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This summer, investors are taking their ball and going home.
They’re not just selling stocks. They’re not just selling bonds. They’re selling everything … for the first time since the market disaster of 2008.
That’s the damning conclusion of research provided by Credit Suisse, as chronicled in this Bloomberg story. The firm estimates everyday American investors yanked $6.5 billion from stock funds in July, as well as $8.4 billion from bond funds. Then they yanked another $1.6 billion and $8.1 billion, respectively, in early August.
This is NOT ordinary behavior. Typically, investors will sell stocks in times of turmoil and move to bonds for safety. Or they’ll sell bonds when inflation and growth is picking up, and shift money to stocks to generate greater profits.
But in 2008, disgust with Wall Street and the capital markets in general grew to such a level that investors dumped everything. Now, in the wake of increasingly turbulent markets from New York to Shanghai and everywhere in between, they’re doing it again.
Separate research from Bank of America Merrill Lynch suggests a stunning $19 billion was yanked from equity funds on Tuesday alone That’s the most in any single day since late 2007.
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| Investors have yanked billions from stock and bond funds in the past few months. |
You can look at this data in one of two ways. As a short-term, contrarian timing indicator, you can say the extreme investor panic may mark a temporary low. And sure enough, markets bounced sharply on Wednesday and Thursday. I anticipated something like that, taking large profits on inverse ETFs and put options in my trading services on Monday.
But as a longer-term indicator, I think these figures are troublesome. They dovetail nicely with the other fundamental and technical signals I’ve been talking about all summer, the ones that suggest we’ve entered an entirely new market environment.
Gone are the low/no-volatility, monetary morphine-driven “autopilot markets” we’ve had for the last 6 1/2years. Now, central bankers are losing the tenuous control they had of investor psychology and economics. That means many investors will be left on their own, with only lousy, conventional Wall Street “wisdom” to lead them astray.
You won’t be one of them though. You have Money and Markets to give you unbiased, timely, generalized advice. I also have my much more detailed Safe Money Report with specific “buy” and “sell” recommendations and much more detailed guidance.
| “But as a longer-term indicator, I think these figures are troublesome.” |
Unlike most of Wall Street, by the way, I wasn’t just sitting on my keister this summer and hoping things would magically get better in Safe Money. As things started coming unglued a few months ago, I was actively selling down exposure and raising cash — BEFORE markets went to heck in a hand basket.
Bottom line: It is a new market and a new paradigm. And while most of Wall Street hasn’t gotten wise to that yet, I will do absolutely everything in my power to make sure you stay ahead of the game!
In the meantime, let me know what you think about these outflows. Are you one of the American investors who is dumping stocks and bonds, and if so, why? What does that say about where markets are headed this fall and beyond? Let me hear from you over at the Money and Markets website.
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Is the market turmoil we’re seeing the inevitable result of massive debts coming due? The consequence of bad policy over the past few years? And what should you do about it as an investor? Those were the topics you were discussing over at the website.
Reader Mike S. said the lack of proper banking regulation is setting the stage for more market turmoil, offering this view: “Thank You for pointing out how high the margin levels are in our banks, as they are also trading with our savings deposits. Back before 1999 when the geniuses removed Glass-Steagall, our savings were safe as there were two kinds of banks: Saving Banks and Investment or Commercial Banks.
“Now the runaway bankers are making bets not only with their funds, but with ours. This will not end well, unless both the Democratic voters and the Republican voters start calling their Congressmen and women and demand the reinstatement of Glass-Steagall. Until that happens, a repeat of 1929 and 2007 is right around the corner, in my opinion.”
Reader C.W. said post-recession policies should have been better calibrated in 2008-2009, and if they had, we’d have a different economy today. His take:
“Keynes did not fail. Politicians failed. Applied correctly, Keynes works. As a previous submitter said, ‘Where would we be if the stimulus had been given to the populace? Student debt should have been paid off in full, so household formation could continue and all mortgages should have been reset to 3.5%, 30-yr fixed.
“Those two moves would have reset the U.S. for growth and allowed the free market to take care of the rest. But so many right wingers hate Obama that no logical approach like that would have made it.”
Speaking of debt, Reader Stu said: “Pretty scary stuff about the amount of margin debt out there. Not to be forgotten is the excessive amount of student debt, the huge auto loan debt bubble, stupendous credit card debt, and the indebtedness list goes on and on.
“Oh, and lest we forget the elephant in the room, the government’s U.S. $18.5 trillion debt, and of course those hundreds of trillions of unfunded liabilities (social security, etc.).”
So what should you do about it? Look for advice away from Wall Street, according to Reader Didi. She said:
“If you watch CNBC, every fund manager and their mother can’t stop saying: ‘Invest for the long term’ — Probably so that the market doesn’t bust their leveraged trades.”
