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It’s at times like these, with the year winding down, that I always get contemplative. I like to ponder the last 12 months of market action, and consider what lessons we can all learn from them.
If there’s one theme that stands out to me for 2011, it’s this: Policymakers are trying to fight a battle they can’t win!
Interest rate cuts. Money-printing programs. Stimulus plans. Powwows every few weeks. They’ve all been tried, and they’ve all failed to accomplish much for the global economy or the capital markets.
Indeed, barring some large last minute rally, the S&P 500 will likely finish the year roughly flat. But the carnage is much worse overseas — in both developed and emerging markets …
As of Thursday’s close, the DAX in Germany was off 15.4 percent, while the FTSE in the U.K. has lost 8.1 percent. The Brazilian Bovespa has shed 17.9 percent, while the Shanghai Composite Index has bled 21.1 percent.
The Track Record of
Failure Is Clear …
Throughout 2011, we were subjected to meeting after meeting, and proposed fix after proposed fix — from both fiscal and monetary policymakers:
The second Greek bailout in July,
Each and every event was hyped in advance — billed as the ultimate solution to what ails the economy and the markets. Many times we saw stocks, commodities, and the euro currency rally for a few days or a few weeks shortly before or after those developments.
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| British PM David Cameron said the 17 single currency countries must do more to tackle their debt crisis themselves. |
But ultimately, all of those rallies failed. Ultimately, policymakers failed to deliver on the promises they uttered. The 200-billion euro International Monetary Fund (IMF) bailout fund that was supposedly one of the concrete achievements of the December summit is just the latest example.
We were told that national central banks throughout Europe would funnel 200 billion euros to the IMF to create a slush fund. That fund would then turn around and lend money to troubled European nations.
But now, we’re learning the U.K. has no intention of ponying up the more than 30 billion euros worth of aid it was expected to contribute. Other countries throughout the euro zone are getting cold feet, too. Result: The fund will almost certainly fall short of its money-raising goal, just like the EFSF did before it!
… But Why?
So WHY do these ideas keep failing? Why is nothing working for more than a few days or weeks?
Because we’re in a worldwide economic slowdown driven by massive deleveraging and debt aversion! There is NO way back to the debt-fueled growth economy of the early 2000s, or the equity bubble-fueled growth economy of the 1990s. That’s the reality on the ground as I see it.
But the politicians and the cheerleaders on Wall Street won’t admit it to themselves, and most certainly won’t admit it in public. So they keep trying to come up with ways to put Humpty Dumpty back together again! They keep failing to learn the most obvious, powerful lesson of 2011!
Prudent investors like you, though, don’t have to be like them. You can take my lesson to heart. You can take steps to protect yourself for the tough market times that we’ll face as a result of the inability of policymakers to “fix” what ails the economy! One crucial step is to consider investments that rise in value as select assets fall. You can learn more about them here.
And if you do, I believe you will make 2012 a much better year for yourself than 2011 was for the typical Wall Street investor!
Until next time,
Mike
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.
{ 29 comments }
Zzzzzzzzzzzz…Zzzzzzzzzzzzz…Zzzzzzzzzz……don’t forget what else happened this year…..Bill Gross got up and apologized for costing his minions millions……..
Guess what Bears??….he obviously, isn’t changing his strategy/paradigms heading into 2012……hell..he’s still stuck in 2011…good luck next year Bear….you will only need to make 3,400 % to makeup ofr the last 3 years…
Right now, the Bear inflation rate is over 30 %……
…and what kinda of bonehead applies macroeconomics to short the SPY and short the Russell??….take a guess.
I hope Bears, he has been shorting the other indices he mentions above….FTSE, Shanghai, DAX, etc…
He uses those indices to support his paradigm but yet??…did he even have you guys make plays on those??…
Mike is a walking contradiction…he’s confused…he’s getting wiped out…he’s…well..un-American…
I can only reflect (sound familar) during Bowl season that Mike would can ya hear the sniffling and crying now??!!…
he reminds me of a famous quote by Homer Simpson when Bart reached out to him for support….”Bart, when things get tough, its okay to quit”…
Keep on playing the market and one day soon the game will be over and you will be left with an empty hand
Frank….thanks for the warm wishes….I could lose 75 of my wealth tomorrow..and it wouldn’t effect my lifestyle ONE BIT…..
because my station in life right now is exactly where I’m supposed to be…we are all where we are supposed to be.
