Today's Market
by Dr Invest

There are really no new surprises in the market. The breath taking fall of 2.5% is a continuation of a declining market moving to lower lows. 2015 began with excuses that weather had temporarily caused a decline in the market, then there was "oil gate" and the sudden decline in oil prices, and later other excuses were made for a declining market in 2015 such as the Chinese economy. Still, economists and analysts believed that 2015 would be the defining year in which the economy would "take off" and GDP would reach 3% with the S&P growing 10% to 12%. At this late season of 2015, most of these perma-bulls are readjusting their projections, only because to maintain them would be outright embarrassing. Let look at some of these new projections.

Goldman Sachs

After stock prices slumped in late August, the analysts at Goldman Sachs were quick to argue that we could see a rapid snap back in prices as we did in 1998. But in a new note to clients, they've changed their tone. "We have lowered both our S&P 500 earnings estimates and price targets," Goldman's David Kostin writes. "The impetus for these reductions is that our models now incorporate a slower pace of economic activity in the US and China and a lower oil price than we had been previously assuming." Kostin now sees the S&P 500 ending the year at 2,000, down from his previous target of 2,100.


Janus Capital

In a tweet on Tuesday morning, Janus Capital's Bill Gross said: "Stock market refrain from a few months ago: "Where else are you gonna put your money?" LOL ... Ever considered cash?" Put another way, Gross is laughing at people who invested in the stock market because there was nothing else to invest in. Folks who have been reading Gross' investment updates over the past year or so most likely know that Gross would prefer holding cash to being invested in the stock market — or almost anything else. Early in September, Gross' monthly missive basically said everything sucked.

Gross wrote:

Global fiscal (and monetary) policy is not now constructive nor growth enhancing, nor is it likely to be. If that be the case, then equity market capital gains and future returns are likely to be limited if not downward sloping. High quality global bond markets offer little reward relative to durational risk. Private equity and hedge related returns cannot long prosper if global growth remains anemic. Cash or better yet "near cash" such as 1-2 year corporate bonds are my best idea of appropriate risks/reward investments. The reward is not much, but as Will Rogers once said during the Great Depression – "I'm not so much concerned about the return on my money as the return of my money."
Early Tuesday, stocks were falling after getting crushed on Monday.

Merrill Lynch

The fourth quarter looks like it will be bumpy, and investors shouldn't plan on taking on extra risk in the final months of 2015, Bank of America Merrill Lynch's Christopher Wolfe said Wednesday. Three big fears are looming for the chief investment officer: a corporate earnings recession, uncertainty swirling around worldwide monetary policy and downward revisions to corporate sales and guidance for the remainder of 2015 and likely part of 2016.

RCB

Another top Wall Street bull has lowered his stock market forecast for the year. At the end of last year, Golub's forecast for the S&P 500 for 2015 was 2,325, "consistent with 12% potential upside". Of the strategists followed by Business Insider, Golub was tied for most bullish forecast. But in a note to clients on Monday, Golub lowered his forecast to 2,100, which would see the S&P 500 gain just 2% for the year. The benchmark index opened at 1,911.75 on Monday; it would need a roughly 10% rally to hit RBC's forecast.

Barbara Kolmeyer

Welcome to the worst day of the year for investors, though you wouldn’t know it by looking at stock futures this morning. Thank the portfolio window-dressers or bouncy dead cats, but the market looks set to fly. Anyway, that gloomy prognosis for the day fits nicely with the disastrous end to the quarter we’re headed for, set to finish with 8% to 9% losses for the big U.S. indexes. The quarter has delivered the biggest point declines for the Dow industrialsDJIA, +1.24% and the Nasdaq Composite COMP, +1.70% since the end of 2008, and the biggest for the S&P 500 since 2011.