And Reader Fred151 said we should all be prepared for more turmoil in the months ahead. His opinion:
“The rebound of the past two days is just a temporary reprieve. Certainly within the next few days, this market will be going back down in a very vicious manner.
“This bear market is ready to rock and roll. And unlike 2008 when the federal government was in fair shape and able to help, this time, it is going to be horrible. Obama has put us into so much debt that there will be no help for those on the margins.”
I appreciate all the feedback. Personally, I believe our problems stem from a combination of lousy regulatory policy, too much debt with too little income to support it, misguided stimulus, and wretched monetary policy. Many of the solutions we’ve been offered – like almost a decade of zero interest rates and QE – haven’t worked to turbocharge the economy, yet we keep getting more of the same from the “experts.”
But the real world and the lackluster global economy seems to be intruding on the fantasyland markets now. That means we’re in for much more volatility and tumult over the next couple of years than we’ve experienced over the last several.
More thoughts on these topics or others? Then don’t let them fester; share them at the website using this link.
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Quit your whining and get going already. That’s the message from international officials to the Federal Reserve, according to the Wall Street Journal. Several are advising the Fed to just go ahead and start hiking rates at its September 16-17 meeting rather than keep kicking the can down the road.
Mining and materials stocks have been getting crushed in the past year by the global economic slowdown. But legendary financier Carl Icahn apparently thinks Freeport-McMoRan (FCX) can turn things around with a little help. He revealed that he took an 8.5% stake in the copper, gold, and energy producer, and will pressure the company on cost, production, and pay issues.
Desperate to escape political and economic turmoil at home, waves of migrants are trying to gain access to Europe by air, sea, and land. Politicians are struggling with the migrant crisis and in the meantime, an increasing number of immigrants are winding up dead.
The latest tragedy struck overnight when 71 migrant bodies were found in an abandoned truck in Austria. Police believe Bulgarian smugglers may be responsible.
So what do you think about the latest move by Carl Icahn? Can he right the ship at FCX? How about the Fed meeting next month – should they raise rates or not, and why? Any other stories you want to comment on? Then please do so over at the website.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
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Migrant problem: Seems like it is easier to run than fix the problems at home. Yeah I know a lot of people die or get hurt. Any good size phone book will have about as many names as people injured or hurt fixing our problems. Depends on what your home is worth to you. One of my great uncles lost his lower left arm to a misfired cannon, or so the story goes to explain the sewn back sleeve, during the Revolutionary war, two died during the Civil War, one on each side, and my father lived with an injured right hand,but apparently it was football injury during basic training in 1942 that didn’t get caught until he mustered out.
I’m sitting here watching candidates saying some of the most ridiculous things about immigration possible. A fence, ludicrous. Kick peoples doors in, arrest them, completely impossible and UnAmerican. We and Europe have the same problem and could fix it the same way. Turn off the magnet! If you or I lived in one of these Third World hellholes I bet America or France would look pretty awesome. A job, free housing, free food, free medical care, free schools, and some cash to send back home, and vote yourself a raise. What a deal. Of course they come here by the millions. Anything we do is going to look mean but if they knew all they were going to get here was a sandwich, coke, and a bus ticket back home they would never come in the first place. If one of us immigrated to Mexico illegally what do you think would happen to us? Legal immigration is nothing but good for us, the current invasion is killing us. Jim
Over in Australia they took a tough line and stopped the boats. Nothing wrong with planned immigration, but not by motivating people smugglers. We have to get tougher, to control our borders, otherwise there’s no control and we end up like Germany who are expecting 500,000 illegal immigrants this year.
Isn’t it amazing how these politicians can’t see their policy is an invitation to immigrants both here in the US and in Europe.
Jim,
Both Truman and Eisenhower brought mass deportations and they worked…..That said, we still may have to do a wall and huge deportation camps in the desert….
So true and why is this so difficult to understand and implement?
Yes, and FDR rounded up a few himself ( Japanese ). You may be right in thinking this is necessary but I have to wonder if current public opinion would allow such a thing under any circumstances. I suspect we are paralyzed on the problem of the millions of undocumented already here because it is a moral dilemma that would vex Solomon. I really don’t have a humane solution for that. Jim
Nobody seems to have fingered disastrous Federal programs like Obamacare and rampant, unsupervised fraud in Social Security Disability and Medicare programs. Food stamps should be short term and Welfare-to-Work reforms are needed. Instead of “Come get your entitlement goodies, ” American ingenuity and production needs to rise. Even Rwanda is emphasizing entrepreneurship instead of hand outs. College debts need to be paid by those that incurred them. Let’s get back to personal responsibility.
do not forget the 45[?] separate bureaucratic welfare programs Prez Johnson started besides Social security !