I’m sorry yours is such a crappy-ass place right now…
How can you say those things when you do not even know me ????
Hi Mike
This time of year it is important to reflect on all of our humanity. We all lost something during 9/11 when building 7 came down in its own footprint. It was pre planned over months and has never been investigated and impacts on us all. We own this and the relatives of 3,000 loved ones deserve an honest enquiry. No U.S. administration can pump confidence into our country unless the people get back –
“We the people”
Happy holidays and a Merry Xmas to you all.
Correctly calling six of the last two recessions. Way to go, Mike and Money and Markets team. Remember early 2009 was the beginning of the Depression, with S&P 500 heading from the 800s to 400 or below? There may be bad times ahead, but for now we keep holding the economy together, at least here in the U.S., and Dow 12,190+, S&P 1250+ and other indices are proof. Good Luck, you may be correct some time in the future and Merry Christmas.
Mr. Larson,
You and W have a lot of pride.
Yes, one can portray bears as naiive….. But there was a crash in 2008-09. It happened. It could happen again. If I want to be a bull… how do I deal with that possibility?
Here’s another lesson to PONDER, Bright Boy
DOW ON TRACT FOR “BEST” 4th QTR since 1998!
[23-Dec-11 09:55 am]
How can such an “expert” be so wrong…so often…so consistently…and still have people supporting him??…it’s truly insane..
..and as he sits there..acting like he’s trying to learn something….he’s gonna do the same thing…over…and over..and over again…
WAKE UP!!!!….YOU JUST MISSED THE BEST 4th QUARTER since 1998!!!!!!!!….LEARN THAT, if anything….
Here’s my parting, GENERAL tip for the Bears in 2012:
I stated this 60 days ago….
the world is gonna be FLOODED with “money” in 2012….FLOODED..FLOODED…FLOODED…there is ONLY ONE place in the world “people” are gonna go with this funny money..EMERGING MARKETS included…
hear me now, Bears…..it’;s going into US STOCKs….American companies….STOCKS….STOCKS….STOCKS…EQUITIES MY FRIENDS…
you have been warned……..AND NEVER FOGET…THE MARKET IS RIGGED WHEN IT GOES DOWN TO..
dear frank mike he right about the goverment debt and economy fundamental but stock market is casino it can go up or down for no resons
The long term trends tend to stay the same.Those are a declining fiat currency and therefore rising fiat prices of everything else.I can’t tell you what the DOW,commodities or bonds will do next month or next year but I’m pretty sure that stocks,commodities,real estate and every other thing,valued in fiat,will rise in fiat price,over the long run.That means I just stay invested in great companies,in necessary businesses with growing demand,with great management,doing better than their competitors and keep my fiat holdings to a minimum,required for liquidity.I do believe that most people are short term traders,looking for quick riches and therefore,newsletter writers/sellers must cater to that desire,forcing them to make short term predictions,that are difficult to make.Who would subscribe/pay for a newsletter that recommended you buy some great investment and hold it for 5 years?I remember the money I lost,back in the 1970’s,when I would constantly receive phone calls from my stock broker to make trades.He was doing his job,making commissions.Didn’t help me.
Imagine that….people ALREADY going into stocks….someone is listening….probably not the Bears…
http://www.cnbc.com/id/45769986
Right is going to become left and left is going to become right in 2012…..somethings that ran in synch the last 3 years will soon be running counter…
Frances, one thing in Weiss’s favor is that they’ve been exceptionally tolerant of your rants. There’s a difference between respectful disagreement and gratuitous, excessive bashing and name-calling. I think you crossed the line a very long time ago. I don’t think anyone could accuse Weiss of silencing critics — even though I wish he would in your case because you bring these blahgs down to an unpleasant level.
(Note to moderators: Please implement a reputation feature so readers can choose not to see posts that the community has rated low.).
Mark,
Larson and W are ranting about a market crash. Frances’ rants provide balance for a market rise.
Plus, it’s well documented that W bear cave has cost their subscribers a lot of money.
Turn the channel, Mark F… don’t be a victim…you are in control, not me…
I’m exceptionally tolerant (tol-er-RANT) of them bad mouthing my country…I suggest you read their columns closer ….if they don’t like it…leave it…
Hey, Mark F..can you offer 3 reasons why they hide out as a business in the state of Florida…
They rant and rave all the time insulting people……you just “hear” what you want to hear..
..
let’s burn some books while we’re at it….
Big freaking, baby…….
there’s a fine line between critic and TROLL.
