February 22, 2013 at 9:35 pm #17639
Look at this chart of S&P and Dow. Overzealous investors creating booms three times in last 15 years with resulting crashes. Both the Dow and S&P are now at just about the peak of the previous two crashes. Will Fed printing sustain the current levels, or as Bill has suggested, may cause increasing frequency of boom/crash cycles.
My warning bells are going off.
https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1361568472571&chddm=1142&chls=IntervalBasedLine&cmpto=INDEXSP:.INX&cmptdms=0&q=INDEXDJX:.DJI&ntsp=0&ei=4uInUdHcEJTUlgPaUAAugust 21, 2013 at 11:49 am #27076
Reply from fellow Bonner & Partners member:
In dick stoken’s Strategic Investment Timing he gives a way to get in and out of markets at major turning points. (Highly recommended book.) during Deflationary times (as now) it only takes a 15 month high in both short and long rates to torpedo the market. this occurred in July 2013.
Using his methods I was able to sidestep ALL the tops from Sept 1987 until now.
Would love to know if his rules work the same way in foreign markets. Incidentally he has different rules for Inflationary times and how to tell when to change plus a lot more–on commodities and gold. not the easiest to read but definitely worth the effort.August 21, 2013 at 6:05 pm #27077
For what my opinion is worth: I do believe that it is prudent to try to time the market at these major turning points – to pay attention to one’s warning bells – at least take some money off the table in what you know are your weakest stocks, so that you can sleep at night. If QE continues and increases as many believe, then you will still have an oar in the water. But as Bill has pointed out, QE is a strange/unreliable way to gauge the strength of the market.
In the same vein as a market crash and/or timing the market here is another potential “crash” that would be about as alarming as anything one can think of, one that an investor can do something about to add a layer of protection in these very uncertain times. The MF Global collapse highlights the lack of integrity that exists in within the financial system – the lack of trust – the doubt that anyone can properly evaluate the soundness of these institutions, the danger of “bail-ins” a` la Cypress; the knowledge that laws are in place to allow such appropriation of one’s private money. The further knowledge that you are a creditor to your bank, that your money is just not there because of the fractional banking system; and that your shares are registered in their street name, which are used by said bank as collateral for their trades.
Rob has suggested we spread money into several banks and that is good practice but will not protect you from an MF Global type collapse – a “loss” of your funds, to be polite – which would involve years of legal entanglement. SIPC insurance would be hopelessly inadequate in the event of a major collapse.
In the old days people used to own stock certificates which were an ironclad claim to your shares. I have come across suggestions that we need to return to such a system in the event of a brokerage bankruptcy, as inconvenient as it may be.
Direct Registration is the second method, whereby your shares are digitally transferred away from your broker and “registered” in your name on the books of the transfer agent and most corporate messages will come from the transfer agent or directly from the company. This does not apply to ETF funds or mutual funds. Such direct registration will mean you can rest that your shares cannot be stolen. I believe this can be done in IRA’s. The broker will not be happy. Do any members have any experience with this?August 28, 2013 at 4:37 pm #18089
Timing tops is tricky. I thought 2000 was the top, and that 2008/9 would be a weak rally.
I think Rita makes very good points, that the market is rigged with QE, that the financial system is still very fragile in spite of the happy propaganda. If anything happens to either, the consequences to investors could be very serious as more wealth is transferred to insiders. All we know for now is that the Fed is doing all it can to pump up the banks and that they will issue enough money to buy all the housing, all the stocks and all the bonds, if necessary. Reserve currency allows great purchasing power and great gifts. It suits the insider banks and the biggest debtor, the US government, but not anyone who is trying to create real wealth. The public is largely unaware of what is going on.
Imagine what will happen if the market declines and the public then demands cash from mutual funds which are 90% “invested” in the market (by mandate). They will have to sell into a feedback loop of declining prices. It could get ugly really quickly. Chris reminds us daily of the weak underlying reality.
I would like to add that I have noticed that credit seems to flow from the developed world to the “emerging” world. While this is going on there is a supportive feedback loop that encourages talk about de-coupling. However, now that the credit is declining, the developed world is spending less, so money flows back to the center. The “submerging” markets no longer talk about de-coupling and there is a feedback loop which shows the situation we are seeing now where the peripheral markets are declining… in spite of all the money pumping and bravado actions of the Fed. Eventually the “emerging” markets will probably rise faster than the developed world, but I don’t think that will happen in the next five years.
I think that commodities will decline with the decline of the US and European markets. Rick Rule pointed out the fabulous newly found deposits of copper, gold and platinum to our group. The share prices look like a bargain and it is so tempting to buy, as it is with Rob’s recommendations in Russia and Asia (maybe even Choada will shine again). I especially like the platinum prospect as many years ago I worked with the chief geologist near that area and know what is in many of the boreholes. There is a lot of metal there… but if the price of Pt drops, as I think it will, the political problems will be severe in Africa. Cleaning up dirty smoke stacks and stinky cars with platinum will be low on the list of priorities for the Chinese leaders who will be interested only in holding onto power. Communist countries are notorious for environmental pollution. A slowing economy will only make conditions worse.
Bill’s crash alert flag is flapping in the advance winds. This may be pointing to a top. It looks like it to me.
Does anyone think money/savings is safe in the stock market? How about in any bank, or brokerage house? Will Federal insurance be able to protect our savings/investments in a “market event”? If there is a collapse, does spreading the risk over several stocks help? In a banking melt down will spreading the assets around different banks help?
Bearded Ben thinks he is saving all these institutions and that he will save us all, but history tells us he is being very, very naughty and that there may be bad consequences. Unfortunately, I think they will fall on us and not on Ben.
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