Today's Market
by Dr Invest
There is a sadness when you consider that much of what seems legitimate news reports on the condition of our U.S. economy is simply false. This falseness is a collaboration between government, wall street, the banks, and the business news media.
If none of these sources are reliable, then who can we go to? Your investment adviser would seem to be the answer, but he is part of that collaborative circle and his major goal is to capture your investment portfolio and then sell it to... well, yes, "wall street".
So, the investor is fleeced by group of perpetrators who have collaborated together to take his hard earned wealth. Although I seldom speak about politicians, today I read that Hillary Clinton had revised her promise to only raise taxes no higher than 20% on the wealthy, and now believes that 30% or more would be fair. This, she believes, would force the wealthy to spend more money in training and hiring the unemployed. The point is that the fleecing continues under the pretense that investors are becoming filthy rich from their investments.
A Plethora of Evidence
On almost every level our economy has and is failing. Regarding DEBT, our nation is ridiculously borrowing money. U.S. debt has doubled under the current president. Other countries are selling their U.S. Treasuries. (selling the debt they purchased from the U.S.) They are selling their U.S. treasuries because the dollar is at an all-time high and many of these countries need extra money. Regarding UNEMPLOYMENT, our government is claiming that we are now at a 5% rate of unemployment. This kind of technical, but if you used an older method (pre-obama) of counting the unemployed, we would have a 23% rate of unemployment. Regarding STOCK MARKET GROWTH, stock prices have risen dramatically, but with a falling participation in the market. (market volume) The stock market has never continued to climb with a falling volume. At some point, the energy dissipates and the market falls.
For Example: Imagine that only 100 people bid on IBM stock. Now there are 200 million people who are not interested in IBM stock, but these 100 buyers/bidders begin by looking at a price of $50. Two of them are willing to pay $51 while the others, who desperately want to make some money, see the price movement upward. Three others make a bid for $52. The original two make a bid for $53. Because these investors NEED TO MAKE MONEY, the price keeps climbing. There are only a few speculators who are moving the IBM stock upward. This takes us to the idea of PRICE TO EARNINGS RATIO, which is called, PE. Now PE determines how many years it will take for a stock to return value. A PE of 18, the average PE, would take 18 years. A PE of 27, which is where many stocks are valued in today's market would take 27 years to see its value returned to you.
Dr. Robert Shiller of Yale, created what was called the CAPE to measure the PE ratio. He recently warned (two months ago) that the U.S. stock market was too rich (overvalued) and the PE ratios too high.
Now I can keep going from chart to chart and from subject to subject to show how the evidence points to a stalling economy. The government declared that all businesses will now pay for their full-time employees healthcare. Business answered that declaration by only giving employees 30 hours a week so they would be considered part-time employees. The result was less income for workers. The workers were PUNISHED for the government's solution to make private enterprise pay for their healthcare.
With Obamacare came new taxes and penalties. All of the companies participating in Obamacare are now asking for substantial increases in premiums because they can't make a profit from so few people participating in Obamacare. In 2016, once Obamacare is fully implemented, the full impact of Obamacare will be felt. Obama will be out of office, but blaming the failure of Obamacare on some political outcome.
In all fairness none of this is entirely the fault of the Obama Administration. In only a few short decades, our government of both Democrats and Republicans have managed to put us into debt for many years ahead. The answer is to cut benefits and cut government agencies, instead; our government is enlarging healthcare programs, agencies, and its footprint.
James Dale Davidson has made some interesting observations. In the enclosed video, he is trying to sell his newsletter. I wouldn't buy it, but some of his points are viable. Davidson Video
Ron Paul has also made a video which an investor really needs to see. ron paul
Again, it seems to me that more people are trying to fleece investors by selling them newsletters. That is no my game. But still, if you you understand that the market could turn ugly at any moment you will be better prepared to get out of your investments that will drop 50% to 70%.
My suggestion is to stay light and be prepared to move out of the market. Stop sells are key. You can't wait too long to get out, so if you have had a long run of great returns, you could sell if you loose 10% to 12%. Some would call this a market correction, but I would rather be out of the market wishing I was in, than to be in the market wishing that I was out.
Before a real downturn, there will be a series of ups and downs. Some will interpret the initial downturn as simply a market correction. People will see it as a buying opportunity so stocks will rebound for a while. But because there will not be enough momentum/growth, the market will return to its original downturn. This is were people will recognize that a real market downturn is underway.
Do I believe in the "end of days" market collapse? No! But it sure can feel like the "end of days". So the secret is being prepared. Get your chicken off the grill... get your money out of stocks. Protect your gains.
Finally, if you haven't been fully invested in the market, don't get into the market now. This is not the right time. Wait until there is a full market downturn. This could take any where from one to two years to fully unfold once a downturn has begun. Even a mild downturn could be 30% and a serious downturn will see losses nearing 50%. So get out of the market quickly with a stop sell, stay out of the market until people seem really desperate and then begin to buy. You can buy VTI which is Vanguard's full market index and will not have to figure out which stocks to buy if you were building a portfolio.
Think about some of these ideas, but most importantly, become mentally prepared for a downturn.