Wall Street, though, is hoping to brush the quarter under the rug. A Reuters poll of 40 strategists found that most think the worst is over for stocks. (Less bullish, perhaps, is Goldman Sachs, which cut its S&P 500 target to 2,000 yesterday, though its strategist David Kostin cushioned that with a “flat-is-the-new-up” mantra.) Those strategists polled think the S&P will end up at 2,094 by the end of 2015 — a gain of 2% for the year, but 7% below where they thought it would be when asked a few months ago.

If these market magicians know anything, it’s that stocks needs a catalyst to go up. They can no longer count on the Fed, as one CIO quoted by Reuters rightly pointed out. (Note that Goldman also called for more QE.) This column discussed yesterday how that catalyst will be earnings, and companies themselves will need to put up or shut up to keep the bull from dying. A 2% gain would keep the bull market going, but not by much.

Figuring out a year-end target for the S&P 500 is clearly a guessing game. And some really aren’t buying any sort of stock-market optimism at all. Take our call of the day, which warns that Wall Street is pulling the wool over the peasant’s eyes right now.

Carl Icahn

Icahn calls for taxes to be lowered for corporations and raised for hedge fund managers. He also reiterates his previous warning that interest rates hovering close to zero are creating investment bubbles in real estate, art, corporate earnings and high-yield bonds.

"The middle-class investor has nowhere to go with their money but into the (stock) market, or even more concerning, high-yield bonds, which are very risky," Icahn said in the video, which is posted on his website CarlIcahn.com.

• Jobs Report Should Boost Fed's Plan to Hike Rates This Year
• Bank of America to announce layoffs
• HP Resorts to Layoffs to Control Costs, Boost Earnings per Share
• Chesapeake Energy lays off 740 workers companywide
• BP plans layoffs at Texas City, Texas, chemical plant -sources
• Mortgage applications drop 6.7% on rate swings

Conclusion

Economic Cycles Research Institute defines more realistically what is happening. Here is what they say: What most may not realize is that U.S. economic growth has actually been falling since early 2015. Year-over-year (yoy) growth in ECRI’s U.S. Coincident Index, a broad measure of economic activity that includes GDP, employment, income and sales, has fallen to a one-and-a-half-year low.

Yet, for months, the consensus has continued to believe in the “second-half rebound” following the “weather-related” first-quarter weakness. That narrative is finally falling apart, with the dawning realization that the reality is 180 degrees from that popular view. 

In a recent interview with The Wall Street Journal, New York Fed President Bill Dudley finally acknowledged that the "second half of the year will probably be a little bit weaker than the first half of the year." Some Wall Street houses are also starting to recognize that reality. 

After all, as we pointed out over the summer, "a service sector slowdown has already joined the manufacturing slowdown that started last fall, and so the slowdown in overall growth is likely to intensify in the coming months. As such, hopes for a 'second-half rebound' are likely to be dashed."
 
The good news is that, notwithstanding the continued slowdown, ECRI’s indexes are not yet pointing to recession.

My View

Market swings are made up of two things, data and emotion. The data tells us that there is a slow down, but we are not in a recession. Emotion, on the other hand, is heightened because we are at the end of a bear market, the losses of 2008 are still fresh on investor's minds, and you can smell the fear in investors. 

Many investors have seen QE dry up and now have to face the reality of rising interest rates and uncertainty in the market. When these sell-offs occur in a weak and tepid market, people want to take their profit. The use of Stop-sells by individual traders and the execution of trades during a market sell-off brings the brokerage houses to almost a crawl. Though we haven't entered a recession, it feels like a recession and is likely to continue that course in the months to come.

Protecting Yourself

Return to the fundamentals of investing you have learned. If you buy a security, buy it knowing how much you are willing to lose (for example 6%), if the security goes down below 6%, sell it immediately.  If the security goes up 10%, move your stop-sell to 6% below the current price. If it moves down 6%, sell it immediately and take your 4% PROFIT.  

Having hard fast rules protects you from your emotion. It is easy to say to yourself, "I know I have a big loss here, but it will come back." Some years ago, I bought into GE (general electric), when it fell, I sold half of my position, but kept GE because I was sure that it would rebound..... it didn't! By the time I sold GE, I had lost all my previous profit. Don't out guess your RULES. Live by your RULES and you won't get hurt.

