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Are We In Another 1990s-Style Super Bull Market?
- Bull markets normally last an average of 4.5 years. By that time, stocks are usually overvalued, the market is overextended, and the Fed is making plans to cool off the enthusiasm.
- The bull market/bear market cycle begins to sequence into the next bear market.
- Super bull markets, those that go beyond the norm, have been once in a lifetime anomalies.
- There have been two in the last 100 years. But could we be in another one already?
Global Economies Will Dictate Rate Hike Timing
- Now that the Fed has unwound its QE stimulus program, the hot topic is how soon it will take the next step of beginning to raise interest rates back up.
- With the Fed saying that will depend on when it believes the U.S. economy is strong enough to handle higher rates, analysts are watching U.S. economic reports.
- They would be better off watching global economies, since they are likely to have a significant impact on the U.S. economy in one direction or the other.
Still Lower Prices Ahead For Oil?
- Investors have poured money into oil tracking ETFs at an unusual pace over the last six weeks.
- They apparently believe the decline in oil prices is over.
- So far it has been a losing trade, and here is why oil prices probably have further to fall.
Healthy Returns From The Healthcare Sector
- The healthcare industry, like consumer staples, is considered to be a defensive sector for stock market corrections and bear markets.
- The premise is that no matter what happens people will still have to eat, drink and take their medicines.
- But the healthcare sector has been more than a defensive sector to hold in market downturns.
- It has significantly out-performed the S&P 500 in the bull market.
Don't Let Greed Lure You Into Scams
Wed, Nov. 5 • 7 Comments
- The market’s favorable winter season has arrived.
- The market is breaking out to new highs. Investor optimism and confidence are very high.
- Unfortunately, this is opportunity time not just for normal investing, but also high season for those perpetrating frauds on unwary but confident investors.
Buy The Dip Or Sell The Rally
- Both bulls and bears have strong arguments.
- Unfortunately, at this point, the charts do not settle the debate.
- The next few days should do so.
Janet Yellen Is Wrong About The Cause Of Wealth Inequality
Sat, Oct. 18 • 158 Comments
- Janet Yellen blames the inequality between the middle-class and the very wealthy on rising college costs and tougher lending practices that make it difficult for people to start their own business.
- Economists and politicians blame it on the inequity of the tax codes and want to raise taxes on the wealthy.
- Left out of that type of analysis is how and why huge amounts of capital have periodically moved from the hands of the middle-class to the wealthy, creating the inequality.
Can The Fed Come To The Rescue Again If Needed?
- If this market pullback becomes something worse, can the Fed come to the rescue as it did in 2011?
- Here is why it would have problems in trying to do so.
- Why sell and take downside positions if all we expect is a normal 15% to 20% correction, and then an important buy signal and resumption of the bull market?
Look Out Below For Gold
- Gold experienced a 37% bear market decline from its peak above $1,900 an ounce in 2011 to its low last year.
- It has been trying to build a base for a new bull market since.
- Here are reasons to believe it has failed and still lower prices lie ahead.
U.S. And Global Confidence Are In Divergence - So Are The Markets
- Investor and consumer confidence are very high in the U.S. and very low in the rest of the world.
- Meanwhile, the U.S. stock market is very high, while global markets elsewhere are breaking below important long-term support levels.
- Is confidence a leading or lagging indicator?
Can The Economy Withstand Another Housing Breakdown?
- With the three fascinations of the week - the Fed’s FOMC statement, the separation vote in Scotland, and the Alibaba IPO now history, will investors re-focus on the economy?
- From what is happening in the housing sector they probably should.
- Investors were anxious to judge how long the Fed will leave interest rates at low levels.
Last Stand Approaching For Gold
- Ended its 10-year bull market when it topped out at $1,900 an ounce in 2011.
- It was a spectacular run from $250 an ounce in 2001. Since then all its rally attempts have ended at lower highs.
- Now, with its summer rally having ended at another lower high, gold has declined almost to its previous bear market lows.
- If those levels do not hold, gold will be at new lows and in uncharted water, likely to bring more pronounced selling.
Why A Market Correction Now Would Be The Best Scenario
- Investors are hoping the market can continue higher without experiencing the overdue 10% to 15% correction.
- History says they should be careful what they wish for.
- The risk is for something much worse later if a normal correction does not take place now.
The Eurozone Is A Growing Problem For U.S. Economy
- The euro-zone is in another economic crisis. It is the largest trading partner of the U.S.
- Will its growing problems affect the still anemic U.S. economy?
- Will its stock market declines resume and be a drag on U.S. markets?
Is It Time To Ignore The Fed?
Sun, Aug. 24 • 18 Comments
- Investors, who despised the Fed and railed against it and the rest of the government during the 2008 financial meltdown, have come to trust the Fed over last 6 years.
- However, those six years were one-directional for the Fed. Its decisions were limited to when it needed to apply more pressure on the stimulus accelerator and how aggressively.
- It's always been quite proficient at that once the economy is in recovery mode. Now it has begun a reversal of monetary policy at which it has a dismal history.
Bonds Persist In Their Warning About The U.S. Economy
- Bonds usually rally when expecting an economic slowdown.
- They began rallying in early January, and in April we learned the economy plunged to negative growth in the first quarter.
- The economy has supposedly recovered, according to Wall Street and the Fed. But bonds continue to rally.
