rise in Signal Labor Market Slow to Stabilize. Just more evidence why the mainstream media and the pundits need to get serious, come back to reality, and start looking at factual data instead of hopeful, optimistic green shoots.

Wednesday, 24 June 2009

As a percentage of G.D.P.

Interesting chart. The red ellipses signify times in stock market history when the market was great value. (i.e. being great times to be heavily invested in the stock market.) You look at where we are today and you have to say, "Hmmm, is the market a great value and at its lowest point?" I don't think so. Which means there is another down leg coming before we get to great value.

Tuesday, 23 June 2009

Inflation Vs. Unemployment

I don't know Michael Pento's work, but he makes some interesting points. I don't agree with him on his inflation theory. My belief lies in the fact that credit is contracting faster than the Federal Reserve can print it's fiat paper money. He is right that the Fed is going to do whatever they can to avoid a depression (although inevitable), and that means keeping the Fed funds rate low (possibly for our lifetimes, like he said). It also means coming right out and saying they are going to buy treasuries. Basically trying to prop up that market themselves. The belief that the Fed is all powerful is going to be tested. The Fed thinks its all powerful, and wants to give the perception of omniscience. But it is clearly scared to death that the market will realize what they are doing and collapse the system. These are perilous financial times.

Money, Credit and the Federal Reserve: Your source of info on banks, credit, Federal Reserve, and money

Monday, 22 June 2009

Insiders are Selling?! Say it ain't so!

Here a some quotes from a Bloomberg article today talking about how insiders are selling.
“If insiders are selling into the rally, that shows they don’t expect their business to be able to support current stock- price levels”
“They’re looking to take some money off the table because they think the rally will come to an end”
“It’s the most bearish we’ve seen insiders, on a whole, in two years.”
“It does make you wonder if the market rebound is running out of steam”
“If you see broad- based selling among the management team or large holders, that’s generally not a good sign because presumably who knows that business better than they do?”

Now, Bloomberg is telling the whole world that insiders are selling. Not only are they selling, they are selling "at the fastest pace since credit markets started to seize up two years ago." The market is driven by social mood and gives excellent lessons in human psychology. So what are these actions telling you?

"No Regions Escaping The Grip...."

These aren't signs of a recession. These are signs of credit bursting depression. The sooner people recognize, the better they can prepare themselves.

Saturday, 20 June 2009

Money, Credit and the Federal Reserve: Your source of info on banks, credit, Federal Reserve, and money

Ahh, the banks!!

Bloomberg headline reads: Georgia, North Carolina, Kansas Banks Shut as U.S. Tally for Year Hits 40 . That's 40 banks bankrupt this year. Quietly it makes the headlines. Apparently we are all desensitized to collapsing banks. Listen, the economy cannot be healthy if banks are still going bust every week. Credit busts bring depressions and that's what we are experiencing. It's right in front of our faces, but some of us choose to deny the truth. All I can say is liquidate any assets depreciating in value, move some of your capital to gold (near the end of the depression), and be on the sideline in the stock markets when the next leg down in the depression begins. (Probably in the fall of 2009 or early 2010).

Wednesday, 17 June 2009

Commentary: Your source for news, commentary, and stock info

Barron's Interview

If you want to know my point of view about markets, read this article in Barron's. Most of the reasons that Bob Prechter points out are many of the same reasons why I think the market is headed lower later this year and into 2010. Sorry folks, there isn't going to be any recovery.

Barron's Online

Thursday, 11 June 2009

Quote of the Day

"To be clever, alert, and not only quick to act, but able to reverse a position at a moment's notice. One should exhibit no hopes or fears. One must participate without a sign of nerves or mental strain; must look upon profits or losses with equal equanimity. One must develop the kind of intuition that becomes a sixth sense. These traits must evolve over a series of failures over many months and years. The education could be completed only through a long series of transactions, spread over long periods, which would perfect the operating personality to carry one through adverse times without discouragement, until ones expertness and self-confidence match that of the surgeon who performs many operations, losing some patients but never losing his nerve. Such a man, with such character and experience should be a success in the market."
-Richard D. Wyckoff

Friday, 5 June 2009

Monday, 1 June 2009

Inside the House of Money

I recently had a look a one of my trading books and thought this was a good excerpt. Very true.

"Talk is cheap; think in terms of risk/reward rather than just direction; and think big move, not little stuff. Be very honest with your thought process. Markets are hard. When we are totally honest with ourselves, we place ourselves in a position to read the news clearly. If you're stuck in a view, you're going to kid yourself, disbelieve new news, and probably panic too late. That's the other dictum, by the way, that I've learned or that I pass on: If you're going to panic in markets, panic early. Panicking late is a recipe for disaster."
-Dr. Andres Drobny

I would like to add to that. I think, really, you should think in terms of risk/reward because you will be more objective about your investments/trades, and try mostly to focus on price rather than fundamentals. Because you don't really need the extra noise when you get right down to it. Turn off Bloomberg and CNBC. The mainstream financial media is there to throw you of course. Everything you need to know at that moment is in the price. That's the only thing that doesn't lie. Also, there shouldn't be a need to panic if you've thought everything through. There is no such thing as panicking early, when you have a stop-loss order. The decision to get in has already been made.

Inside the House of Money
Steven Drobny