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

Today's Market
by Dr Invest

What can I report? I know! Nothing has changed. What you saw in 2012 is what you see in 2015. Your saying, "O yeah, my portfolio has grown since 2012!" You just think your portfolio has grown and that is the problem.

Recently Marc Faber explained, "Your dollar doesn't buy as much as it did ten years ago! Median income in the U.S. has decreased from $58,000 annually to $52,000 annually." Faber says, "Because of QE and bond buying, the dollar has been devalued so it takes more dollars to buy the same things you bought ten years ago. The only reason the dollar appears strong is because other currencies are so weak, but when you compare the actual value of the dollar, relative to the U.S. dollar of ten years ago, it takes more dollars to purchase the same things."

We can applaud the fact that the price of oil is down and so we are rewarded at the pump. But food prices are dramatically up, the cost of insurance is dramatically up, the cost of healthcare is dramatically up, the cost of housing is dramatically up. In our area a two bed room duplex rose from $800 to now $1,100 per month. That is almost a 38% increase in rent alone, and many families work two part-time jobs because a full 40 hour a week job can no longer be acquired. Thanks to Obamacare, businesses no longer hire full-time employees so they are not forced into the government healthcare system. There is discussion about forcing employers to pay a higher minimum wage, but this will turn out badly as well. Employers will just get rid of non skilled workers and the unemployed with grow.

More good news in the strong economy we now have. Catepillar is cutting 10,0000 jobs, just like IBM, JCPenny, Sears, HP, and many other corporations. But don't forget, our strong economy will quickly help these unemployed find jobs. (If you are from another country, I am joking. Our economy is pitifully weak and the fundamentals of our economy has been sinking over the past year.)

In the S&P 500 chart below, you will see the long-term patterns going back to 1970. The "strategic number" is an algorithmic measure comprised of multiple factors which measure risk. When it is close to 100, risk is very high. When it is close to 0, risk is very low. In between, risk is about normal, and trend following can be employed. The "strategic risk range" shows the rough range that the market is likely to be in during the intermediate term.





This is a chart used by QUANTS to determine the trend of the market. The S&P is already well into a downtrend.

Experimental Monetizing

No, I've never heard of lowering interest rates below 0%, but it has already been done in Denmark; other central banks are already discussing the method and it has been discussed by our own Federal Reserve. This exactly what Peter Schiff has been saying. He claims that Yellen threatened to raise interest rates to make it appear that the economy was stronger than it really was, all the time knowing that she would remain at the 0% interest rate. Now there are suggestions to implement negative interest rates just in case there is a truly horrific recession.

Today, Yellen said that her intent was to raise interest rates this year, but would be ready if the market turned down.

Conclusion

As I began, nothing has changed. The economy remains weak and declining. This typically results in a continued downtrend. Expect six months before we begin to see unemployment returning and the admission that we are in a recession, but for now we should see lower lows as the market slips further into a recession.

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

Today's Market
by Dr Invest

There is nothing predictable in the stock market because the game is rigged. The market went into a recession in 2012. Copper declined, while stocks climbed. No longer was copper correlated to the stock market, and was surest sign that the fundamentals of the market were declining. There was a Head and Shoulders Pattern in the S&P 500, but rather than a decline, the QE by Bernanke kept stocks rising. This is what we would later learn was called the FED's WEALTH EFFECT. It was as if the economy was on LIFE SUPPORT. The FED was reassuring the investor that they would stand behind the stock market guaranteeing future gains and job growth.

After seven years of government stimulus, studies have shown that the only thing the government has successfully done was to go deeper into debt and overvalue stocks. This is a course they may well continue, considering that to remove life support from the economy would surely return it to a down trend. The idea of ESCAPE VELOCITY has been bantered around in the study of economics and both the FED and OBAMA has proclaimed that our economy is STRONGLY RESPONDING to the interventions of the FED.

