Thursday Thrust: Just Buy the Darn Dips [View article]
Buy the dips - that's right - every time the S&P goes down by 30% or 40% from its last high (2002-2003, and late 2008 to mid 2009), that is a good time to buy. Any other time you're a sucker. If this latest rally goes to 1300, then the right buy level will be around 800 to 900.
Seems pretty crazy? Well, twice in the last 10 years this strategy has worked well. Maybe it will never happen again, since this time the market is going up on strong fundamentals, not easy Fed money...that's what they tell me at least...
Is QE2 the Road to Zimbabwe-Style Hyperinflation? Not Likely. [View article]
Exactly. If this whole process is so benign, then why not extend it, expand it, and really take advantage of the "no-lose" nature of the Fed buying huge quantities of US treasury debt?
Given our predicament, and the absolute assurances of Cullen Roche and Ellen Brown that nothing could go wrong, then why not do the following:
The US Treasury issues a single $50 Trillion dollar, 100 year bond at 0.00001% interest. The Fed is the only bidder, and pays nearly $50 Trillion for the bond. The Treasury then tells Congress that there is plenty of money to spend, and Congress passes the "bail out America" bill, where each adult American citizen is "loaned" ($50T/200M) approximately $250,000 at 0.1% interest for say 30 years, for a monthly payment of about $700.
Individual Americans could sell their loan options to others who are capable of borrowing more, and there would have to be some adjustment for credit and other factors, but in general, everyone gets a quarter-Mil to bail themselves out. For some, this makes a real nice no-interest mortgage, for others gets them out of major credit card, HOMEQ, or student-loan debt.
What could go wrong? It's "our" currency, and therefore we can do anything we want (right Ellen?), so what's the holdup?
Considering that the hyperinflation in Zim was apparently due to colonial grudges, and Weimar Germany must have been because of a snub at a Christmas party, then as long as the US remains popular, there is no chance of hyperinflation here.
Debt Forgiveness May Be the Only Way Out for U.S. [View article]
"My house is worth 6 times what I paid for it in the early 80s, though inflation generally has been nothing like that"
-------------
How do you know this? Have you put it on the market, found a buyer, and actually received the money?
I think that THIS is where the debt system will collapse - the day when all these "assets" are suddenly not worth 20% of what the owners think they are worth. All "wealth" is based on the presumption that when the time comes, some other (usually younger) person will come along and pay six times more than you paid 30 years ago.
But what if they don't show up? A system (or scheme) works until it doesn't. What if all of today's 20 year olds refuse to buy houses for 6 times their 1980s prices, instead waiting for a return to 1980s prices?
What if they do the math on the Dow and discover that a P/E of 20 is not worth it, but a P/E of 5 is? Dow to 3000?
Of course, the whole system is based on keeping people stupid and misinformed, so it is not likely that today's young will do any better with price discernment that the last generation did.
Contrarian Indicator: Investors Wait for the Hundred-Minute Flood [View article]
Wait a minute - you just said that "This time it's NOT different".
So, considering the 80% rise in the S&P since the low (similar to the rise from 2003 to 2007 after the previous crash), then we're probably due for ANOTHER crash, just like the 2001 and 2008 episodes.
Why buy now, AFTER the huge rally? Wait for history to repeat, and buy at the bottom when bearish sentiment is over 80% again. With the speed of communications these days, it probably WON'T be 7 years between crashes this time - maybe more like three...
Market recap: After some better-than-expected retail sales, a day of moderate gains for stocks went off track in the last hour as indexes ended mixed. Treasury yields spiked to three-month highs and Moody's warned about effects on the U.S. credit rating of extending Bush-era tax cuts (bad) and implementing the debt commission's recommended austerity (good). [View news story]
How about something like this:
Under 50,000 - 1% Fed tax rate (everyone has some "skin in the game")
50,000 to 250,000 - 10% (livable middle class rate for 60% of America)
250,000 to 1,000,000 - 20%
1,000,000 and up - 40%
No deductions, no dependents, if you earn some money you pay some tax. Sally cashier makes $30k - she pays $300. Joe plumber makes $75k - he pays $3000. Jane radiologist makes $200k -she pays $15,500. Jimmy stockbroker makes $800k - he pays $135k. Finally, Lady Gaga entertainer makes $35 million, she pays $13,775,000 in tax.
Auto Sales Boom: Another Sign This Recovery Is Real [View article]
A 12 million sales-per-year market is barely replacement level in the US.