Why not just 1 bureaucratic agency to run them all to prevent fraud ?
The comming “market turmult” could be, and probably will be, to the up side!
Hi Tommr,
Maybe the following link would disagree…
It could explain the current sell-off by the wise or fearful..
The fear of the Seven Year cycle is being pushed by a very recent book on the subject.
https://search.yahoo.com/search;_ylt=AwrBT.LlS.FVnOcAfGpXNyoA;_ylc=X1MDMjc2NjY3OQRfcgMyBGZyA3VzaC1tYWlsBGdwcmlkAzk0Wi5LakQ5UUpLOGpPSzl3M05uNEEEbl9yc2x0AzAEbl9zdWdnAzEEb3JpZ2luA3NlYXJjaC55YWhvby5jb20EcG9zAzAEcHFzdHIDBHBxc3RybAMEcXN0cmwDMTkEcXVlcnkDdGhlIGNvbWluZyBzY2hhbWl0YQR0X3N0bXADMTQ0MDgyODQwNQ–?p=the+coming+schamita&fr2=sb-top-search&fr=ush-mail
Ron
Agreed….. However, there is a political connection to whether the rally from 2009 keeps going….. Historically, the stock market has risen with Democratic Administrations and gone sideways or fallen with Republican Administrations….. That statement goes back over 100 years…. 1929 and 1932….. 2007 and 2009…… Bad enough that we have a Republican Congress….. Keep an eye on 2016….. Lots of Black Pools and Donations from the richest in this country going to the GOP. Those people are NOT looking out for you and me…. :(
AND THE DUMBOCRATS ARE ….. your president or should I say your dark lord is the most worthless president this country has everrrrrrrrrrrrrrrrrrrrrrrr had his promises were empty his healthcare plan plundered the medicare program for the elderly of almost 3/4 of a trillion dollars to pay for obummercare premiums you always forget to mention that he promised to cut the national debt to 5 trillion during his presidency it was at 10 trillion when he took office its now going on 18.4 trillion he promised transparency more lies from your democrat president he promised to bring this country together all he has done is his best to tear it apart with racial relations, he promised 6% + growth in the American economy every yr of him being in office nothing but lies and now because of your presidents inability to do his job through reckless spending the u.s. has a unsecured debt level of over $820,000 per taxpayer using GAAP accounting
Mike, After much consideration I have decided the problem with your historical analysis theory is that it is much too simplistic. A trend in a particular administration is not necessarily determined by who is in the White House at that moment. Control of Congress and the holdover policies of the previous administration are critical to outcome. For instance, Reagan cut taxes and deregulated, greatly increasing treasury revenues but the Democrat Congress vastly increased spending making him look like the deficit spender he wasn’t. Likewise the Repubs handed Bill Clinton a booming economy and huge peace dividend that he took credit for without doing much of anything. If what you say is true we would have never heard the phrase “it’s Bush’s fault” from the current administration. Jim
Mr. Mike, I sometimes wonder if you say what you say just to watch us Conservatives recoil in horror, and have a good laugh at our expense. It’s working! Jim
Sorry Jim…… Remember I’m a historical economist….. What I keep stating are economic facts….. The GOP spends billions pointing the finger at other guys and saying facts aren’t true and falsehoods are….. Personally Karl Rove reminds me of Goebbels…… I’ve seen far more of those repeated untruth since he came to power…. Sadly, many people listen to the GOP version of economic history and take it as gospel, when, in fact, their version is full of falsehoods….. If this were Nazi Germany, I’d be in a concentration camp for standing up and pointing out their falsehoods.. If more in America took the time to check out the GOP statements, like with Snoops.com, the GOP would be laughed out of existence..
Sorry Jim…… Remember I’m a historical economist….. What I keep stating are economic facts….. The GOP spends billions pointing the finger at other guys and saying facts aren’t true and falsehoods are….. Personally Karl Rove reminds me of Goebbels…… I’ve seen far more of those repeated untruth since he came to power…. Sadly, many people listen to the GOP version of economic history and take it as gospel, when, in fact, their version is full of falsehoods….. If this were Nazi Germany, I’d be in a concentration camp for standing up and pointing out their falsehoods.. If more in America took the time to check out the GOP statements, like with Snoops.com, the GOP would be laughed out of existence..