 It is certain that in 2015 our economy has deteriorated. The FED and WALL STREET have said the deterioration was due to weather and later in 2015 proclaimed that the deterioration was due to China, but economic indicators seem to point to continued deterioration through out 2015. Now the question remains whether the FED will raise the interest rate 1/4 % or continue the current trend of 0% interest. We will know by Thursday.

Below is a chart showing the S&P500. Marked in red is the trend of the market. You will see a technical indicator showing what a BEARISH PENNANT looks like. When comparing that example with the actual chart, it looks identical. The expectation is that a down trend could occur at any moment.  

I really don't need to say more. Protect your investment. Expect that at any moment the economy could deteriorate and enter a steep decline. The technical signs don't typically lie, but who knows what further things the FED might do to stave off an almost certain decline.


Note:The above article is for entertainment purposes and not to be used in any way as financial advice.

Today's Market
by Dr Invest

Ouch! Ouch! Ouch! say's Wile Coyote. Known for his scheming which always results in the ultimate fail, he races to the next opportunity to fail once again.  This circus of comedy is unfolding right now in our stock market. Here is some of the genius advice being offered by wall street and the news media:

Don't panic... uh, don't panic.... remember that you are a long-term investor. Just stay where you are. The Federal Reserve has been able to establish stable growth after spending FOUR TRILLION DOLLARS and you can trust that they will spend four trillion more to insure that your investment is safe. (This is Wile Coyote kind of thinking!)

Here are some actual quotes:

Still, despite the grim scene across global equity markets, many market participants see opportunities for those willing to ride out the storm.

Peter Kenny, chief market strategist at Clearpool Group, agreed as well, saying in a letter to clients Monday the he remains "positive" on U.S. equities overall.

El-Erian echoed that sentiment, noting, "this sharp downturn will eventually create interesting opportunities for investors. (Another Wile Coyote misquote by the news media to make the sell-off seem insignificant.)

When El-Erian was asked about the falling market today he said: "the selloff will continue until one of two things happen: emerging markets put in place a policy circuit breaker or prices fall low enough to bring buyers back. How low? Low enough means a lot lower than here because they've been inflated well beyond fundamentals by central bank policies, so in order to bring people back in you've got to overshoot the fundamentals on the down side to induce people back in. We are still well above what would be warranted by fundamentals. There has been this enormous faith in central banks, and that faith in central banks means we have borrowed returns and growth from the future, hoping that central banks will be able to hand off to higher growth. That has not happened."

What I am Trying to Prove

The news media and wall street brokers are telling you what you want to hear. They are slicing and dicing the information and providing the private investors with pieces of information which would make it appear that great investment opportunities are ahead. It is true that great investment opportunities are ahead and that a downturn will create interesting investment opportunities, but that is after your portfolio has lost 50%.

Today is not a Buying Opportunity

Traditionally, we see a bounce after a market sell-off, but there is nothing "traditional" about the current stock market. As I have said previously, the market has been an artificial market since 2012 when Quantitative Easing began. What seems as business as usual is actually underpinned by the Federal Reserve. The four trillion in stimulus simply makes it appear that our economy is prospering. The sad part is that everyone knows that the economy is weak, but continue to sell investments to private investors, knowing that private investors are likely to experience significant losses. 

Brett Arends writes:

Don’t be surprised if stock markets stabilize or bounce back in the next couple of days. Markets are due at least a short-term rally after last week’s dramatic plunge. This usually happens after a sell-off, no matter what the next big move is going to be. It doesn’t mean anything.

But anyone who automatically assumes this is another easy “buying opportunity” is talking nonsense.

For the past couple of years, Wall Street’s perma-bulls have had it their way. They’ve been gloating openly as stocks went up and up and up, seemingly without pause.

It got to the point that those warning about valuations and danger signs had been mocked into silence — or were simply ignored.

Not now.