A FAR, FAR cry from the 17.5 million pace of 2006. But if we simply extrapolate your 18% trend, then gosh, it looks like we'll have sales of 30 million a year by 2020! Maybe 40 million when people start doing "cash-out HELOC refi's" on their houses again.
Dave's Top 10 Reasons Why QE2 Won't Help the Economy [View article]
Why do you doubt that the price of gold can go to $10,000 an ounce?
Seems kind of inevitable that it will, with the Fed's stated policy now being to devalue the dollar as much as possible.
Only a few years ago gold was $300 an ounce, now it's approaching $1400.
I don't think that the road to $10,000 gold will be smooth and linear, but 15 or 20 years from now after an escalating series of QE actions, it is not hard at all to imagine $10k gold, $700 oil, and other "crazy" prices.
3 Ways to Get Rid of a $13.728 Trillion Deficit [View article]
Ok, good straightforward article.
You can cross #2 right off your list - that's not going to happen.
#1 will happen in dollar terms automatically, due to #3 being goosed through hyperinflation. It's happening right now due to Ben's purposeful currency debasement. When the dollar "value" of everything increases because the value of a dollar decreases, magical things happen (or so the Fed hopes I guess)...
So GDP will "grow", when the price of everything doubles and we all pretend that we're richer. $5 gas and $50,000 Honda Accords and a Dow at 22,000 will make everyone's $200,000 underwater houses feel like only $100,000 underwater, right.
But wait - there's one possible problem. Unless wages grow too, then the whole inflation thing doesn't quite work. You get stagflation instead. But I'm sure with 10% unemployment and every business in the US doing everything they can to reduce employee expenses, those wages are sure to rocket any minute now...
One last thing - with a $3.1 Trillion increase in the national debt so far, in 18 months, you CAN credit Obama with a nearly 30% jump in your table. At this rate, he'll whoop GHW Bush's 4-year record easily...
Why the Fed Will Be Dissolved Within Five Years [View article]
If the Federal Reserve "Central Bank" system is so good, then why is this the THIRD iteration, only active since 1913, after a period of about 80 years WITHOUT a central bank? What happened to the first and second central banks?
During the time with no central bank, this country opened the West, build the transcontinental railroad, fought and resolved a Civil War, became one of the premier Industrial Revolution powerhouses, and became a major agricultural producer.
Those "dollars" in your pocket are actually called "Federal Reserve Notes", not too much different than a "JP Morgan Chase note", or a "Wells Fargo note". For some reason we trust a private bank to regulate and manage our entire monetary supply? They've done a great job in their 97 years - the Great Depression, 1970's stagflation, and now the near collapse.
Convert FRNs to real things at an increasing rate over the next couple of years. After it is all over, people will laugh about how much power and trust was given to a single private bank for so long.
Correction Parallels: May All Over Again? [View article]
As a pretty regular trader of leveraged ETFs, I've been amazed by some of the action of the last two weeks - more precisely the lack of big action. This has that late-April feeling, magnified by 10x. Back then it hardly seemed possible that early May would happen, then it did.
The market is clearly waiting, for the election and for real QE2 news - good or bad. Then it will DO SOMETHING.
It's hard to imagine a bit of news that propels this market 5% or 10% higher in the following week or two. And it's also extremely hard to imagine that this market will stay exactly flat for another week or two.
QE2 Rumored to Disappoint...But That's Good News [View article]
Let's say that half of the 133 point rise in the S&P since September 1 (+12.7%) can be attributed to the expectation of massive QE2.
This would assume that the other half - 66 points, or the rise from 1050 to 1116 (+6.3% in two months, or about a 44% annual rate) can be attributed to all the "good news" about the economy. Right - all the good news, like declining steel demand, or 4-week unemployment still averaging 450,000.
But even if you believe that the stock market is growing at a 44% annual rate based on good news, then you still have to admit that half the market's rise has been based on QE2 hopes.
Adjust the numbers as you want. If you want to believe that there was NO QE2 hope built into this two-month rally, then you have to believe that the market is growing at a nearly 90% annual rate on economic data alone.
We'll see on Wednesday. If QE2 disappoints, which the WSJ and now CPB seem to be hinting at, then the market will have to figure out how to justify the assumed 90% annual rate from the last few months.
Or, it could do the same thing it did in January, May, June, and August after vapor "hope" rallies.
Stocks Are Heading Down, and QE2 Won't Change That [View article]
The question is also whether the Bank of Japan does another Yen intervention before or after Nov 3. Last time it was on a Wednesday, and for some reason the US market was also excited about the "race to the bottom", but this time it might mean the Fed must show a little more restraint, and US stocks may drop.