There is a very big difference between a Conservative and a Republican. I do not consider the Republican Party a bastion of conservatism, really quite the opposite. I think you confuse the two sometimes. Rove IS a disgusting shill. The Most Transparent Administration in history has dished out its fair share of fibs as well. The Obama administration has prosecuted more whistleblowers under the
Espionage Act than all previous presidents combined. Sieg Heil! Check out their lawsuit. The GOP does deserve to be laughed out existence. Jim
HAVE A BUNKER
In the first place, I never fully accepted this “recovery” to be authentic; to be a true bull market in its own right, as was the case from 1981-2000. This obviously is not a new bull market. So, I never went ” all in”. Sure, I looked stupid and like a fool in 2013 when financial engineering worked, before the end of QE 3, that is.
Everyone told me how dumb I was to keep so much cash because ” You get no return on cash, so you LOSE money”. They never understood what was really going on and got suckered-in by the system and most importantly, their own greed. My late cousin ( 94 years old) repeatedly told me in 2013 ” Cash is not trash”. True statement. The FED can not force me to consume things I don’t need or want or invest at high valuations, no matter what. Only I decide what is best for me.
So, I never fully accepted this as a real bull market as such, even in light of so much cheer-leading by the financial media and most stockbrokers. Instinctively, I kept a huge amount of cash on the sidelines for a “bunker” in case things head South again. Sure enough, it looks like reality is coming back to remind us Central Bankers are not alchemists. Eventually, reality wins. So, its back to the basics for everyone once again.
In your 8/28 article you mentioned that lots of people have been exitting stock ownership. The primary evidence you’ve given has been recent mutual fund selling ( WSJ article reported on that). Maybe there’s been lot’s of stock selling, but that’s not the same a mutual fund selling.
A second thing you’ve mentioned as a strategy to profit, I guess, from a down market has been trading options. Maybe so, but for me to calculate individual stock’d EVA valuation takes more than a full day. Time doesn’t really permit me to also calculate options valuations. Also, I suspect that EVA buy or sell signals aren’t likely to coincide with their counterparts in the options markets.
Thanks for allowing me to read your newsletter. It often consicely brings up topics that interest me.
Sincerely,
Pete
Isn’t it conventional wisdom that when there is an exodus in stock ownership you are merely witnessing stocks moving from weak hands to strong hands? Jim
Furthermore there has been little inflation during the years since 2013. Look at commodity markets down 35% across the board since 2012. That’s not inflation! That’s oversupply!
Inflation is what virtually everyone was afraid of and deflation has been and will be the reality. When everyone is on one side of a trade then guess which way the market goes.
thank you Reader C.W.
and now to the writer of these articles
What do u not get , the retires want there money and do not trust the bankers ! They are retired and do not want to lose it ! , like 2008 and 2000 {+/_} plus they are retired and have it , they want to spend it and not let the bankers loose it !
check out demographics , & ss[social security] . More people retiring and they will spend THEIR money dif then those working and starting families _ FACT ! NEW bigger houses NOT! Fancy BS , NOT ! reduced spending , Yes , they have what they need !
we do not trust the bankers or politicians !
So, I am retired, and taking advantage of SS. I keep my money (what little I have), in a couple of credit unions. They apparently can’t speculate with my cash.
I think you are smart to leave your money in your Credit Union. Personally, I think they are safer than the big banks for a lot of reasons… You might want to check the Weiss rating on your Credit Union. I believe it is free
In 1960 my professor gave me an A+ on my term paper even though he disagreed with the final paragraph. It stated that every great empire reached its zenith when its inventory of gold was at its highest level. And decline set in as the gold was squandered away. Is that what we are witnessing now?
If your investing in the market at the moment,you must be scare of every whisper and tip,scared to turn your computer on in case you see blood on the screen,no wonder billions of $ are out of market,I got out 3 weeks ago,just holding 2 inverse ETF,Anybody having any joy with Larrys new service,a bit expensive,but if its any good,well ,you never know
For all the ailing and gnashing of teeth, I’m Long, long term and have been since March 9, 2007…. Where the SPY is before the close on the 1st trading day of September will decide whether or not I go to Money Markets and inverse funds long term…. Short Term, I went long three days ago on this last rally in IWM (TNA)….
Incidentally, I recently got a letter from my broker informing me that my “Cash Deposits” are now being held in one of the “Too Big To Fail Banks” as cash savings and are insured to the Maximum the FDIC allows… We all need to be aware of what that means if the Big Banks FAIL, aye? Personally, I’m going to move more to Money Markets and government bond funds rather than much cash. Just a thought to consider, aye?
2009….. :(
Your comments are right one, but with one exception. You cater to the establishment investors. You have forgotten the small guys that would like to use your service and advice but with very little money to gamble. So can you come up with a strategy for us small guys?