I don’t mean to be alarmist or to induce panic, but someone needs to tell the public that there is a plausible scenario in which the U.S. stock market now collapses by another 70% until the Dow Jones Industrial Average falls to about 5,000. The index tumbled more than 3% to 16,460 on Friday and over 1,000 points in early trading Monday.

Dow 5,000? Really?

For 30 years, stock prices have been increasingly boosted by financial factors: collapsing interest rates and Federal Reserve manipulation, culminating most recently in ‘quantitative easing.’

I’m not predicting that will happen, but contrary to what the bulls tell you, it cannot be completely ruled out. And even if that ranks as an outlier and a worst-case scenario, there are other, more likely scenarios where the Dow falls to somewhere between 10,000 and 12,000.

In other words, although this might be a buying opportunity, a serious reading of history suggests this sell-off might also be the beginning.

Let me say on the record that I am not joining the perma-bears or extreme doom-mongers. I am simply pointing out that the perma-bulls have taken their own arguments way too far. The stock market is not doomed to collapse to oblivion, as some hysterics keep claiming. But it is not certain to keep going up by 10% a year, either. All those claiming that every sell-off is a buying opportunity, and that stocks “always outperform,” are lying to you.

A true understanding of stock market history shows that Wall Street in the past has moved in long, long swings upwards and downwards, often taking years or even a generation or two. There is a great deal of evidence suggesting that the upward move that began in 1982 is one of them — and that the downward move that first began in 2000 has not ended.Read: Meet the market timer who said things would get ‘ugly’

As stock market historian Russell Napier points out in his book “Anatomy of the Bear,” on five occasions in the past 100 years — in 1921, 1932, 1949, 1974 and 1982 — those big downward moves have not ended until share valuations have fallen to just 30% of the replacement cost of company assets. That’s using a powerful, if little-known, economic metric known as Tobin’s q.

And, to cut to the chase, if Wall Street stocks followed the same path today, that would take the Dow down to about 5,000, and the S&P 500 Index all the way down to around 600. (The S&P 500 slumped more than 3% to 1,971 on Friday, extending the drop as much as 5.3% on Monday.)

Yikes.

The “q” is a valuation that they don’t even mention in the training manuals for the official “financial planner” and financial-analyst exams. Your money manager has probably never heard of it. Or, if he has, he probably ranks it with astrology and the mystic rantings of Nostradamus.

But the “q” happens to have by far the most successful long-term track record of any stock market indicator.

It’s been better than the price-to-earnings ratio or quarterly earnings forecasts or economic growth rates or long-term interest rates or Federal Reserve minutes.

Independent analysts — such as professor Stephen Wright at London University and Andrew Smithers at Smithers & Co., a financial consultancy in London — have tracked it back over 100 years.

And in the past there has been no better guide for the long-term investor. It’s been even better than the cyclically adjusted price-to-earnings measure, also known as the “Shiller PE” after Yale finance professor Robert Shiller (which also, incidentally, suggests U.S. stocks could plunge a long way from here).

The “q” looks at the net asset values of public companies and adjusts them for inflation. It makes some intuitive sense. Why would Widget Inc. be valued at $1 billion on the stock market if you could start the company from scratch for a lot less?

Right now, according to data from the U.S. Federal Reserve, the reading on the “q” is about 100%. (It was 106% at the last reading, on March 1, but the S&P 500 has fallen about 10% since then.)

Since World War II, the average “q” reading has been about 70%. So if Wall Street tumbled just to its modern average valuation, that would take the Dow Jones Industrial Average down to about 12,000.See: When the stock market last crashed, these sectors fared best

If we just look at the period 1949 to 1994 — in other words, before the gigantic, off-the-charts boom of the late 1990s — the historic average “q” reading for stocks was 57%. If the market falls to those levels, that would take the Dow to about 9,500.

And if the market fell to its historic bear market lows, namely 30% or so, that would mean a Dow of about 5,000.

