bobdark

Economic Data Showing Signs of Negative Trends

You blame shorts for the market correction? You think it is realistic that people can borrow beyond their means to repay? You think it is realistic that real estate prices should go up 20% every year? If anybody should be angry it should be the savers who are now watching their hard-earned savings get flushed down the government toilet by the huge tax burden in order to bail out people who were rediculously irresponsible and presumed that they were entitled to wealth through speculation instead of the old-fashioned way of working and saving.

The bottom line is that this crisis was caused by overleverage and rediculous real estate speculation, whether it was pointed out by shorts or scholars or not, the system had to collapse. Just be glad the shorts were there to buffer the downside, otherwise it would have been much worse. In fact, next time around, it will be much worse, because America still has not learned the lesson, that it is wrong to lie and cheat your way to achieve a lifestyle that is beyond a level of income required to sustain it and that eventually there are consequences. Some day, there won't be any money left to bail out all the irresponsible people unless the government simply decides to nationalize everything and eliminate the middle class.


On Nov 01 11:58 AM apppro wrote:

> Old Trader,
>
> Can only speak for what I see, but according to the media and their
> own figures, storewide sales are up. I have to admit that people
> are coming in for sales, but that is to be expected and Macy's knows
> it. We have trained the U.S. consumer to wait for a sale, so like
> Pavlov's dogs they buy only as soon as someone rings the sales bell.
>
>
> We forced everyone to take out a lot of leverage out of our system
> and we fired a lot of people in the process. Those that are lucky
> enough to still be at work want to spend and shop. We allowed a few
> pundits and short sellers to screw the rest. As soon as we realize
> this and allow business to get back to business, we'll all be better
> off. Remember: all that leverage that those shorts and scholars wanted
> us to eliminate - only became bad when all those shorts and scholars
> shoved down our throats that it was bad. (Boy am I going to get yelled
> at for that comment!)

Relative to Gold, Stocks Are Depressed but Rising

I believe a more accurate assessment is that stocks are wildly overvalued and gold is starting to become more accurately valued. There is a reason for the gap, it is because the dollar faces massive devaluation over the long-term due to the monetization of debt, our economy is wildy out of balance with the only future prospect for paying for the assets through devaluation of the dollar and a standard of living that balances credit and debt correctly (i.e. Americans have been living far beyond their means - i.e. housing bubble).

Even in terms of decline of the dollar, however equity prices are way out of the range of realism in terms of even the most wildly optmistic future P/E ratios. So, expect a correction in the stock market, while Gold may actually continue to appreciate.

On Oct 09 06:29 PM E Nuff Sed wrote:

> Remarkable analysis. Priced in gold the S&P 500 has barely recovered.
>
> Either gold is wildly overvalued or stock very undervalued. As usual
> the truth is somewhere in the middle.
> stockcharts.com/h-sc/u...;p=W&b=5&a...

Ten Reasons for an Imminent Stock Market Crash

Qusar71: I"m not sure I'd call the Dow dropping 6 of the last 7 days and 200 points today profit taking. Looks like the author is on the money and the ducks are setting up in a row. Sure, the Fed will probably bounce the market back again over next few days, but it seems that each "profit-taking" drop is getting worse and the dip-buying and pumping less-and-less effective. I wouldn't wait for too many more up-swings to cash out of this market, the next one might be the last chance to get out with your shirt on, assuming we haven't already started the crash as of today. It's been 3 months since the market has had this bad of a drop, and being on the tail-end of the rally rather than only mid-way through makes this more ominous.

Will the Market 'Melt Up'?

The herd will keep following each other right over the cliff. The market has been going up on low volume and pure speculation (AIG, AXL, C, FNM - all practically insolvent companies). Wait until October. The storm clouds are already brewing, Insider selling at all-time high since September, Gold spiking to levels affecting credibility of the dollar, followed by a counter-response to a flight to US Dollar futures today(volume on UUP up 4x).

If we didn't have a second wave of foreclosures of more massive scale than subprime (Alt A Option resets) and a Commercial Real Estate default rate increasing 2x every month and the housing recovery based strictly on banks lowering the supply by holding foreclosures instead of selling, and if our unemployment was reasonable, and if consumer spending wasn't at all time lows, I might agree with you...

There's a big pinch between the downward pressure being put on the dollar and lack of eroding faith in the US currency against the pressure to keep the market high. Low volume shows the market being manipulated up for political reasons and exit purposes of insiders who are now exiting at a fastest rate since last September. When push comes to shove, and serious dollar devaluation is looming as it is now, the Fed will have to protect the dollar, which means trouble for the equities market in the longer-term. Interest rates rise will need to rise, and banks will have to become accountable for government money being used to basically hide trillion in toxic asset losses hiding in the books that can't be inflated away. China and Russia are beginning to call the bluff that we have an economy built on a ponzi money scheme and if they threaten to change out of US currency, it will bring the stock market back into reality where the P/E ratios are justified.

Unemployment is historically only a lagging indicator in the market, when it is moderate. When it is over 10% as even Bernanke admits it is going to, it generally leads to a second dip down.

I don't know when it is coming, but this market doesn't have much more left, and we are headed for correction and stagnation for several years to come as we become relatively weaker compared to other world economies. The only hope for our economy is to have a GDP that is based on real production of goods, not one that 20% of it is based on financial services which provides no benefit to anybody other than wall street.

On Sep 09 11:40 AM Stone Fox Capital wrote:

> Looks like both Cramer and Fitzpatrick agree with us. Market is up
> 4% already since this call.
>
> www.cnbc.com/id/32740744

We're in a Mid-Cap Rally

Do you really expect a 70-day rally with the economic factors out there? Isn't this rally sort of running on hot air?