Today's Market
by Dr Invest

I haven't been writing because there is little new information to add. I am holding WMT and RTH as my stock positions. They have risen and fallen since their purchase in November, and then risen over the over the past month. At this time both are around the price I originally paid.

My gold position, IAU, has fallen over 7% since my purchase in September, regaining 2% in January. The purchase of IAU was for a window of one year with an expectation of a 6% to 8% gain.

My bond position with BND and TIP purchased in May of 2012, has risen and fallen with BND loosing and TIP gaining. Both BND and TIP, when taken together are a wash. All the above positions taken together are only down .22%. When looking at this near return to the original investment, you need to remember that some of this money has been invested nearly nine months and with positions of this quality, I would have expected to have seen a return around 6% to 8%.

The election, the fiscal cliff, the debt ceiling, the constant wrangling over political agendas have all taken a toll on investments. Bernanke's commitment to stimulate the market to the tune of $82 billion monthly through "twist" and "QE-3". This kind of government market manipulation keeps stocks climbing, without any real financial fundamentals to support the rising market.

TALKING HEADS

Almost everyone is touting how wonderful the market will be in 2013. All the voices seem to rise in hearty agreement, get your money out of your savings and buy stocks... NOW! We can ride the fed stimulus wave for a little while longer, but at some point the wave will break and then economic fundamentals will take over again.

The talking heads point out that a leading indicator of recovery are the new home mortgages. So many of these points of recovery are simply mirages. Things are not the way they appear. Click on the link and listen to this video by David Stockman...... David Stockman Video

http://finance.yahoo.com/blogs/daily-ticker/housing-bubble-2-0-david-stockman-133026817.html

I believe that David Stockman has it right! Rising bubbles, whether housing or bond, are being created by the government. At some time these bubbles will burst.

Marc Faber, defends his viewpoint that in 2013 we could see a decline in February and then rise dramatically and finally end in a dramatic collapse. I believe that you should carefully consider everything he is saying for 2013.  Listen to his video.... Marc Faber Video

Let me say, you would be wise to consider the advice of both these men. I remain fixed in my investment positions, but I am defensive at this time. Stop-sells remain on all my positions and I am prepared to sell so I can minimize my loss.

RESEARCH AND MARKET REPORTS

I encourage you to move to the sidebar and look for "Research and Market Reports". Read all the recent reports under that heading. These are totally free to you and each one, if purchased from a research firm, would cost you any where from $250 to $500 per year.

John Hussman, Howard Marks, and John Lacey are at the tops of their field with billions under their management. These voices are warning you to take care. The economic exuberance that has overtaken the present market will end in a punishing correction. Whether you stay in the market or not, you need to be psychologically prepared for a coming downturn.

PREDICTIONS

It is hard to explain our present condition simply, but imagine living on canal near the ocean. Each day the tide take water out of the canal and then returns it. The government, thinking that it would be best if the canal remained filled, builds a retaining lock that keeps the canal filled; so to you, each day the canal remains full. No longer are their predictable cycles of lower water and higher water.

You can see the problem, from your perspective the canal is always full. You will pull out your boat and fish in the canal. You will go to visit your friends, and they visit you because the canal never empties.

One day though, the retaining lock will fall into disrepair and the government will no longer be able to keep the water in the canal. The water will rush out into the ocean and those fishing, traveling, and using the canal will find their boats stranded for weeks in inconvenient locations along the canal as the government makes the necessary repairs.

If you don't think this will happen then think, NEW ORLEANS. The government knew for years that the dyke system was failing. Then one day, without warning, sudden calamity.

I am not saying these things to scare you from investing. But you need to be adequately prepared if calamity does come. What will happen when the Federal Government can no longer maintain a $82 billion dollar stimulus program?

(note: the above information is for entertainment purposes only and not to be used for investment advice.)