Why might such a scenario happen? It’s not just about China, or Greece, or slowing earnings, or the “death cross” on Apple’s stock. It would be because, for the past 30 years, Wall Street stock prices have been increasingly boosted by financial factors: collapsing interest rates and Federal Reserve manipulation, culminating most recently in “quantitative easing.” But at some point, that game has to come to an end. When it does, it is possible — not certain, but possible — that valuation metrics could unwind all the way back down again.

Past performance, as they say on Wall Street, is no guarantee of future results. And that means there is absolutely no guarantee that share prices in the future will follow a similar path to the one seen in 1921, 1932, 1949, 1974 or 1982. I would consider that to be very much the outer range of possibilities.

The real reason to be worried right now isn’t that these scenarios are guaranteed or even likely. It’s that 99% of the people managing America’s money, probably including yours, assume that they are completely impossible. And no, they aren’t. Have you factored that into your plans?

Closing Thoughts

I would expect a head and shoulders signal to develop, but this is not always the case. I am thinking that a regular pattern of entry into a recession might be skewed by the Quantitative Easing by the Federal Reserve. But after careful examination of the varied chart patterns, I can't honestly recognize a pattern that fits. I don't know what I am looking at, and that makes me very uneasy. 

I don't know that this is the BIG ONE or the collapse of the economy as we know it. But a significant downtrend has developed. I think we will find a new bottom where consolidation will start again, but could continue to lower lows. If you  are not invested in the market, don't start investing now. Wait for a month or two and see where the market is at that time.

(Note: the above information is for entertainment purposes only and is not to be used in anyway as investment advice.)

Today's Market
by Dr Invest

A quick look at bloomberg.com leads one to believe that the economy has never been better. The FED is projecting a rousing and robust economic future, and the bevy of financial advisers and analysts are firmly committed to investing in a stock market that they claim is undervalued. One analyst reminded the viewers that you can never trust PE as a measurement of the value of a stock. Another analyst assured the viewers that BONDS would not move lower and would remain a great buy as deflation kept the price of oil low and no major changes in the interest rate would occur.

STAYING OUT OF THE MARKET

I asked a few friends about their view and whether now was a good time for them to invest. The unanimous response was "I'm staying out of the market for now!"  This is no surprise because in
spite of stock prices moving higher and higher, participation in the market is moving lower and lower.

This chart demonstrates that there is a declining VOLUME with rising PRICES in the S&P 500. Simply said, "Fewer people are participating in the stock market even though there are rising prices". This is because people generally are not fooled by the hype and are unwilling to participate in higher risks for financial losses. Those in the market are enjoying some great returns, but will suffer tremendous losses when a down turn finally hits.

INSTITUTIONAL INVESTORS IN REAL ESTATE

Calls that unemployment is at an all-time low and that our economy is finally responding in a robust way to the brilliant actions of the FED has created the belief that things are returning to normal. Black Rock, after the collapse of the housing bubble, began to purchase distressed properties across the U.S. As the price of housing increases, Black Rock will, along with other institutional companies, begin to divest their selves of this real estate.

The problem is that their is a "NEW NORMAL". For most people, their one and only real investment has been their home; now, retiring and needing income, there is a flood of real estate coming onto the market. Individuals and institutional investors will be seeking to sell their properties. When you have too many sellers, the price always goes down.

I live in the Austin, Texas area. My tax evaluation on a property has increased by 44% over the past two years. That is a rise of 44% in the increase of property taxes as well. Currently, there just isn't enough housing in our area, even though builders continue to build as fast as they can. But as more seniors begin to sell their homes, the panic to sell will drive the prices lower for housing in our area.



The above chart shows the peak of BOOMER YEARS being from 1958 until 1962. This means the largest number of seniors will be potentially selling their homes and down sizing over the next ten years. Expectations is a deflation in the real estate market.