Frances, do you believe in personal liberty?
In what context?..todays’ or 1861….they tend to change and be different…….Northern States or Southern States….
The Southern states didn’t like the personal liberty laws/statutes passed by Northern States in 1861….I love personal liberty laws as long as they don’t tread on me…
I gotz my gun..let’s discuss legal reasons to use it…
Troll = Norwegian = Larson….cool…
One persons troll is anothers wiseman….
I wonder who is is doing the “trolling”??..trolling for suckers…
A troll…Me//..I think not…here’s the definition…Seems like Mike and Marty are the trolls… NEXT….
Internet trolls are people who fish for other people’s confidence and, once found, exploit it.
Trolls are various in nature and the type of damage they do ranges greatly, such as:
Disrupt an email list or online group
â– Steal money
â– Obtain credit card details
â– Build false hopes
here’s how to deal with a troll….
Dealing with Trolls
Here are some ideas to help avoid being deceived by trolls:
â– Before you invest your trust in someone – either emotional or financial trust – you should verify their bona fide nature from multiple known, reliable and independent sources.
â– ignore postings that you think are suspicious.
â– beware of off-list emails that praise and flatter, or seem to evoke sympathy. If you feel yourself beginning to like someone, ask first: how much do I know about them from real life sources?
â– if you do get involved with anyone via the internet, seek out verifiable data. Real people will provide information about themselves that is open-ended and leads to a myriad of sources which enable you to verify their genuine status.
â– if you are concerned by email list/group postings, write to the listmaster about it.
â– listmasters can also make their lists restricted, and conduct a security analysis of each list application before allowing them to subscribe. This is probably easier to do in areas that have professional associations or qualifications.
Wow…sounds like the authors….anybody verify anything about Mike and Marty…
Again??…Just what the heck is Marty a PH.d in??..
Oh, man..you should read up on the SEC lawsuit they lost a few years ago….google- it….man o man..multimillion dollar judgement….false advertising for doing just what they are doing now..
Yeah…I’m a troll…
Looks like I was wrong fans….in the midst of a huge downdraf last Friday….when ..yes the dynamic Duo were preaching the end of the world…again…I predicted an 800 point updraft…I was wrong…
We only had a run of just under 600….sorry…I wonder why I can read this and the Dd can’t??..intersting discussion point about behavior, huh??
Anyway…the good thing is…When the DD were preaching no Santa cluase really right around T-Giving???…the Market since 11/25 is up OVER 1,000 POINTS…and wait till next week!!…now//..I call that a Santa Claus rally..
Nice job, boys…..man…I feel for those people who loaded up on the SPY/Russell shorts….man …DOW up over 1,000 ponts….
Frances,
The Dow is the same level as 1998. How can you say that’s been good for the bulls???????????????????????????????
yeah..and the US dollar from 1975 is the same US dollar today?/…….isn’t it??..it’s a dollar…or??..is it ???….Hmmmm…hmmm….
The Canadien dollar is the same as the US dollar isn’t it??….
bears don’t dollar-cost average…..perma-bears don’t accumulate…it’s called..accumulation to keep up and pass inflation…….if I have 25,000 more shares of a said stock than i did in 1998 and they are at the same price???.. because of dollar cost-aveaging..am I ahead????…i sure freaking am, son…
when i bought my first share of “Wells fargo” many, many years ago..let’s say it was at 10.00…..now I have just under 25,000 shares at a dollar cost average of 8.92…
I dunno…
The natural trend is up because of inflation…every day the Bears lose this race…
Hello Frances, FYI, indices are adjusted for stock splits. Dow flat for 10 years with declining value in dollar means bulls have LOST money. That’s the trap bulls fall into — they feel rich because of inflation. It’s an illusion at best.
Yeah..right…tell the IRS that…tell ny CPA that…..
I guess all the multi-millionaires out there are just plain broke….even that dude from Omaha…
I guess we just might as well quit…..you are typical of a man without a plan….
You Bears crack me up…..
Um…let’s see….Um…I wonder how they “feel”….looks like they fell into a huge trap, huh??…..I guess their life is just an illusion….
http://money.msn.com/retirement-plan/5-tips-for-retiring-before-you-are-50-usnews.aspx
CC = Man without a plan…..
jeez….um..duh…the dollar declines in value due to inflation and monetary policy??..duh..
Man..CC..you act like this is new news or something..
Frances You are so much on the money about the scare that these guys use . I don’t use any advice they put out.