Well I was going to say stupidity. But, this post that MachineHead did I think nails a good part of it.
Where is this money going? Gold? China? Consumption? Maybe basic living expenses!
To further riff off this: America is largely a place where unhappiness is essentially the equal of treason – that’s why it’s immediately suppressed in individuals with powerful tranquilizers. This can be seen vividly in many of the rants of the high priests of CNBC who are quite explicit in their linkage of rosy economic forecasts and nationalism. So, for example, to question the viability, resiliency, etc. of the American economy is to be against America, is to hate grandma, apple pie and baseball. If you’re not upbeat and optimistic then you lack respect for America and what it’s given you (of course, through the pillage of others, but that’s another topic). I remember a few weeks back someone saying, after Peter Schiff went through the bleak, raw data, “Well, I’ll always be bullish on America.” That this was coming from some supposed luminary of the economic/financial world struck me in a crushing way and highlighted the diseased insanity of it all. We are truly unreformable. That’s why all we can really do is create the new within the shell of the old. Some houses are too far gone to renovate or remodel.
[quote=mainecooncat]
Some houses are too far gone to renovate or remodel.
[/quote]And persistently stubborn to fall.
[quote=Davos]
And the longer they go undemolished the greater of a threat they become to those inside and around them.
[quote=mainecooncat]
[quote=Davos]
And the longer they go undemolished the greater of a threat they become to those inside and around them.
[/quote]No offense to you: But we think a like!
Well, I guess Reagan did his job, huh?
It’s always “Morning In America” right? Just believe in Santa, The Baby Jesus, and Corporate America, and everything will be fine.
Stocks are up 53% in the past 6 months – the best 6-month return since 1933. Buy-and-holders have experienced a tremendous relief rally, although they’re still down on 12 months ago. As a coincident indicator, the press simply reports what people are feeling now. There’s no predictive value in it. And of course, the all-important advertisers prefer upbeat news, so there’s likely to be a positive bias.
The NYT article lists nine other cases in which stocks gained 30% or more in six months. In 8 of the 9 cases, stocks went on to achieve further gains over the succeeding 12 months. The exception was 1980, a brief bull market sandwiched between back-to-back recessions.
Also, 7 of 9 sharp 6-month stock gains were ‘blastoffs’ during the early or middle portion of a longer bull market. Besides Oct. 1980, already mentioned, the other anomalous 6-month gain occurred in April 1999. It was a blastoff from the Oct. 1998 panic … but the late-stage bull market continued for only 11 more months, to March 2000.
In conclusion, sharp blastoffs can be fakeouts. But more often than not, the powerful momentum rolls on for awhile longer, though at a reduced rate of climb.
Historically, insiders have represented ‘smart money,’ while mutual fund investors represent ‘dumb money.’ So these indicators are giving conflicting signals – insider selling says ‘sell,’ while the public’s equity fund withdrawals scream ‘buy.’
Another contrary indicator is liquid assets of equity funds. Managers tend to load up on cash during bear markets to meet redemptions. From as low as 3.7% back in 2007, equity fund cash reached 5.9% in Feb. 2009, and has since tapered off to 4.2%. This is consistent with a low point in stocks and subsequent recovery.
http://www.idc1.org/research/stats/trends/trends_03_09
Sure, there’s too much short-term bullishness. The press is returning to its accustomed cheerleader role. And insider selling has to be taken seriously. But the S&P retested the 1,000 round number earlier this month, and then rose to fresh 10-month highs. If momentum players start piling in, the market can keep climbing regardless of overvaluation and overenthusiasm.
For a nonprofit board I serve on, I have to invest the proceeds of a maturing CD in November. Last November, we bought a high-dividend stock fund, which has gained about 20% in price plus paying a 4% dividend.
This November, I am probably going to recommend a couple of REIT ETFs. They pay nearly a 5% dividend. After two years of declines, they look ready to rock. Real estate is badly messed up. But that’s why REITs are way down in price. You don’t get paid to buy ‘em after the storm clouds dissipate and the sun comes back out. Have to step out in the howling rain, clutchin’ your fistful of dollahs …
I wonder what Orwell would say if her were around today. The propoganda and manipulation are beyond belief, but people seem to swollow it. It seems as kids we believe in the Toothfairy and Santa Claus, as adults it appears these things still hold true for many, it just these guys bring economic recovery and continued luxuries that we just don’t need. As an advert used to say in the UK in an attempt to discourage people from buying pets for Christmas, “a dog is for life, not just for Christmas”. How those words seem very very true.
It makes me so frustrated that folks just won’t open their eyes and look around them!!
Don’t worry, I think you’ll have one more opportunity to buy – whether or not anyone will sell is another question! I’m supposing you’re fairly new to acquiring metals, so let me explain a little bit about the “metal” crash last year. When gold/silver/plat hit hard last year – YOU COULDN’T FIND IT! Honestly, coin brokers, metal brokers, the US mint didn’t have supply! There was nothing to buy – and if you wanted to buy it – you could buy it and preorder although you had to wait months before the orders became reality. I think we’re set for one more major correction in gold/silver - not because the conditions aren’t ripe for a major takeoff, but because the power brokers manipulating gold/silver are shorting the market in a larger way than ever before!