Thank you
ONE STATEMENT BY A READER WAS >>” CONSERVATIVES HATE OBAMA SO MUCH THAT THEY WILL NOT PASS ANYTHING” <<<
FIRST OF ALL WHATS NOT TO HATE [THE LIST IS SO LONG] A CRIMINAL MOUTHPIECE FOR THE CHICAGO MOB BUYS [OR THREATS] HIS WAY THROUGH CONGRESS AND THROUGH LIES AND TRICKS AND COVERUPS . ALSO VOTER FRAUD …… ENDS UP IN THE WHITE HOUSE . PROCEEDS TO GUT THE MILITARY AND NATIONAL DEFENCE, EMBARRASSES HIMSELF IN FRONT OF WORLD LEADERS , TRAITOROUSLY INSTALLS MEMBERS OF THE MUSLIM BROTHERHOOD INTO KEY GOV OFFICES , LIES AND DECIVES AND OBFUSCATES THE TRUTH ABOUT HIS ELIGIBILITY FOR POTUS AND THE SENATE . DESTROYS QUALITY HEALTHCARE FOR MILLIONS SO POOR FOLK CAN HAVE BAD HEALTH CARE. CONSPIRES WITH THE RUSIAN PRESIDENT, UN, IRAN AND OTHER ENEMIES .
IN LIGHT OF THIS SHORT LIST NO WONDER INVESTORS ARE CONVERTING TO METALS AND HARDGOODS… I AM ..
OH YES ONE OTHER FACTOR , IS THE FACT OF THE FORTH BLOOD MOON COMMING THIS SEPT.
[ A SIGN OF GLOBAL CONFLICTS COMMING, SEE THE NETFLIX MOVIE ]
AND WHETHER YOU BELIVE IT OR NOT INVESTORS WILL PULL IN 'TILL WE SEE WHAT ELSE HAPPENS… NOW ADD IN ISIS AND OIL PRICES [APPROCHING 50 ]
YOU WILL SEE THE MONEY SUPPLY DRY UP … WATCH OUT !!!!!
OH TWO MORE TO ” CW — KEYENEIAN ECONOMICS ALLWAYS FAIL ”
SEVERAL VERY SMART AND SAVY “S&S” MARKET GURUS ARE PREDICTING THE COLLAPSE OF THE DOLLAR IN LATE SEPTEMBER EARLY OCTOBER AND RESULTING CHAOS IN THE MARKETS FOREIGN MARKETS ARE NO LONGER ACCEPTING THE DOLLAR IN TRADES AND IN THE KNOW BILLIONAIRES ARE HEDGING THEIR MONEY INTO OTHER CURENCIES SO BE “S&S”
TO †CW — KEYENEIAN ECONOMICS ALLWAYS FAIL â€
Even Keynes stated that his policies could be taken too far and should be used in moderation. I guess the Fed Chairman never read that part.
Mike,
You left off my last sentence where I asked you for your opinion of the value of Glass-Steagall relative to the current markets?
Mike, I would really like to hear your response to the value of Glass Steagall slso.
Attention oil shorts. It is just a rumor, but for what it’s worth, a usually reliable source tells us that OPEC will call an emergency meeting next week. The theory being that their plunging revenue coupled with plunging stock markets is too much for them. I know conventional wisdom says oil still has a long way to go down, and it probably does, but if the Saudis toss us a curveball next week and the shorts do some covering it could get pretty interesting in the short term. Jim
Thanks Jim!…
Investors are over reacting. People still need paper products, gas, insurance, food etc which is produced by companies that are fundamentally strong, that is as simple as that !
Keeping things in perspective seem to be hard to do these days.
As we see, to much free money, welfare, extended unemployment , low wage, political buy offs, wars, bad loans, bank corruption its all her and more. Levels point to a mess ahead yet money is still free to buy off stagnant bets.
Food, clothing and shelter are the basic investments but, we are not producing food, clothing and now we are buying shelter from foreign investors here in America. Its not all bad but concerning as we see each day ahead. I feel we will pull out of it , sure there will be difficult times ahead as normal but, look at the investment portfolio, you have to spend to make and this is age old theory.
Gold will rise as normal due to inflation, energy will also rise, as soon as we see that the system is failing then and only then will we began to change policy.
George, the point about only when we see the system is failing will be began to make change is so true. Every individual in society just refuses to take any hit themselves. Until the whole system fails I don’t see anyone giving up their personal promise.
Our economy isn’t moving forward because there are so, so, so may regulations that companies,farmers,etc. have to meet that they feel going forward isn’t worth the time or money. Also there are no pipelines being placed, no coal mines working, limits on the amount of carbon that can be released into the air…. it just goes on and on. I heard that Obama wanted to make us more like a 3rd world country in order to share the wealth. Whither that is true or not, that goal is certainly being achieved.
