Reading time: 3 pages, 1,027 words, 3 to 4 minutes.
There’s an old stock market adage, “Sell in May and go away”. Summer doldrums usually cause weakness and sideways movement in stock prices. Long term investors often wait it out while short term investors may sell and wait for the end of summer.
Lately, many analysts have been predicting a stock market crash. As usual they’re wrong although at some point there WILL BE a correction and eventually I expect another major crash. The only certainty in the our manipulated corrupt markets is volatility. The last few years have shown us that. After bottoming in March, 2009, markets staged a tremendous recovery aided by central bank. As I’ve mentioned numerous times, the stock markets are propped up by the Fed and other central banks printing vast amounts of money out of thin air to lend to their stooge banksters for speculating in the markets.
James Howard Kunstler says, “They’re driving up the stock markets for cosmetic purposes, to make it appear that an economic recovery is going on … the Fed and their auditors on Wall Street and in government, are jacking up the stock markets in the hopes of stirring up “animal spirits,” as the financial psychologists say, to put over the story that it equals a vibrant economy — which is nonsense, of course, to anyone who shoots a casual glance at the economic wreckage all around them.”
The lesson is simple: don’t fight the Fed (or other central banks). There could still be some upside and a few months’ climb to new (nominal) record levels before the inevitable correction. Look at the chart below to see the ‘Megaphone’ pattern the S&P 500 stocks have made resulting from increased volatility.
And, at some point, as volatility increases there WILL be another major stock market crash but not for a while yet. Before the crash, there will be corrections. However, you have to be ready to bail out when the market turns or else hang on for the ride of your life and DON’T sell at the bottom. After correcting and shaking out the dumb money in the near term, markets will stage another come-back and reach new record highs by the end of the year or early next. There will be corrections, but a major crash may still be a year or more in the future.
The front cover of the latest issue of Macleans magazine says “BUY”. NO, you don’t buy at the top or close to the top. When the shoeshine boy and the Main Stream Media are telling you to buy stocks; that’s the time to get ready to sell. I’ve been doing some selling into strength but I’m not ready to bail out entirely yet.
Admittedly, most stock markets are frothy but there’s still room to run. Apparently, insider selling is 9.2 where they are selling more than nine times as many of their own company’s stocks than they’re buying. Do they know something that we don’t?
Google announced that Executive Chairman Eric Schmidt will sell 3.2 million of his Google shares after he already sold 1.8 million shares last year for a total of 53% of his holdings. Does he know something that we don’t?
Bucyrus just announced they are selling their road building division to Bomag. Last year Bucyrus sold their mining division to Caterpillar. Why are they divesting themselves of assets? Do they know something that we don’t?
You’ve no doubt heard that the Pope announced his resignation. The conspiracy theorists and those who still cling to outdated prophecies fulfilled long ago will no doubt have a field day with this news. Some say the child sex abuse scandals are getting closer to the Vatican. However, the Pope is too new and hasn’t been in office long enough for this mud to stick. Some say the Vatican banking scandal is forcing him out. However, the Vatican has weathered far worse scandals and the Vatican bank is no more corrupt than most other corrupt banks. Still, every Pope for the last 600 years has died in office regardless how tired and decrepit they were at the end of their lives. The Vatican is set up to carry and cover for them in decrepitude so his official reason doesn’t wash. Does he know something that we don’t?
A new bubble is forming. It’s called UNCERTAINTY. Things are getting out of control but, we have to keep dancing while the music is playing. When it stops, no one knows until it stops. And then everyone will try to rush through the exit at once. The unprepared won’t make it.
I haven’t posted any financial commentary for months. It’s not because friendly aliens have landed and solved all our problems but because there’s little new to report. ALL the problems I’ve outlined over the past five years still exist with the exception of the U.S. housing bubble bursting and bottom bouncing. Everything I stated in my last two major posts last fall is still current. Rather than repeat myself, see Collapse Update – Autumn 2012 from last October and Massive Worldwide Downturn Alert from November.
On another note, there’s much commentary about deflation being more of a problem than inflation. That’s utter bullshit. Aside from governments’ cooking the CPI numbers which I’ve mentioned numerous times, we are seeing more cases of ‘Stealth Inflation’. Manufacturers are reducing package sizes or cheapening ingredients and sometimes they are doing both.
Horsemeat is being found in so-called ‘beef’ in Europe. Biotech ‘Franken-salmon’ is on its way to your supermarket and many Subway’s foot long sandwiches are less than 12 inches. Even high-end Maker’s Mark bourbon distilled in Kentucky is reducing its alcohol content by 3%.
The U.S. inflation graph below is almost identical in most other countries globally.
Even McDonalds has removed one slice of cheese from its burger. And, you can see for yourself when you go shopping that package sizes are getting smaller in order to avoid raising prices. This is how Stealth Inflation masks real inflation and why your money runs out before the month does.
February 12, 2013
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