Yep, when I say ‘printing money’ I mean that they are creating debt on a pyramiding scheme.
SP 500 PE around 20
SP 500 Div Yield = 1.97%
Massive sell signal. 3 to 5 years from now, it’ll be 40 to 60% lower than now.
Gold looks like a short today. Anyone with an opinion?
I think you guys are all completely wrong about deflation.
Pull up a long term chart of the dollar. What is the primary trend? For you guys to be right about deflation the dollar should be in an uptrend.
Even the 2008 crash, the biggest deflationary event of our lives and since the Great Depression was unable to change the dollar’s trajectory.
In 2003, Greenspan printed hundreds of billions to fight the tech crash and we had a massive bull market with many bubbles.
This time, Bernanke has printed trillions to fight the crash and we are going to have a massive bull market with 1 Bubble - precious metals.
There is too much debt in the country that can be serviced by income (this is the textbook definition of deflation) but the government is printing money to pay off the debts rather than default.
Printing money is the most inflationary thing in the world. Don’t make this too complex people.
[quote]whatifiwascool wrote:
I think you guys are all completely wrong about deflation.
Pull up a long term chart of the dollar. What is the primary trend? For you guys to be right about deflation the dollar should be in an uptrend.
Even the 2008 crash, the biggest deflationary event of our lives and since the Great Depression was unable to change the dollar’s trajectory.
In 2003, Greenspan printed hundreds of billions to fight the tech crash and we had a massive bull market with many bubbles.
This time, Bernanke has printed trillions to fight the crash and we are going to have a massive bull market with 1 Bubble - precious metals.
There is too much debt in the country that can be serviced by income (this is the textbook definition of deflation) but the government is printing money to pay off the debts rather than default.
Printing money is the most inflationary thing in the world. Don’t make this too complex people.[/quote]
I agree with everything you are saying, when I say deflation will be first I am thinking it won’t be longer then 4-6 months. After that I am expecting massive inflation.
[quote]whatifiwascool wrote:
I think you guys are all completely wrong about deflation.
Pull up a long term chart of the dollar. What is the primary trend? For you guys to be right about deflation the dollar should be in an uptrend.
Even the 2008 crash, the biggest deflationary event of our lives and since the Great Depression was unable to change the dollar’s trajectory.
In 2003, Greenspan printed hundreds of billions to fight the tech crash and we had a massive bull market with many bubbles.
This time, Bernanke has printed trillions to fight the crash and we are going to have a massive bull market with 1 Bubble - precious metals.
There is too much debt in the country that can be serviced by income (this is the textbook definition of deflation) but the government is printing money to pay off the debts rather than default.
Printing money is the most inflationary thing in the world. Don’t make this too complex people.[/quote]
Looks like you have it figured out. Bet your money on that theory.
Until you realize that there is a world of difference between printing money (currency inflation) and easing rates to increase money supply through fractional lending (credit inflation), we are simply going to have to agree to disagree.
Currency inflation cannot implode (deflate).
Credit inflation without a growing economy and money velocity to hold it up, can only eventually implode (deflation). I could be wrong. Wouldn’t be the first time. (Maybe the second).
Also, if you look at a three year chart of the DXY, encompassing the span of this sell off and bear market retracement, it would be much easier to make the case that the primary trend is up which the long term trend reasserting itself in late Nov., early December.
Again, the Fed bought up troubles assets from banks to free up money flow, and they lowered and kept rates at virtually zero in order to encourage borrowing/lending, which inflates credit and money supply but not currency.
NEITHER GREENSPAN NOR BERNAKE HAVE BEEN PRINTING DOLLARS AND DROPPING THEM OUT OF HELICOPTERS.
[quote]whatifiwascool wrote:
I think you guys are all completely wrong about deflation.
Pull up a long term chart of the dollar. What is the primary trend? For you guys to be right about deflation the dollar should be in an uptrend.
Even the 2008 crash, the biggest deflationary event of our lives and since the Great Depression was unable to change the dollar’s trajectory.
In 2003, Greenspan printed hundreds of billions to fight the tech crash and we had a massive bull market with many bubbles.
This time, Bernanke has printed trillions to fight the crash and we are going to have a massive bull market with 1 Bubble - precious metals.
There is too much debt in the country that can be serviced by income (this is the textbook definition of deflation) but the government is printing money to pay off the debts rather than default.
Printing money is the most inflationary thing in the world. Don’t make this too complex people.[/quote]
Inflation is on the horizon but not for a few years. 2013? 2014? 2015? It’ll get here all too soon.
Day 17
The markets came out somewhat weak this morning until the European Union gave vague reassurance that they would assist Greece in its debt. The markets used this as an excuse to rally and finished relatively strong for the day. I had said yesterday that I would watch and use the preceding day’s highs as my upper limits to step aside and reaccess.
