Today's Market
by Dr Invest
The report of a 1.8% growth in GDP simply proves everything I have been saying for months, our bull market rally is simply, BULL! There is NO REASON for elevated prices in stocks, other than liquidity pumped into the market by quantitative easing.
After I had first gotten married, I remember how I was struggling to pay my bills. Yet, a peer of mine had a large home, new furniture, new cars, a boat, the latest gadgets... however; I was certain that he earned an income that was near my own income. I would guess, at that time he was earning $20K a year, but living like he was $80K. One day, when he was in a talkative mood, he began to tell me about his financial successes. The key to this visible wealth was DEBT. He joked about "owing the banker the shirt off his back", but the enjoyment all the things was too great for him to change his debt load. A year later, with a downturn in the economy, my friend lost his job and all his THINGS.
Our nation's GDP is growing at 1.8% and expected to grow no more than 2%, yet the stock market is growing 12% to 18%? This morning the spin-masters are already sending a boat load of positive articles, reminding us that BONDS are whack, that GOLD is moot, and that STOCKS are destined for end-less gains. Even though everyone saw the volatile reaction of the market at the suggestion of a reduction in stimulus, the stock brokers are now advising them to get into the market because there is no finer time.
Your financial adviser or broker is not typically interested in your portfolio growing, he is interested in moving your funds around to get additional fees and bonuses. He is guaranteed a management fee, but there are also sales fees and transaction fees. Moving you to a "new" fund or taking on a "new" position in your portfolio is often more profitable to the financial adviser than to you.
THE KING'S CLOTHES
We have known for a long time that governments "cook the books". The way that the CPI is figured has been changed, so we don't really get a true sense of our real inflation. The way that unemployment is figured by the government doesn't truly reflect the depth of our unemployment. Can you ever remember the government under estimating the GDP? No, at the end of the year, it is always...ALWAYS... revised downward. So the present 1.8% GDP may be even lower.
If you ask anyone about inflation, they will tell you it has gone up. If you ask anyone about salary increases, they will tell you that they have gone down. Like the government, many individuals have found themselves earning less, but spending more.
Like the story of the King's Clothes, we have been told how beautiful the investment opportunities are but are in danger of exposing ourselves to public ridicule for putting our trust in those whose goal is to take advantage of us.
No one can deny the fact that stocks continue to climb, but when it is time to REDUCE LIQUIDITY in the market, there must be MONETARY DESTRUCTION. If you don't understand this term, look it up on WIKI. When a stock is overvalued, people can be influenced to pay the overvalued price, but at some point people will clearly see that the price of a stock is overvalued and sell their stock. Because they sold when there was still a demand for the stock, they made a profit. But others, beginning to see the sell of the overvalued stocks, can stay in that stock hoping for a recovery to even a higher price. (FOR EXAMPLE APPLE STOCK) When the stock goes down so much that there is PANICKED selling, then even the most positive investor is compelled to sell as well. The difference between the "high price" and the "low price" of the stock will be the monetary destruction and could amount to BILLIONS of dollars lost to monetary destruction.
As cynical as I am sounding, the government wants EVERYONE to get into stocks so this monetary destruction can take place. Yes, the government has bought BONDS and holds BONDS. Everyone now wants out of the bubble the FED created.... so they run to stocks... boom.... a sudden market downturn with investors loosing BILLIONS in stock value.... this is monetary destruction. You lose stock value and run to bonds...SOLD TO YOU BY THE GOVERNMENT. The government is now out of bonds, and you are holding those safe bonds after having lost 30% to 40% of your portfolio.
Life is good, when you can print enough money to move the markets and then destroy the money you printed by monetary destruction.
LOOK AT THE WEATHER
It is partly cloudy with thunderstorms in the forecast. The world economy is grinding to a halt. We are scheduled to have another government cut to the budget in October. In October, people will be signing up for one of the most expensive healthcare programs in the world with employers scheduled to carry one of the most burdensome financial expenses they have ever known, and 21 new fees and taxes will be implemented to cover these healthcare costs. Please think about it!
Though there seems to be some positive results in employment and corporate profits. These are hardly vibrant enough to warrant another 12% gain in the stock market.
