Here is what I wrote on March 6, 2009.
Here is a quick prediction for you.
Obama’s radical spending/deficits will lead to a legacy of trillions in new debt that will result in the USA bond rating being reduced from AAA by the end of 2011.
Think I’m crazy? Wanna bet me?
We were just downgraded last night August 5, 2011 by S&P.
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:)
Congratulations on the seemingly inevitable passing of a financial “reform” bill that does not reform anything of consequence and has ZERO CHANCE of preventing the next financial crisis!
Oh yeah, and it violates the 4th amendment.
“But Dan, I heard on the the news that…”
STOP!…There is no good way to end that sentence.
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 of the close Friday, oil is $75.11 a barrel. Remember that the market has been crushed the last 5 days on fears of huge debt and continued economic weakness and oil fell right along with the market. Until this latest drop it had been above $80 for almost 3 months and was on the way to $90.
We still have a weak economy here in the USA and the dollar has actually held up pretty well lately. Yet, oil has climbed. Remember the last time that oil was climbing like this towards $150 we had an extremely weak dollar and a strong economy with much lower unemployment than we have now. This is a big problem.
While the economy in the USA is still limping along, most of Asia is booming. Bubble or not, for now they have a demand for commodities including oil. Top notch investors know that all paper money is suspect right now. Government around the world to varying degrees have spent trillions of dollars they do not have to bail out everyone and engage in massive government intervention. Oil (and gold) is being used as a de facto currency right now which means more accumulation by professional traders, countries, and even the people who run pension funds. This puts upward pressure on the price.
Obama’s latest sham announcement of new drilling is a complete lie from top to bottom. Net, it is a loss for oil production. He locked up tons of resources and said in a few years their will be lease sales. Yeah, good luck with that guys. Even if Obama was really interested in this, he would get rolled by the oil companies. He’s already been rolled by Wall Street and all our enemies. Sarah Palin kicked the oil companies asses and in the process got more oil to market for the people. She would lift all restrictions and play hard ball. She would cut good deals that incentivize new production while making sure that we aren’t getting ripped off. She has done it before! Of course, she’s the dummy according to the media and Obama is the genius. I want you to remember that when you are cursing up a storm as you fill up your gas tank.
With the terrible oil spill in the gulf, idiots are out in force declaring that no more offshore drilling be allowed. Their stupidity will actually result in more oil spill accidents and higher prices. Less offshore drilling here means far more oil tankers from overseas will be needed to bring us IMPORTED OIL. Tankers are far more likely to have accidents. Lack of production means upward pressure on price, and our current government has no interest in increasing production. Actions speaks louder than words.
The dollar has been stronger lately, but do not be fooled. This is happening because the Euro is in full meltdown as the European socialist welfare state collapses into riots and anarchy. By comparison right now, I suppose the dollar is good. Eventually, the dollar will return to its weakness. After all, are the fundamentals for the dollar strengthening or weakening? Trillions of new debt is obviously a sign of weakness. Other countries forming a cabal to replace the dollar with a currency that is backed by commodities is obviously a sign of weakness. I could go on.
Now, what happens when the economy does actually pick up and demand increases? What happens when the weakened dollar returns to put more pressure on commodities priced in dollars like oil?
Do I have to answer this question? Isn’t it obvious?
