by Dr Invest
If I had told you that the DOW would fall 1.96% today, you would have called me a LIAR. Didn't we just get FED TWIST extended? Now we remember all those brave...uh...stupid...er... speculators who put there trust in QE-3. Here lies the remains of their decimated stocks and the hopes that they would have doubled in price by Bernanke's good will toward the investment institutions. And didn't we just hear from someone at Goldman Sachs, telling us that the market would rebound with the market ending 15% higher by the end of the year? Maybe you didn't hear that Goldman Sachs shorted the S&P 500 today, showing their lack of confidence that the market would move higher. This sudden change of investment strategy simply shows how the big investors get out....and let the small investors take the fall.
Here are some truths. Truth 1: You shouldn't be in stocks right now anyway! There is no safe harbour in stocks at this time. Repeat after me. Stocks are going down in price! Stocks are going down in price! Stocks are going down in price! Is there something you don't understand about prices going down? By the end of October, there may be buying opportunities for stocks; but for now, stocks are going down in price. Truth 2: The U.S. economy is in the dumpster. The economy is better than it was four years ago, but unemployment is still at all time highs and debt suffocating any potential for U.S. growth. (See HussmanFunds.com) (Read the latest reports and weep) Also look at Mauldin's report. http://www.mauldineconomics.com/images/uploads/pdf/mwo061812.pdf
If stocks are going down in price, bond funds are typically going to go up in price. I have chosen two, TIP and BND.
FORBES
iShares Barclays TIPS Bond Fund Experiences Big Inflow
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares Barclays TIPS Bond Fund (AMEX: TIP) where we have detected an approximate $108.5 million dollar inflow — that’s a 0.5% increase week over week in outstanding units (from 191,800,000 to 192,700,000).
Looking at the chart above, TIP’s low point in its 52 week range is $109.65 per share, with $121.43 as the 52 week high point — that compares with a last trade of $120.48. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique.
The above article, drawn from forbes.com gives you a synopsis of TIP performance. The next two or three months BOND FUNDS should show good returns. I am using the Ivy Portfolio along with seasonal charts to make timely investments. Keep true to your Ivy Portfolio trading method and don't permit people to turn your head. If the market is rebounding, you won't need any one to tell you.
WHO CARES ABOUT THE PRICE OF COPPER
As copper goes, so does the stock market. Don't ask me why, it has just always been true. Below is a chart that shows the price of copper over the past 90 days:
I am suggesting that copper prices indicate a declining stock market and as I suggested in previous blogs that the dip began back toward the middle of April. Now I realize that some of these methods are a bit simplistic. Some economist insist on making much more complicated analysis, utilizing varied charts, CPI, GNP, etc. But most of this is over analysis. Look at the price of copper and most of the time the price of stocks will follow. Traders use real time charts showing the price of copper next to the stocks they are trading to warn them of impending downturns. You too can use this little trick for your own investments.WHO CARES ABOUT THE PRICE OF GOLD
Now for my GOLDBUG friends. Today the price of gold fell $49.50. I have warned some of my friends that during a deflationary season, commodites will deflate as well. Gold is a commodity and is not exempt from the loss of value.
As with all investments, you don't want to lose 20% or 30% of your gains even if gold had grown 119% since you first purchased it. Remember rule number one in investment: Don't lose money! Especially remember rule number two: Remember rule number one!
Below is the gold chart prices for the past six months:
Unless the Euro rises in value against the U.S. dollar, gold will continue its decline. If the U.S. dollar declines in value against the Euro, we will see gold strengthen. Should gold fall below 1550, there will be a race for some investors to get out of gold.
Long-Term Outlook for Gold
As a positive note, with all the liquidity in the market inflation will be hard to control when the economy returns to life. I don't know when our economy will strengthen, but it could be two or three more years before we see economy spark to life. Yes, we will have some rebounds, but until we deal with the U.S. debt problem, real growth is not likely.
You have heard it said, You can't spend more than you earn. But with the magic of debt, governments can continue to spend until they become distrusted by people buying their BONDS. Without loans, governments can no longer continue business as usual. After DEVALUATION of a market, it is able to climb from its lows to the highs once again. People who have seemingly lost everything, get jobs, save money, buy houses, purchase cars, make investments, and the economy heats up again.
GOLD WILL CLIMB HIGHER! But as an investor, I can't enjoy the luxry of holding on to an investment that is not making money. If the direction of the price of gold moves higher, it would be a worthwhile investment.
I am not willing to hold on to an investment that has only returned a little over 1% in the past year, when my investment into TIP and BND exchange traded funds (BONDS) has returned over 12% in the past year. Let's see $100,000 invested in gold brings a return of $1,000 in the past year, versus $100,000 invested in TIP and BND brings a return of $12,000. Which was the better return? $1,000 or $12,000?
(note: the above article is for entertainment only and not to be used for investment advice.)
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