However, as I examined the previous few days worth of charts as I was waiting for resolution, I started to see a different pattern that suggested one more upward push before a resumption of the downward movement. This coupled with a good rally in gold today that appeared to satisfy the retracement concerns that have been bothering me the last few days convinced me to maintain my short position for the time being. I have not ruled out the possibility of a little more rally, but as long as we do not surpass the highs of a week ago, I am comfortable with staying put. If it appears as though we are starting to sell off tomorrow, I will add to my positions. We have a three day weekend ahead, it is not uncommon to experience a slight upward bias.
Bottom line, I think it likely we are on the verge of another sell off. I will be looking for confirmation to more fully position myself for another down leg.
[quote]on edge wrote:
Gold looks like a short today. Anyone with an opinion?[/quote]
Edge,
For what it’s worth, yes. Looks like a great short.
THIS IS BAD.
The Chi-comms ordered the guys in charge of their trillions to pull in their horns and only buy US gov’t guaranteed debt instruments. This means that extremely intelligent people in charge of trillions (who probably get shot if they fuck up) are bailing.
http://www.marketoracle.co.uk/Article17217.html
"When the worldâ??s biggest investor turns risk-averse, that is something you take notice ofâ?¦â??
â??China orders retreat from risky assetsâ??. Ambrose Evans-Pritchard, Telegraph.co.uk, 2/10/10
Indeed! Investors and Traders should take note! Chinaâ??s Funds Managers are very savvy. The Chief Investment Officer, Mr. Zhu, was until recently head of hedge fund operations for U.S. financial giant PIMCO.
As well, China just increased bank reserve requirements resulting in a worldwide tumble in Equities Markets. The Powerful Chinese Dragon is sending a clear signal: if The West does not cut back on its borrowing and spending binge, The Dragon will push them to do it."
Day 18
Sorry, forgot to update Friday afternoon.
The market sold off at the start, and then spent the rest of the day trying to recapture its loses.
The story remains the same for me. The action is spastic, the chart movements overlapping. Overall, the charts look ugly. For what it is worth, I maintain all of my short positions. I have a really strong feeling that the coming week could get very ugly. Time will tell, but I think the market has the potential to sell off hard in the coming week.
Time will tell.
Seems like a good thread for economic advice. For awhile I wanted to invest 3k in a mutual fund over at Vanguard, is that not a smart thing to do anymore? I know that the economy is not ‘fixed’ and before this crisis happened, I was more optimistic about investing. Is investing in gold the answer now?
Granted, I wanted to invest in a mutual fund mainly for retirement, so 30+ years or so. Does that even work with gold? Does gold “grow”?
[quote]PB Andy wrote:
Seems like a good thread for economic advice. For awhile I wanted to invest 3k in a mutual fund over at Vanguard, is that not a smart thing to do anymore? I know that the economy is not ‘fixed’ and before this crisis happened, I was more optimistic about investing. Is investing in gold the answer now?
Granted, I wanted to invest in a mutual fund mainly for retirement, so 30+ years or so. Does that even work with gold? Does gold “grow”?[/quote]
Andy,
I will give you one man’s opinion.
$3000 dollars is no small some of money. It is a good start.
However, from an investment standpoint, it is not a big sum either. If this was speculative money, meaning you don’t want to loose it but would not be hurt is it happened, I would give you some suggestions. I do not get the impression this description fits you right now.
My advise, keep it in cash in a safe bank or in a large, safe home safe. The market just came off one of the biggest one year runs ever, based on predictions that have not come to pass. I do not see a repeat in the near future. Hold on to you money. Save it. Don’t touch it. There will be a time in the future to put it to work. Not now.
Good luck.
[quote]JEATON wrote:
[quote]PB Andy wrote:
Seems like a good thread for economic advice. For awhile I wanted to invest 3k in a mutual fund over at Vanguard, is that not a smart thing to do anymore? I know that the economy is not ‘fixed’ and before this crisis happened, I was more optimistic about investing. Is investing in gold the answer now?
Granted, I wanted to invest in a mutual fund mainly for retirement, so 30+ years or so. Does that even work with gold? Does gold “grow”?[/quote]
Andy,
I will give you one man’s opinion.
$3000 dollars is no small some of money. It is a good start.
However, from an investment standpoint, it is not a big sum either. If this was speculative money, meaning you don’t want to loose it but would not be hurt is it happened, I would give you some suggestions. I do not get the impression this description fits you right now.
My advise, keep it in cash in a safe bank or in a large, safe home safe. The market just came off one of the biggest one year runs ever, based on predictions that have not come to pass. I do not see a repeat in the near future. Hold on to you money. Save it. Don’t touch it. There will be a time in the future to put it to work. Not now.
Good luck.[/quote]
Could you explain ‘speculative money’ again, I didn’t quite understand from your post. The reasons for my investment is basically long-term growth, i.e. retirement. So 30+ years, get my hand in some international markets, and actually invest around $4100 instead. I was looking at my Vanguard account and I actually had $3,100 in the Money Market (which is pointless for long term growth), and $3000 in the Vanguard Total Stock Market (which has no int’l stocks). So I went ahead and put all of the money of the Total Stock Market in the Vanguard LifeStrategy Growth fund (15% int’l markets, overall it is 80% stocks/20% bonds), along with $1000 from the Money Market.