Amen.
Listen to this URL as to how regulations have slowed new entry into business.
http://www.econtalk.org/archives/2015/07/lee_ohanian_arn.html
4 economists out of Stanford discuss who regulations are killing US job growth.
Nexus: Banking and Wall Street
IED Warning
Over the last 5 years, banks have stoked growth and earnings via “financial engineering”. The alchemist have converted “airballs” into well margined low risk paper! Beware that buyouts spawning whooping intangibles and capital sucking stockholder distributions have morphed into prime paper. Based upon EBITDA to industry trading multiples, unsecured loans have become well secured by “Enterprise Value”. Loans to private ventures aspiring to future IPO’s, as well as overpriced public companies, have been equal opportunity borrowers. Most C&I Risk Models, used to support bank reserves, are reactive not proactive with Enterprise Value collateral considered low risk in Loss Given Default metrics. When the dominos fall, Humpty Dumpty will fall. Who will bail them out? While the Banking Regulators have issued concerns regarding these practices, their has been no bite to bark. They will be able to say we told you so…… Nationalization?
It’s been a long week but the dead cat is still dead. Next week will be the memorial services. After Labor Day……..
Most of the comments on this site look for politicians to correct this or that problem in the economy or society. That is asking the very people who have over-ruled and regulated us into the state we are in to do something about it. Politicians are not daddy or mommy. They are looking out for number one, of course, and they answer to the money that buys them victory in elections. The moneybags, of course, don’t give a hoot for you and me, except as they can induce us to add to their wealth – and to become poorer, thereby. We, in all honesty, share that goal as well. There is only one thing we can do about it in our system. NEVER vote to re-elect anyone to he same office again. That just creates career politicians who become largely pawns of the moneybags. Always look for new blood that may be a little more responsive to you and me.
I might have added, if a candidate seems to be well funded, look for who is behind him or her, and maybe vote for someone else – even if you like the person.
Agreed. I haven’t really made my mind who I intend to vote for President. When I watch Dr. Carson in interviews he is so calm and collected I can’t help but think what a breath of fresh air he would be as our leader. I don’t know a lot about his policies other than he thinks God belongs in the conversation, which is really novel these days. What a relief it would be to have someone in office who isn’t always on the hunt for the next political angle. He is smart, rich, and not a career politician. He just might look out for you and me. Wishful thinking, but I can dream can’t I ? Jim
Dr. Carson’s political/economic views interest me, also, but then his socio/religious emphasis turns me off, since I seem to be conservative in the first, but liberal in the second. Which is kind of a contretemps, since I really see no difference between politics and religion. Socio/economic movements such as Naziism or communism always have religious overtones, and religions, such as Christianity or Islam are politically based. They all have economic consequences. Oh, hell!
I like your thinking Chuck. Nazism was very much based on a return to primitive paganism. Any system based primarily on belief is suspect but, if nothing else,
I always thought Christianity provided our culture with a common moral compass that was conducive to voluntary good behavior. Islam doesn’t seem to make any distinction at all between politics and religion which is why it seems so odd to most of us. I guess I just feel like I could trust Dr. Carson. Trust is in short supply today. Jim
Amen! Replace them all with less government oriented politicians.
Chuck I agree that we must replace all the politicians who have already been in office. I can’t imagine that any established politician could possibly provide a solution to our problems. Look at their decisions, drive up debt rather than solve the underlying problem of too much debt, provide sanctuary cites and illegal’s permanent admittance (when there is a huge underground illegal economy). Is that any way to build a country? Go to war under false pretenses. Remove Glass Steagall just when it is most needed. Allow banks to compete (1000s of trades per second) against society, the real investors, those who just want a decent return. Open up our industry to world competition when the world’s pay is 1/10 of ours.
But then,… we voted for them.
I think we want politicians who are willing to do the tough things, stop debt growth, balance budgets, decide to stop funding pet projects, remove favoritism wherever it exists in the economy and allow competition to provide society better lives, remove the handouts. We need politicians who are willing to say no to so many groups who want some free ride or special benefit, cut government just like an unprofitable business must cut employees. Make government work! Realistically if you had bought too much and couldn’t pay your bills how would you solve that problem????
I am done with individual stocks for the short term. A little gain is not worth the downside risk. I am in negative territory for the year. I have sold off 80% of my mutual funds and it is now in cash. Simply not worth the downside risk. The economy is sick and the market is volatile. Only an idiot or someone on the inside would be in right now.
