There is more to it than just this article, but Charles Gasparino is correct.

Saint Warren’s dark side: Ugliness the media overlook

I am in a holding pattern right now investment wise. I do dabble a little here and there. For example, I bought RIG at roughly 52 a bit ago and sold today at roughly 56. I still like it for the long term as well at these current prices. I am not interested at going into anything real heavy right now. I am just holding what I have. I expect for the most part to be in this holding pattern until next year.

It is remarkable how low US Treasury Yields are right now. We are talking about lows in yields that haven’t been seen since the 40′s and 50′s. I am watching it closely, and you should too.

http://michellemalkin.com/2011/05/31/chart-of-the-day-america-the-dependent/

As you can see, over roughly the last year China’s holdings have stayed flat, Japan’s have increased slightly, and our friends in the United Kingdom have increased their holdings significantly. The data is updated periodically on the treasury website. This chart is using the latest data released by the treasury on January 18, 2011.

http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

(The data at the above link changes periodically, but it can always be found there)

Almost on cue, today the Dollar is rising and taking the DOW down as a result. This is not healthy long term and is a serious problem. Stocks going up with a worthless dollar is pointless as is a strong dollar with stocks worth nothing. Eventually, there needs to be some stability in this relationship for long term prosperity. They do not need to rise together all the time, but what we have now is just not going to work for long term economic prosperity.

The last 10% of the DOW’s rise has come at the expense of the US Dollar.

Meanwhile, Gold has surged during this same time period.

The 10 year bond finished today at 2.78%. The 10 year yield has fallen considerably from the 4% level from only a few months ago. The current yield is approaching the panic levels of late 2008 when it briefly bottomed at around 2.1%. The current yield is almost exactly where it was during the March 2009 stock market lows.

This is not good. The bond market is flashing major warning signs that deflation still persists and that the economy is about to get weaker, not stronger. Keep an eye on it. I always use my own brain to determine what is going on, but if I had a choice to believe the government and their economic outlook, or the bond market, I would choose the bond market every time.

I do not have time to respond to every e-mail I receive, but I am always happy whenever I receive one that thanks me for helping a reader make some money. It is hard to make a living these days and even harder to save money for a house, or raise capital for a business, or just taking care of your family so I am very glad I could help.

To those who are thanking me, you are welcome! I am happy to help when I can.

I am also asked alot in emails what I would recommend buying now and what advice I currently have etc. The thing is, I am a very patient investor. When I see something that is a sure thing, (or as sure as anything gets in life and the market) I bet big. Like anyone, there are some things I keep private of course. Also, in many cases what I am doing personally only makes sense for me given my situation. We all weigh risks differently depending on our own lives.

For example, maybe for me a 50% downside risk in a stock VS a 300% upside makes sense. For you, 50% downside might be simply unacceptable and therefore that advice would be worthless even if it turns out to be a great bet. That is why I made such a point about my March 2009 buy call on the stocks I listed. I KNEW you would make money on those and there was no ambiguity. Why? Because I bought those very same stocks that very day I published that post. The economy was still bad but the market was ready for a bullish phase. I was right. You made money. I made alot of money.

In 2003, I knew the economy and market would boom with the tax cuts and I bet big.

In late 2007, I knew we were headed for a deflationary credit collapse, so I bet big.

In March 2009, I bet big on stocks as you read on this blog.

In April 2010, I bet big  against stocks when I told you it was time to get out.

These are just some of my calls over the last 18 months and you can go back the see the charts and the track record by reading old posts. Unlike the freaks on TV who push new stocks to you everyday, I keep my powder dry until I can see the whites of their eyes. “Their” being the next great investment opportunity.

Anyway, Thanks for the e-mails. It is always nice to be appreciated:)

My calls have worked out pretty well as you can read here, here, here, and here as well as other posts you are free to read. It’s almost like I know exactly what I’m doing. Oh wait, It’s exactly like that!

I point this out because I feel it necessary to establish some credibility with you as I now have a track record that can be read and seen here. You are being sold a bill of goods literally everyday by the Lame Stream Media and they will bankrupt you and destroy this country economically with their reckless Keynesian policies if you aren’t careful. This economy is a tinderbox. Big things are coming, and I will warn you about them. I hope my track record gets you to listen or at the very least gets you to think about it.

Here is David Rosenberg’s latest take on things. I really like David and think he makes alot of sense. I would not say I agree 100%, but his overall theme the last year has been in line with mine. I have posted some charts over the past year that show what he is essentially talking about which is that these de-leverage cycles last longer than the media would have you believe.

Global debt issues and investor fear have the US mired in a “meat grinder” stock market that likely will last another six to eight years, economist David Rosenberg said Thursday.

Debt-cleansing cycles generally last six to seven years and the current run is in about its second year. Global economies are trying to shed debt, with varying levels of success as several European countries run risk of defaults and uncertainty grows over the effect debt will have on the US.

“The sharp down was the 57% slide from October 2007 to March 2009. The reflexive rebound was the 78% runup from March 2009 to April 2010,” Rosenberg said. “And, Stage 3, the re-emergence of the fundamental downtrend, in classic Carpenter fashion, has only just begun.”

At the same time, broad cycles of low market returns and wild stock swings usually last 16 to 18 years, and this is the 10th year of those conditions, Rosenberg, chief economist at Gluskin Sheff, said in his morning note.

Neither trend, if kept intact, would bode well for stock prices.

“It will not be a straight line down but the fundamental trend line is down as far as US equity prices are concerned, and racked with intense volatility,” Rosenberg said.