(note: the above article is for entertainment purposes and in no way is to be used as investment advice.)
by Dr Invest
There is a sadness when you consider that much of what seems legitimate news reports on the condition of our U.S. economy is simply false. This falseness is a collaboration between government, wall street, the banks, and the business news media.
If none of these sources are reliable, then who can we go to? Your investment adviser would seem to be the answer, but he is part of that collaborative circle and his major goal is to capture your investment portfolio and then sell it to... well, yes, "wall street".
So, the investor is fleeced by group of perpetrators who have collaborated together to take his hard earned wealth. Although I seldom speak about politicians, today I read that Hillary Clinton had revised her promise to only raise taxes no higher than 20% on the wealthy, and now believes that 30% or more would be fair. This, she believes, would force the wealthy to spend more money in training and hiring the unemployed. The point is that the fleecing continues under the pretense that investors are becoming filthy rich from their investments.
A Plethora of Evidence
On almost every level our economy has and is failing. Regarding DEBT, our nation is ridiculously borrowing money. U.S. debt has doubled under the current president. Other countries are selling their U.S. Treasuries. (selling the debt they purchased from the U.S.) They are selling their U.S. treasuries because the dollar is at an all-time high and many of these countries need extra money. Regarding UNEMPLOYMENT, our government is claiming that we are now at a 5% rate of unemployment. This kind of technical, but if you used an older method (pre-obama) of counting the unemployed, we would have a 23% rate of unemployment. Regarding STOCK MARKET GROWTH, stock prices have risen dramatically, but with a falling participation in the market. (market volume) The stock market has never continued to climb with a falling volume. At some point, the energy dissipates and the market falls.
For Example: Imagine that only 100 people bid on IBM stock. Now there are 200 million people who are not interested in IBM stock, but these 100 buyers/bidders begin by looking at a price of $50. Two of them are willing to pay $51 while the others, who desperately want to make some money, see the price movement upward. Three others make a bid for $52. The original two make a bid for $53. Because these investors NEED TO MAKE MONEY, the price keeps climbing. There are only a few speculators who are moving the IBM stock upward. This takes us to the idea of PRICE TO EARNINGS RATIO, which is called, PE. Now PE determines how many years it will take for a stock to return value. A PE of 18, the average PE, would take 18 years. A PE of 27, which is where many stocks are valued in today's market would take 27 years to see its value returned to you.
Dr. Robert Shiller of Yale, created what was called the CAPE to measure the PE ratio. He recently warned (two months ago) that the U.S. stock market was too rich (overvalued) and the PE ratios too high.
Now I can keep going from chart to chart and from subject to subject to show how the evidence points to a stalling economy. The government declared that all businesses will now pay for their full-time employees healthcare. Business answered that declaration by only giving employees 30 hours a week so they would be considered part-time employees. The result was less income for workers. The workers were PUNISHED for the government's solution to make private enterprise pay for their healthcare.
With Obamacare came new taxes and penalties. All of the companies participating in Obamacare are now asking for substantial increases in premiums because they can't make a profit from so few people participating in Obamacare. In 2016, once Obamacare is fully implemented, the full impact of Obamacare will be felt. Obama will be out of office, but blaming the failure of Obamacare on some political outcome.
In all fairness none of this is entirely the fault of the Obama Administration. In only a few short decades, our government of both Democrats and Republicans have managed to put us into debt for many years ahead. The answer is to cut benefits and cut government agencies, instead; our government is enlarging healthcare programs, agencies, and its footprint.
James Dale Davidson has made some interesting observations. In the enclosed video, he is trying to sell his newsletter. I wouldn't buy it, but some of his points are viable. Davidson Video
Ron Paul has also made a video which an investor really needs to see. ron paul
Again, it seems to me that more people are trying to fleece investors by selling them newsletters. That is no my game. But still, if you you understand that the market could turn ugly at any moment you will be better prepared to get out of your investments that will drop 50% to 70%.
My suggestion is to stay light and be prepared to move out of the market. Stop sells are key. You can't wait too long to get out, so if you have had a long run of great returns, you could sell if you loose 10% to 12%. Some would call this a market correction, but I would rather be out of the market wishing I was in, than to be in the market wishing that I was out.
Before a real downturn, there will be a series of ups and downs. Some will interpret the initial downturn as simply a market correction. People will see it as a buying opportunity so stocks will rebound for a while. But because there will not be enough momentum/growth, the market will return to its original downturn. This is were people will recognize that a real market downturn is underway.
Do I believe in the "end of days" market collapse? No! But it sure can feel like the "end of days". So the secret is being prepared. Get your chicken off the grill... get your money out of stocks. Protect your gains.
Finally, if you haven't been fully invested in the market, don't get into the market now. This is not the right time. Wait until there is a full market downturn. This could take any where from one to two years to fully unfold once a downturn has begun. Even a mild downturn could be 30% and a serious downturn will see losses nearing 50%. So get out of the market quickly with a stop sell, stay out of the market until people seem really desperate and then begin to buy. You can buy VTI which is Vanguard's full market index and will not have to figure out which stocks to buy if you were building a portfolio.
Think about some of these ideas, but most importantly, become mentally prepared for a downturn.
(note: the above article is for entertainment purposes and in no way is to be used as investment advice.)