My reason for posting this is I am not looking for short-term growth, so why not just leave it in? I may not expect a big jump in growth in the next year which has happened recently, but as long as it steadily goes up (which I’m not sure will happen in the next 5 years).
Jeaton, nice thread.
Its good to see something like this without the tinfoil hat theme thats is seen so often in this forum. I’l looking forward to following it.
Commodities up, dollar down.
Day 19
Ouch!
Strong day today for stocks, oil and gold. The one good thing is that it clarified some of the confusion I was having over the last several days about the “look” of some of the charts.
I have mentioned that gold charts did not look “quite right” over the last few days and the charts of the DOW and S&P looked choppy and overlapping. Because my overall bias is slanted towards down, I therefore interpreted this action in a manner that supported my bias. This rarely works to one’s advantage. When your vision gets cloudy, it is often best to step aside and let the fog clear.
I had stops in place and was mercifully taken out of my positions today. This last “bet” lost approx 25% before I was taken out. As I never followed through will loading up on my position, I was not badly hurt. I am still comfortably up for the period since I started this thread.
I will try to go into better detail in the future, but my methodology involves interpreting fractal patterns in the charts of indexes (and sometimes individual stocks). These patterns are scalar in nature. The downside of this method is that, if not careful, you can begin interpreting from the wrong degree of scale.
Bottom line, there appears to be the potential for more upside movement so I will step aside until I get evidence the move is exhausted.
To be clear, the overall trend remains down. This means that we will not exceed our mid January highs. It is likely that we will match or exceed the February highs. I will let everyone know when it appears this move is exhausted.
[quote]PB Andy wrote:
Could you explain ‘speculative money’ again, I didn’t quite understand from your post. The reasons for my investment is basically long-term growth, i.e. retirement. So 30+ years, get my hand in some international markets, and actually invest around $4100 instead. I was looking at my Vanguard account and I actually had $3,100 in the Money Market (which is pointless for long term growth), and $3000 in the Vanguard Total Stock Market (which has no int’l stocks). So I went ahead and put all of the money of the Total Stock Market in the Vanguard LifeStrategy Growth fund (15% int’l markets, overall it is 80% stocks/20% bonds), along with $1000 from the Money Market.
My reason for posting this is I am not looking for short-term growth, so why not just leave it in? I may not expect a big jump in growth in the next year which has happened recently, but as long as it steadily goes up (which I’m not sure will happen in the next 5 years).[/quote]
Speculative money is basically money that you are willing to take greater risk with in the hope that you may gain greater than average return. Generally, speculative money should be a sum at which you could lose without adversely affecting your overall financial health. Not that you want to loose it, just that it would not wreck you.
It is good that you are interested in preparing for retirement this early in the game. Most your age are not, and they don’t quite get that by the time they are of retirement age, there will be not one else to take care of them. No Gov, no safety net.
There is one error in your thinking, in that you believe that just because you will not need the money for quite some time, any entry point will do. Remember, the last ten years has been called the lost decade. If you had began investing ten years ago in the basic S&P stocks, chances are that you would have zero gains (if not a loss) by this time. Worse, if you had begun investing two years ago, even with the last 11 month run, you could be down by 50% to 100%, depending on the stocks and funds you invested in.
I believe your first priority is preservation of the money you do have. Second priority is making it grow. Right now, I think preservation is best. I believe that there will come much better times and opportunity to put your money to work down the road.
Hope that helps.
Day 20
The markets managed to eek out a gain today, despite a strong showing from the dollar. Breadth contracted, indicating that this move may be running out of steam. I see more upward potential, but would not be surprised if the market resumed its sell off near the current levels. We are entering a fairly strong level of resistance.
After a high of around 1126 today, gold sold off to the point it is around 1100 as I write this. The DXY is holding up as well.
Bottom line, I will be looking for opportunities to reestablish my shorts over the next few days. I will buy June puts on the S&P to give myself time.
JEATON,
I think gold’s strength relative to the dollar is a warning sign that once the dollar resumes its downtrend, gold will explode. The dollar’s strength exacerbated the stock market correction. And its current strength is muting the market bounce back. However, I believe the dollar is topping right now and will be at new lows within a month.
Also, FWIW I think 1050 will hold as the low for the year, although we may backtest it before the markets lift off.
I think the best strategy is to buy and hold precious metals for the next year.
Of course, I know I will not change your mind nor will you mine, but I wish you the best of luck.
Jan 2011: Dow 14K, Gold 2K, Silver 30/oz
That being said I am in no way a permabear and believe that the lows for this secular bear market have not been reached. These asset prices are just a reflection of the excessive liquidity in the markets.
Have any advice for gold investment?