He pointed out that 22 of the past 26 trading sessions have seen swings of 200 points or more in the Dow Jones Industrial Average, while positive moves often are accompanied by low volume.

“Look at what has happened just this cycle-the worst stock market since 1937 followed by the best stock market since 1932 followed by the worst May for the Dow since 1940,” Rosenberg said. “There’s a word for this type of market. It’s called a meat grinder. No return for a decade and yet plenty of sleepless nights on this roller-coaster ride.”

For investors, “classic long-short strategies” should be the order of the day in which investors protect themselves against lower moves in the market.

“This is an environment extremely conducive to income-oriented investment strategies,” Rosenberg said.

He referenced legendary analyst and investor Bob Farrell’s 10 Market Rules to Remember, particularly citing Rule 8 which says bear markets run in three cycles: a sharp downturn, a reflexive rebound and “a drawn-out fundamental downtrend.”

A few people in the media in collusion with certain members of congress are accusing people who tell you to buy gold as being “fear-mongers” who just want to make money for themselves etc. Well, as you can see from this chart, what has been a better investment the past few years, gold or the S&P 500? So if these people were “fear-mongers”  as they are described, you would have made alot of money listening to them! That is odd huh? Maybe, just maybe, they weren’t “fear-mongers,” but rational economic analysts and others who were worried about global instability and currency problems? Nah, that can’t be it.

Sometimes I own alot of gold in various forms. Other times, not as much. Sometimes, not at all. I am not telling you to buy gold. Buy it, don’t buy it, I don’t care. However, it should interest you that people have been telling you to stay away from gold for years as it has risen while stocks have been terrible.

The blue line is gold and the orange line is the S&P 500.

As you see here, had you listened to me you would have made alot of money the past year or so. If you did, you are up huge right now and should get out. Could the market go higher? Of course it could. I have said that the FED and the Obama administration are both engaged in a reckless free money agenda. This agenda can drive stocks up, but is doing incredible damage long term. It is a bubble, but bubbles can last a long time so the market moving higher is not impossible. When the bubble pops though, look out.

So, you are up if you took my advice and now you should take your huge profits and be happy. You won’t go bankrupt making a profit.

On March 13, 2009 I told you I had bought positions in…
MO,BP,NOC,LVS,MGM,T,NTGR,CHK,RIG,DE,UA,INTC,COP,DHIL,GD,BA,LMT,RTN,GROW

That was just over a year ago. Excluding dividends, here is how those stocks have done since then.

When I invested in these stocks on March 13, 2009 I did not distribute my cash evenly like I show in this chart, but you can see that even if you did with the hypothetical dollar amount I show here you outperformed the market by a wide margin. I used the same dollars invested for each stock so you could see the percentage gain without any distortion. For example, if you put more into LVS then you would have made more overall.

Below are two charts of the Down Jones Index and its similar counterpart in Japan the Nikkei 225. Notice how horrific the Nikkei has been since 1990. In the last 20 years, it is down roughly 70%. In the last 26 years it is flat. Our last 10 years in the DOW were essentially flat.

The steady drop since 1990 in the Nikkei can be described as a debt deleverage cycle. This has happened before all over the world including in the USA, but the last 20 years in Japan is an extreme example. The USA economy is far more dynamic than Japan ever was, which means it will be more difficult to repeat their anemic market performance.

However, we are making many of the same mistakes Japan made in dealing with our current economic crisis and therefore the economy will sputter along for years until we get our act together. What shape that sputtering takes is still in question. Just how bad will it get, and how long will it stay that way is a question that has a wide range of outcomes.

I have studied this situation non stop for years. I knew it was coming and I acted accordingly. I warned everyone on the blog and everyone who would listen to me in person. Here’s the problem…

Every scenario that I give a decent chance of happening going forward is bad. The staggering deficits and low interest rates (free money) from the FED point to serious inflation at some point in the future. At the same time, residential housing still has not bottomed, wages are doing anything but rising, unemployment is still a disaster, and credit has been cut and may still be contracting for consumers which all point to deflation. There is also the possibility that we enter into 1970′s style stagflation where inflation picks up and growth lags. Oh yeah, or the whole ponzi scheme the government calls the economy could just blow completely.

I have worked every number and model I can and I cannot see a good scenario playing out. Now, a less bad scenario could certainly occur, but that is still not good. People in America have gotten used to rising standards of living and luxuries most countries can only dream about, but that is changing due to inept government policies finally blowing up in our faces.

Does anyone believe the DOW would be up the way it has been the last year without the FED’s next to zero interest rate FREE MONEY policies? If you don’t, then what happens when these rates rise?

By the way, lately bond auctions have not gone that great and rates have started to climb.

It is is said that history may not always repeat itself, but it often rhymes.

You think nothing as bad as Japan the last 26 years can happen in America? Remember, it could happen to you.

Financials lead us down and they just might do so again. Below is a chart and my predictions. Feel free to go back in the archives and read what I wrote back in March 2009. The DOW has held up a little better than these financials have the last few months, but that changed the past few days. It could be a sign of things to come. Back in March of 2009, I was talking about the overall market and the economy, but since financials lead us down before, this looks like the canary in the coal mine. Notice the last drop of the past few days right at the tail end of this chart. These financials could be opening act for the DOW correction. If only any of our leaders saw this coming as clearly as I did. Remember, they are geniuses (according to themselves and the media,) and we are just mere ignorant commoners. I hope you made money on it!