But I don't think that will happen. I think the Fed will announce $500 billion on 11/3 with "more to come" as needed. The market will pretend that this is what they were expecting all along, rather than the $Trillion or more that has been priced in since 9/1, and the sideways action will continue. Only when another surprise rate increase or sovereign debt problem surfaces will the market really drop.
I think we'll see 10,500 on the Dow one more time in 2010, and also probably see 11,500 before New Years. Not sure of the order though...
Thursday Thrust: Just Buy the Darn Dips [View article]
Seems pretty crazy? Well, twice in the last 10 years this strategy has worked well. Maybe it will never happen again, since this time the market is going up on strong fundamentals, not easy Fed money...that's what they tell me at least...
Is QE2 the Road to Zimbabwe-Style Hyperinflation? Not Likely. [View article]
Given our predicament, and the absolute assurances of Cullen Roche and Ellen Brown that nothing could go wrong, then why not do the following:
The US Treasury issues a single $50 Trillion dollar, 100 year bond at 0.00001% interest. The Fed is the only bidder, and pays nearly $50 Trillion for the bond. The Treasury then tells Congress that there is plenty of money to spend, and Congress passes the "bail out America" bill, where each adult American citizen is "loaned" ($50T/200M) approximately $250,000 at 0.1% interest for say 30 years, for a monthly payment of about $700.
Individual Americans could sell their loan options to others who are capable of borrowing more, and there would have to be some adjustment for credit and other factors, but in general, everyone gets a quarter-Mil to bail themselves out. For some, this makes a real nice no-interest mortgage, for others gets them out of major credit card, HOMEQ, or student-loan debt.
What could go wrong? It's "our" currency, and therefore we can do anything we want (right Ellen?), so what's the holdup?
Considering that the hyperinflation in Zim was apparently due to colonial grudges, and Weimar Germany must have been because of a snub at a Christmas party, then as long as the US remains popular, there is no chance of hyperinflation here.
Can the U.S. Avoid the Fiat Money House of Cards From Crumbling? [View article]
Debt Forgiveness May Be the Only Way Out for U.S. [View article]
-------------
How do you know this? Have you put it on the market, found a buyer, and actually received the money?
I think that THIS is where the debt system will collapse - the day when all these "assets" are suddenly not worth 20% of what the owners think they are worth. All "wealth" is based on the presumption that when the time comes, some other (usually younger) person will come along and pay six times more than you paid 30 years ago.
But what if they don't show up? A system (or scheme) works until it doesn't. What if all of today's 20 year olds refuse to buy houses for 6 times their 1980s prices, instead waiting for a return to 1980s prices?
What if they do the math on the Dow and discover that a P/E of 20 is not worth it, but a P/E of 5 is? Dow to 3000?
Of course, the whole system is based on keeping people stupid and misinformed, so it is not likely that today's young will do any better with price discernment that the last generation did.
Contrarian Indicator: Investors Wait for the Hundred-Minute Flood [View article]
So, considering the 80% rise in the S&P since the low (similar to the rise from 2003 to 2007 after the previous crash), then we're probably due for ANOTHER crash, just like the 2001 and 2008 episodes.
Why buy now, AFTER the huge rally? Wait for history to repeat, and buy at the bottom when bearish sentiment is over 80% again. With the speed of communications these days, it probably WON'T be 7 years between crashes this time - maybe more like three...
Market recap: After some better-than-expected retail sales, a day of moderate gains for stocks went off track in the last hour as indexes ended mixed. Treasury yields spiked to three-month highs and Moody's warned about effects on the U.S. credit rating of extending Bush-era tax cuts (bad) and implementing the debt commission's recommended austerity (good). [View news story]
Under 50,000 - 1% Fed tax rate (everyone has some "skin in the game")
50,000 to 250,000 - 10% (livable middle class rate for 60% of America)
250,000 to 1,000,000 - 20%
1,000,000 and up - 40%
No deductions, no dependents, if you earn some money you pay some tax. Sally cashier makes $30k - she pays $300. Joe plumber makes $75k - he pays $3000. Jane radiologist makes $200k -she pays $15,500. Jimmy stockbroker makes $800k - he pays $135k. Finally, Lady Gaga entertainer makes $35 million, she pays $13,775,000 in tax.
Auto Sales Boom: Another Sign This Recovery Is Real [View article]
A FAR, FAR cry from the 17.5 million pace of 2006. But if we simply extrapolate your 18% trend, then gosh, it looks like we'll have sales of 30 million a year by 2020! Maybe 40 million when people start doing "cash-out HELOC refi's" on their houses again.