I haven’t sold one. Every time you sell a stock does the fact that there is someone sitting right there eager to buy it from you not register? Is this person an idiot? Heck no. People don’t buy stocks for the purpose of losing. The only time I would be concerned was if I tried to sell one and nobody wanted it. A year to two from now I will still own my blue chip, dividend paying stocks plus the commissions I didn’t pay. You are working for the bookie. Jim
Case in point: In the 70s when people were dumping utilities like they were leper colonies my grand father gave me 150 shares of stodgy old Southern Co. (SO), worth $3000, paying $120 a year, as a graduation present. For the obvious sentimental reasons I never touched it. Today I have 1200 shares, worth $50,000, paying $1980 a year. I don’t have the math skills to figure where I would be if I had reinvested dividends. If I had bounced in and out of the Market every time someone predicted doomsday I wouldn’t have a fraction of that. Buy good stuff, ignore the barking dogs, and keep your nerve. Jim
Another case in point: Did anyone else notice that when the Dow crashed 1,000 points Monday that the Dollar crashed with it? That is not how it’s supposed to work. What happened to our “safe haven”? The US really does need to raise interest rates but I think the world economy told Yellen that if she did the world economy would crash. Our too smart for their own good central,planners have finally created a situation where there is no safe haven. Jim
Hi Mike
I got out of stocks and bonds back in 2013 and been in Equity with return average between 3-1/2 and 2% since then. I have read more books and attended more seminars related to financial management and retirement in the past 5 years. I have a masters in Electrical Engineering and also one in Engineering Management. I am a believer in history repeating itself, but this QE and financial bailouts that the central banks implements back in 2009 was unprecedented in past history and market behavior was mainly greed driven. Now even central banks can’t make decisions when to raise interest rates from the near zero levels they are at and have been for years. So, if interest rates increase bonds will sink, and with all the volatility in stocks leaves those with background like me with a gut feeling based on past history that we are not only at a time for a major correction that could bring us back to March of 2013 that now there is even a stronger probability it could lead to a crash to the levels seen in March of 2009. So my feeling is investors have gotten smarter, want to play it smart and be safe, and wait until it makes sense to renter the stock and bond markets at the right times. Als with the Fed raising rate in September, not likely, and highly probable in early October as 1/2 point and then again in December as 1/2 to 1 full point. They will get to 2% and hang in there until they see how to proceed. They really have no choice. If Bernacki or Greenspan was the man, it would have already been done, but in increments so not to cause a market crash like the one I foresee.
Regards
Bill
Of course you shouldn’t sell stocks. Do you think Warren Buffett is panicked? No, he’s buying up stocks (and holding them for the long run). When the Dow hovers between 19,000 and 20,000 by year’s end, you’ll be sorry if you sell stocks.
But then, the Dow might be 10,000 or less by year end. My crystal ball fails me.
Buffett is holding off on buying until it gets to 9600…!
Maybe Margin traders are getting out to prevent losses over any given weekend?
It is hard to bet on anything, when outside forces can change overnight…
If you own the investment outright, you do not have to sell out of fear of margin calls.
Ron
Even in Vegas one can survive but in the stock market today, unless you are a full time trader, their is no way to survive the extreme volatility and value reduction. I will remain 100% in cash until the Bilderberg types again allow the world to function normally. I do not believe that I am alone.
What if we have a currency crisis? Lots of cash is good but it’s still all your eggs in one basket. Real stuff retains relative value. Jim
I’m putting my faith in a serviceable 1911, a can of beans, and some pre-1963 silver coins. Jim
I’m right there with you.
Prediction:
Most all the market gains that derived from the FED’s interventions (QE) since 2009 will eventually be surrendered by the time this market cycle is completed. What the FED gives, the FED takes away. The long term economic problems ( too much debt ) have not improved and govt. spending has not been curbed. I see a train wreck down the road. Be warned.
Agree with you Mike that this market change is different. Debt has climbed to unserviceable levels, jobs that have formed are less solid than in prior growth periods, pay is substantially down in new jobs, disposable income has fallen, stock margin at all time highs. The list is getting so long it’s boring. China’s growth is failing and the west is seeing deflation across the board. The tide has turned. Now is the time to pay the piper.
Agree with you Mike that this market change is different. Debt has climbed to unserviceable levels, jobs that have formed are less solid than in prior growth periods, pay is substantially down in new jobs, disposable income has fallen, stock margin at all time highs. The list is getting so long it’s boring. China’s growth is failing and the west is seeing deflation across the board. The tide has turned. Now is the time to pay the piper.
Hi Al McNal,
I fear you may be correct..
Deflation has one positive result… (If you can call it positive)
It will also devalue GOLD … I wonder if that is what Hillary was up to when she took
the Red Staples Button to Russia and Pressed “RESET”
Just think what that will do to all those who bought Gold Certificates and derivatives from institutions that will be out of business overnight.