European Markets Look Downright Scary
Sun, Aug. 10 • 16 Comments
- European and U.S. markets have been moving in tandem with each other for years. They still are, both being in short-term pullbacks.
- However, the plunge in European markets has been more severe, and has them ominously broken beneath their long-term 200-day moving averages.
- If the U.S. market and European markets are going to continue to move in tandem, let’s hope European markets recover quickly before the U.S. market follows them down.
Buy The Dip, Bail Out, Or Just Worry?
Sun, Aug. 3 • 18 Comments
- A scary market plunge this week as economic reports disappoint.
- It only has the Dow and S&P 500 down 3% from their peaks.
- Buying 3% dips has worked all year. Or is it a last opportunity to sell near a market top.
China's Market Finally Looks Like A Buy
- China’s stock market has been in a long 5-year bear market, while the U.S. market has been in a long 5-year bull market.
- We finally have a buy signal on China’s market.
- And given the high risk in the U.S. market, we like that China’s market has clearly demonstrated its ability to move independent of the U.S. market.
Enough With The Bubble Talk Already
Wed, Jul. 23 • 11 Comments
- There is way too much talk of whether the market is in a bubble or not as a means of determining the current market risk.
- There have only been two stock market bubbles in the last 70 years, but 25 serious bear markets, or one on average of every 4.5 years.
- Obviously, whether we are in a bubble or not has almost nothing to do with risk of a serious correction or bear market.
Will Investors Get Out In Time This Time?
- Public investors have a terrible record of being several years late in entering bull markets, and then several years too late in exiting serious bear markets.
- In fact public investors do not typically exit until after bear markets have hammered them with losses.
- The strategy of so-called "smart money" institutional investors is to exit when risk rises too high.
- Market technicians have a strategy of waiting until key support levels are broken, and most public investors don't seem to have any strategy at all for getting out or back in.
- With their current bullishness are they setting up to repeat their long-term pattern?
The Bond Rally Is Not A Good Omen For The Stock Market
- Bonds continue to defy the experts.
- Bonds rallying since December even as the Fed tapers back its QE bond-buying, and even as pressures build for the Fed to begin raising interest rates sooner than expected.
- They tend to move opposite to stocks, yet have rallied even though the stock market has rallied to new highs.
Jobs Report Not As Positive For The Economy As Some Think
- The jobs report for June was great news.
- But employment is a lagging indicator and says next to nothing about the direction of the economy.
- Meanwhile, other recent economic reports paint an entirely different picture.
A Second Quarter GDP Bounce-Back May Not Be Bullish
Fri, Jun. 27 • 13 Comments
- The economy (GDP) was unexpectedly negative in the first quarter, but is expected to bounce back in the second quarter.
- The popular opinion is that it will mean the bull market will be fine.
- As the chart in this article shows that is not at all a sure thing.
Is Stage Set For Markets To Again Be Smarter Than The Fed?
- In every economic cycle the Federal Reserve eventually winds up ‘behind the curve’, still trying to keep consumers, businesses, and investors optimistic when the reality no longer supports that outlook.
- Markets are not fooled, and have bear markets underway well before the Fed admits the changed conditions.
- Has this cycle reached that stage?
Worry About The Second Quarter, Q1 Is History
- Only two weeks left in second quarter.
- Has the expected big economic snap-back from the winter slowdown shown up yet?
- The world’s wealthiest investors, presumably also the most successful, seem worried, having raised unusual levels of cash, while unworried individual investors have become even more bullish.
The Truth About The Jobs Report And The Economy
Fri, Jun. 6 • 30 Comments
- The economy may be recovering from the winter slowdown, but the jobs report is certainly not evidence of that.
- Here is the reality beneath the headline that 217,000 jobs were created in May.
- The truth about the jobs report and the economy.
Bull Market Continues, But Will Cash Be Summertime King?
- Increasing similarities to 2011, in the current economy, investor sentiment, valuation levels, and the Fed’s situation, are not encouraging.
- The S&P 500 plunged 19% in 2011 before the Fed realized what was happening.
- The Fed rushed in with additional QE stimulus that prevented the significant correction from worsening into a bear market.
Are Some Proven Investment Strategies Too Simple To Accept?
- An interesting look at Jeremy Grantham’s letter to clients of his $117 billion international money management firm for institutions and wealthy investors.
- Decades of his firm’s studies confirm the remarkable performance of several investment strategies, and how investors blow them off because they seem too simple to be effective.
- Are some proven investment strategies too simple to accept?
Wall Street Says It's Different This Time
- It’s a good thing it’s different this time. We know it is because Wall Street says so.
- So I must be a dinosaur in my thinking that conditions at previous tops, valuation levels, warnings from "smart money," seasonality, etc. going back at least 100 years have always had relevance when similar conditions appeared in later periods.
- Not with enough accuracy to provide buy or sell signals, but certainly with enough to warn of unusual risk.
'Defensive Stocks' Are Not Much Help In Market Downturns
- Wall Street’s advice on how to prepare for possible market corrections has always been the same.
- No matter what happens people will still have to eat, drink and take their medicine.
- So consumer staples, food, beverage, healthcare and drug companies will do well even in market downturns.
- Nervous investors now piling into those "defensive" areas would be shocked to know how terribly they have performed in previous market declines.
Is Housing Ringing The Stock Market's Bell Again?
- It is said they don’t ring a bell at stock market tops.
- However, the housing industry has sometimes been quite adept at doing so.
- Is it currently ringing its warning bell again?