3 or 4 cars per licensed US driver!
Then the recovery will be REALLY real!
Dave's Top 10 Reasons Why QE2 Won't Help the Economy [View article]
Seems kind of inevitable that it will, with the Fed's stated policy now being to devalue the dollar as much as possible.
Only a few years ago gold was $300 an ounce, now it's approaching $1400.
I don't think that the road to $10,000 gold will be smooth and linear, but 15 or 20 years from now after an escalating series of QE actions, it is not hard at all to imagine $10k gold, $700 oil, and other "crazy" prices.
More Monetary Easing: U.S. Economic Policy Is Sheer Madness [View article]
Paper is garbage. I'm buying physical gold.
Wake me when oil is at $200, the Dow is at 20,000, and gold is no longer for sale to the public.
3 Ways to Get Rid of a $13.728 Trillion Deficit [View article]
You can cross #2 right off your list - that's not going to happen.
#1 will happen in dollar terms automatically, due to #3 being goosed through hyperinflation. It's happening right now due to Ben's purposeful currency debasement. When the dollar "value" of everything increases because the value of a dollar decreases, magical things happen (or so the Fed hopes I guess)...
So GDP will "grow", when the price of everything doubles and we all pretend that we're richer. $5 gas and $50,000 Honda Accords and a Dow at 22,000 will make everyone's $200,000 underwater houses feel like only $100,000 underwater, right.
But wait - there's one possible problem. Unless wages grow too, then the whole inflation thing doesn't quite work. You get stagflation instead. But I'm sure with 10% unemployment and every business in the US doing everything they can to reduce employee expenses, those wages are sure to rocket any minute now...
One last thing - with a $3.1 Trillion increase in the national debt so far, in 18 months, you CAN credit Obama with a nearly 30% jump in your table. At this rate, he'll whoop GHW Bush's 4-year record easily...
4 Reasons Why Stocks Are Ready to Make New Highs [View article]
QE2 has been red-hot-rumor for two months now, and everyone has been buying - pushing the market up at a 60% annual rate.
Now today we get the news. What will happen?
Of course, THIS TIME it's different, so people will buy on the news too, right?
Why the Fed Will Be Dissolved Within Five Years [View article]
During the time with no central bank, this country opened the West, build the transcontinental railroad, fought and resolved a Civil War, became one of the premier Industrial Revolution powerhouses, and became a major agricultural producer.
Those "dollars" in your pocket are actually called "Federal Reserve Notes", not too much different than a "JP Morgan Chase note", or a "Wells Fargo note". For some reason we trust a private bank to regulate and manage our entire monetary supply? They've done a great job in their 97 years - the Great Depression, 1970's stagflation, and now the near collapse.
Convert FRNs to real things at an increasing rate over the next couple of years. After it is all over, people will laugh about how much power and trust was given to a single private bank for so long.
Correction Parallels: May All Over Again? [View article]
The market is clearly waiting, for the election and for real QE2 news - good or bad. Then it will DO SOMETHING.
It's hard to imagine a bit of news that propels this market 5% or 10% higher in the following week or two. And it's also extremely hard to imagine that this market will stay exactly flat for another week or two.
That only leaves one possible direction...
QE2 Rumored to Disappoint...But That's Good News [View article]
This would assume that the other half - 66 points, or the rise from 1050 to 1116 (+6.3% in two months, or about a 44% annual rate) can be attributed to all the "good news" about the economy. Right - all the good news, like declining steel demand, or 4-week unemployment still averaging 450,000.
But even if you believe that the stock market is growing at a 44% annual rate based on good news, then you still have to admit that half the market's rise has been based on QE2 hopes.
Adjust the numbers as you want. If you want to believe that there was NO QE2 hope built into this two-month rally, then you have to believe that the market is growing at a nearly 90% annual rate on economic data alone.
We'll see on Wednesday. If QE2 disappoints, which the WSJ and now CPB seem to be hinting at, then the market will have to figure out how to justify the assumed 90% annual rate from the last few months.
Or, it could do the same thing it did in January, May, June, and August after vapor "hope" rallies.
Stocks Are Heading Down, and QE2 Won't Change That [View article]
But I don't think that will happen. I think the Fed will announce $500 billion on 11/3 with "more to come" as needed. The market will pretend that this is what they were expecting all along, rather than the $Trillion or more that has been priced in since 9/1, and the sideways action will continue. Only when another surprise rate increase or sovereign debt problem surfaces will the market really drop.
I think we'll see 10,500 on the Dow one more time in 2010, and also probably see 11,500 before New Years. Not sure of the order though...