(Note: the above information is for entertainment purposes only and not to be used as investment advice.)
by Dr InvestThe report of a 1.8% growth in GDP simply proves everything I have been saying for months, our bull market rally is simply, BULL! There is NO REASON for elevated prices in stocks, other than liquidity pumped into the market by quantitative easing.
After I had first gotten married, I remember how I was struggling to pay my bills. Yet, a peer of mine had a large home, new furniture, new cars, a boat, the latest gadgets... however; I was certain that he earned an income that was near my own income. I would guess, at that time he was earning $20K a year, but living like he was $80K. One day, when he was in a talkative mood, he began to tell me about his financial successes. The key to this visible wealth was DEBT. He joked about "owing the banker the shirt off his back", but the enjoyment all the things was too great for him to change his debt load. A year later, with a downturn in the economy, my friend lost his job and all his THINGS.
Our nation's GDP is growing at 1.8% and expected to grow no more than 2%, yet the stock market is growing 12% to 18%? This morning the spin-masters are already sending a boat load of positive articles, reminding us that BONDS are whack, that GOLD is moot, and that STOCKS are destined for end-less gains. Even though everyone saw the volatile reaction of the market at the suggestion of a reduction in stimulus, the stock brokers are now advising them to get into the market because there is no finer time.
Your financial adviser or broker is not typically interested in your portfolio growing, he is interested in moving your funds around to get additional fees and bonuses. He is guaranteed a management fee, but there are also sales fees and transaction fees. Moving you to a "new" fund or taking on a "new" position in your portfolio is often more profitable to the financial adviser than to you.
THE KING'S CLOTHES
We have known for a long time that governments "cook the books". The way that the CPI is figured has been changed, so we don't really get a true sense of our real inflation. The way that unemployment is figured by the government doesn't truly reflect the depth of our unemployment. Can you ever remember the government under estimating the GDP? No, at the end of the year, it is always...ALWAYS... revised downward. So the present 1.8% GDP may be even lower.
If you ask anyone about inflation, they will tell you it has gone up. If you ask anyone about salary increases, they will tell you that they have gone down. Like the government, many individuals have found themselves earning less, but spending more.
Like the story of the King's Clothes, we have been told how beautiful the investment opportunities are but are in danger of exposing ourselves to public ridicule for putting our trust in those whose goal is to take advantage of us.
No one can deny the fact that stocks continue to climb, but when it is time to REDUCE LIQUIDITY in the market, there must be MONETARY DESTRUCTION. If you don't understand this term, look it up on WIKI. When a stock is overvalued, people can be influenced to pay the overvalued price, but at some point people will clearly see that the price of a stock is overvalued and sell their stock. Because they sold when there was still a demand for the stock, they made a profit. But others, beginning to see the sell of the overvalued stocks, can stay in that stock hoping for a recovery to even a higher price. (FOR EXAMPLE APPLE STOCK) When the stock goes down so much that there is PANICKED selling, then even the most positive investor is compelled to sell as well. The difference between the "high price" and the "low price" of the stock will be the monetary destruction and could amount to BILLIONS of dollars lost to monetary destruction.
As cynical as I am sounding, the government wants EVERYONE to get into stocks so this monetary destruction can take place. Yes, the government has bought BONDS and holds BONDS. Everyone now wants out of the bubble the FED created.... so they run to stocks... boom.... a sudden market downturn with investors loosing BILLIONS in stock value.... this is monetary destruction. You lose stock value and run to bonds...SOLD TO YOU BY THE GOVERNMENT. The government is now out of bonds, and you are holding those safe bonds after having lost 30% to 40% of your portfolio.
Life is good, when you can print enough money to move the markets and then destroy the money you printed by monetary destruction.
LOOK AT THE WEATHER
It is partly cloudy with thunderstorms in the forecast. The world economy is grinding to a halt. We are scheduled to have another government cut to the budget in October. In October, people will be signing up for one of the most expensive healthcare programs in the world with employers scheduled to carry one of the most burdensome financial expenses they have ever known, and 21 new fees and taxes will be implemented to cover these healthcare costs. Please think about it!
Though there seems to be some positive results in employment and corporate profits. These are hardly vibrant enough to warrant another 12% gain in the stock market.
(Note: the above information is for entertainment purposes only and not to be used as investment advice.)
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