THE TRUTH ABOUT DEBT

One of my favorite economist is Dr Lacy Hunt in Austin, Texas. His credentials go on and on, including his time spent on the Federal Reserve board. He knows the angles, but has begun to share just a bit of his perspective. Take a moment to listen on YouTube. Click Here for Dr Lacy Hunt

The Federal Reserve and our politicians have put us into a place that is becoming harder to get out of. Continued national debt and private debt has pushed us into a Japan like scenario at least and a Greece like scenario at worst. We can boast of the strength of the dollar, but only because all the other currencies are doing so poorly. In the next ten years, the interest in our U.S. debt alone will push us near bankruptcy. Even worse, to sustain current levels of spending growth would more than saturate our capacity to pay for all the benefits. Our average GDP since 1776 has been 3.8 and over the past decade we have averaged 1.9 GDP. Even that average of 1.9 GDP has been declining over the past two years.

WHAT TO DO

We will continue to see a flat to declining economy. There is no lift-off in the economy, only a continued lift-off wish used to get investors into a declining market. As hard as it might seem to stay light in stocks, keeping a larger cash position is a better choice at this time. After a market decline, then you can consider the stock position.

Wait for the 15%, 30%, even 50% fall in the market. Then you can re-enter a stock position. Once a recession begins, expect about a year or two in the decline. Most of all, use good judgment. In an era of experimental economics by the FED there are any number of poor outcomes.

(Note: the above information is for entertainment purposes only and should not be used in anyway to make financial decisions.)

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.)

Today's Market
by Dr Invest

In my last article, I alluded to consumer spending being down. This is because many corporations are only offering part-time jobs, which continue to be low-pay and circumvent the Obamacare ACA regulations. In the U.S. full-time employees must have their medical insurance paid by the corporation. (I know I'm being simplistic here, but there's not enough space to discuss ACA.) No one would argue that workers are being paid less, that inflation has been rising, that hidden taxes, fees, and medical insurance forced upon the U.S. populace has left families with less to spend at restaurants and stores. So consumer spending is down, affecting GDP and pulling down on economic recovery. 

Brian Louis recently wrote:

Empty stores from retailers that went out of business years ago -- such as Borders Group Inc., which had big floor plans that are hard to fill -- are dotting shopping centers across the country at a time the rest of the commercial real estate market has rebounded. They’re now going to be joined by thousands of additional stores that will soon be vacant as retailers such as RadioShack Corp. file for bankruptcy and department-store operators including J.C. Penney Co. and Macy’s Inc. cut locations to save money.

Vacancies at U.S. regional malls rose to 8 percent in the fourth quarter from 7.9 percent a year earlier, partly because of Sears Holdings Corp. store closures, according to Reis Inc. The real estate recovery for neighborhood and community shopping centers has “remained at a snail’s pace,” the New York-based research firm said in January.

Retailers and restaurateurs said last year they planned to close 5,483 locations, more than double the 2,592 in 2013, which was a record low, according to a report by the International Council of Shopping Centers and PNC Financial Services Group Inc. Last year’s total was the highest since 2010, according to the study.

Since then, retailers including apparel chains Wet Seal Inc. and Cache Inc. have filed for bankruptcy. Fort Worth, Texas-based RadioShack, with about 4,000 locations, sought protection from creditors on Feb. 5.

More troublesome for landlords than the relatively small Wet Seal and RadioShack locations are the spaces being abandoned by J.C. Penney and Macy’s. Replacement tenants will be difficult to find for those stores, with their large footprints. Macy’s Inc., based in Cincinnati, said in January that it will cut 14 of its approximately 790 Macy’s store locations within a few months. Plano, Texas-based J.C. Penney said it would close 40 stores around the U.S. this year.
Today's headline that unemployment has never been lower is admirable, but says little about the real condition of our economy. We may well see a dramatic recovery from yesterday's dramatic losses in the market, but the underlying economic sickness remains. Since 2012, when stimulus and bond buying began, our economy has been on life support. It is only a matter of time before economic conditions slip lower and a dreaded recession wipes away trillions in stock gains and the dreams of financial security.

(note: the above article is for entertainment purposes only and not to be used in anyway as financial advice.)