This is a link to commitment of traders report for gold –
http://futures.tradingcharts.com/cotcharts/GD
If you pay attention, Gold is being shorted more than ever – honestly, I’m not sure if there’s been a short done by commericals this big in my lifetime! The gold net short position by bullion banks increased by 54,089 contracts – or 5.4 million ounces of gold in ONE WEEK! And the total net short position is 270.797 contracts or 27.1 million ounces of gold!
The situation is the same with silver contracts, but I don’t have time to get into it.
The bottom line is the bullion banks are TOTALLY throwing everything they have to surpress the price of gold – and they have UNLIMITED FIAT cash at their disposal – HOWEVER, sooner or later this game will finally be broken when those holding gold contracts just expect delivery of gold!
Two scenerios and I’ll get a better read early next week that could take place. 1st – the bullion banks succeed in shorting and it sends a massive exits for gold/silver – thus we could see gold go to 900 and silver go to 14 (perhaps even lower) and it happens within a two week period. 2nd – the bullion banks realize their game is up, but control the price going up and you have a slow rise up, while they are still trying to short the market. They are not going to let gold fly with them holding so many shorts – if they did – they be out billions!
So I’m looking for my next buying opportunity – and I’ll wait to see what happens over the next 2 weeks! I think we could see a “correction” ( I’d like to say it’s not a correction but some rich people trying to save their butts! ) and it’ll give the Joe Smoes of the world more opportunities to buy real money with fake money! :-)
Hi Chris.
I had read an article of yours earlier that had mentioned the government was printing anywhere from 15 to 30 billion a month. I have been looking for a source to find this information for some time. How did you aquire it?
If we smooth the data out into a daily figure, the number is actually closer to $10-$20 billion per business day, not month.
The major proportion of this is found by adding few numbers together to construct the total POMO activity of the Federal Reserve.
The first (seen in the chart below) is the Treasury and agency POMOs expressed on a daily basis. Note that POMOs tend to happen once or maybe twice a week so this the “daily rate” is my way of smoothing that information out some so that we can better appreciate how many dollars are flowing into the markets on any given day.
The second source of POMO activity (displayed below) are the GSE MBS products that the Fed buys from the open market.
Then when we add in the other sources of Fed purchasing of various assets, sometimes the weekly/daily totals really spike up there.
If we do not smooth the data into a daily rate, we find many specific days since last March where the fed has added more than $30 billion fresh dollars into the market place.
All of this information comes from the Federal Reserve, with the Open Market Operations data coming from here: http://www.ny.frb.org/markets/omo/dmm/temp.cfm
This is my first blog posting so I am new at this. I was reading some other investment material and found this jut after I read the article of “Throwing Caution to the Wind”. It includes newspaper articles from the Wall Street Journal in 1930. The optimisim sounds very similar to taoday.
What I Discovered in a Newspaper from
September 1930
By Tom Dyson
“The economy is showing unquestionable signs of life,” says Labor Secretary Davis on September 12, 1930…
The stock market collapsed 48% in the Great Crash of 1929. But by 1930, it had found a bottom and started rallying again. This rally erased all the pessimism generated by the Great Crash and enticed investors back into the stock market again.
By April 1930, the stock market had gained 48%. By September 1930, investors were feeling the same tentative optimism we’re feeling today…
-------------------------------------------
This morning, I scanned a list of Wall Street Journal headlines from September 1930…
“We have passed the low point of the depression,” says R. Proctor, President of the New England Council, on September 13, 1930.
“Over 75% of brokerage houses now recommend buying stocks,” says a headline from September 14, 1930. “Brokers, businessmen and even the general public are more optimistic.”
Another story from the same edition reports some retailers have been “caught unawares” by an improvement in business since Labor Day. Some shoppers have had “difficulty finding goods,” added the writer.
In the September 12 edition, a banking industry journal reports a slight improvement in trade and industry over the previous month. The National Council of American Shipbuilders says U.S. shipbuilding has doubled in the past year. A cement manufacturer reports production up 5% in August over July levels. And a railroad sees bigger profits in 1931 as revenues increase and costs fall.
Here’s the thing: The stock market collapsed almost immediately after the WSJ published these optimistic headlines. Three months later, it had fallen 37%. Over the following three years, the Great Depression intensified. Unemployment jumped to 25%, thousands of banks collapsed, and world trade evaporated. By July 1923, the Dow had fallen 89% from its peak.
Old timers say investors lost more money in the rebound than they did in the initial crash of 1929.
We’re in the same situation today. First, we had a 50% crash. Then, we got a 50% bounce. The bounce has been so strong, it’s caused the country’s mood to change from deep depression to cautious optimism. President Obama made a speech on Wall Street yesterday. “The storms of the past two years are beginning to break,” he said.
It’s tempting to conclude a major collapse is coming in the stock market as we follow the path laid out by the Great Depression.
But I don’t think that’s likely.
My best guess is, we’ll get a “sandpaper” market. We use the guillotine-and-sandpaper model to analyze bear markets. The guillotine is the first stage of the bear market, right after the bubble bursts. You get a quick, dramatic collapse like we had in 2008. Then you get the sandpaper stage. Stock prices fall gradually in a narrow range. The sandpaper stage frustrates both bulls and bears as prices oscillate without any clear trend.
But that’s just my best guess. The real conclusion of this essay is: Don’t pay any attention to the newspapers, the media, or the purported “experts” when making investment decisions. These opinions have no value when it comes to forecasting the direction of the stock market or the economy. They were wrong in September 1930, and my bet is they’ll be wrong again today…