Ron
Good point, one that is often overlooked, that the institutions offering derivatives will be broke when it’s time to pay.
Strange thing happened in my neighborhood… Friday after the big drop on Monday, the number of homes for sale in my neighborhood rose about 30%… Must have been those margin calls…
Like you said earlier, far too many people living on the edge believing it can only go up……. Or not…. :(
Edge with a capital E! Jim
I know what’s happening here is that,the Fed is hedging the USD instead of the gold.Because I noticed that gold didn’t shoot up very high when the Dow,Nasdaq,and S&P 500 fell sharply.
Gold is now and always has been such a puzzle to me. I just don’t get it. The bugs say I have to have it and Harry Dent says to throw it in the trashcan. One look at the chart should tell you it’s in a bubble but like another writer says our economy is very much in uncharted territory. When someone figures it out I’d like to know. Jim
Larry may be correct. The dollar value of gold may tank in the short term, then head for the moon, over a bit longer term. Take it for what it’s worth. He has charts to “prove” it/
Jim,
Back in my service days we used to say “plan for the worst and then you will not be surprised”…. Keeping that 911 serviceable (and with a good barrel) is a good idea, especially now when some of the crazies are packing all of the time…..
Incidentally, I answered your question about my left leaning comment from earlier….. I’m really big on Historical Economics which bear out the truth….. Bottom line: Most really rich guys don’t give a crap about the plight of the average American (the real strength in this country). On the other hand average Americans do tend to look out for each other. That is one of our greatest strengths…. So when a really wealthy guy starts talking about how they are going to help the average American, I get skeptical… With the exception of FDR and Kennedy that has been the case going back in history….. Only under those really rich guys did Income Inequity go down……
I painfully have to agree with everything you say here. The successful should be our protectors and they are not. I truly believe the only President that cared about us was Jack Kennedy and we can see how that turned out. I don’t think our enemy, The Military Industrial Complex, has a party affiliation. Jim
Oh, and thank you for your service! Jim
Sadly, most of the Ultra Wealthy come from Ultra Wealthy Families: Bush, Romney,
Trump, etc…… The Ultra Wealthy want a Huge Military to preserve their financial kingdoms and most of them contribute to the GOP… Sadly, it the young men and women of the average Americans that do the death and dying, not the sons of the Wealthy….. We never should have gone into Iraq as our CIA had set up a perfect balance between Iran and Iraq….. Now we have a Middle East disaster that wouldn’t be happening, had we left Iraq alone…… In addition we have about 3 Trillion in front end costs (and about 7 Trillion in back end costs for the damaged veterans) that we had not funded for and over 4,000 of our best and bravest dead, all because a few Ultra Wealthy Oilmen thought they knew better than our Generals!….. :(
Unfortunately, you couldn’t be more right. The Iraq War is arguably the worst strategic error the US has ever made. The cost in blood and treasure for what we got in return is almost to much to contemplate, and like you say, we set the table for many more years of instability. It’s hard to believe smart people thought it was a good idea. It compares to group of brilliant Japanese leaders deciding their best course of action was to bomb Pearl Harbor. Jim
At least the Japanese leaders had a reason for their attack: the US had organized an embargo on oil and other vital materials that was beginning to hamper their military and industry beyond what they could stand. Yes, the purpose of those embargos was to try to force Japan to settle their war with China, but was that the best way to do it? It made Japan’s leaders think war with us was the best answer. That was another case of Washington’s half-vast thinking. Tokyo’s too.
Longer term, I’m very concerned about these three “portals” into the middle class: home ownership, a decent education and acquisition of capital assets (or a vested interest in defined benefit of defined contribution plan). There are significant obstacles to each that are only increasing. It’s not the government’s responsibility to provide these things–only to get out of the way of those who are striving to improve themselves. Since Barack Obama’s taken office, the hill has become much steeper and the government’s influence is no longer benign. When are we going to wake up and eliminate the obstacles? The Trump phenomenon reinforces the sense of malaise.
Hi Mike — Hey, who’s minding the mint. First, NY Fed President Dudley says on Wednesday that a rate hike is “less compelling” and then Friday Fed Vice Chair Fischer says a September hike was still a possibility. Yellen and her keystone cops just can’t make up their minds. By not raising rates, the Fed has basically signaled that the U.S. economy isn’t sustainably strong enough to handle a hike. And that’s the problem as there’s simply too much regulation, too high taxation and way too much debt on all fronts. It’s now time to pay the piper.
I believe that the financial volatility seen recently will soon become political volatility. With a large unmanageable migrant influx law and order is in danger in the EU.