Monday, October 4, 2010

The Markets

My opinion on the markets, is only my opinion... not advice. Since I dropped my registration in the Securities Industry I can speak more clearly... that does not make me correct.  In the short term, markets make everybody look dumb.

That said....

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The distortions in the markets caused by the various central banks has created an opportunity for the little guy (IMHO).  The Little Guy has been given a second chance to sell most of his U.S. equities.  I have been a long term holder and bull for precious metals BUT... I have never seen a market go vertical/parabolic and not end up badly.  That does not mean things can't get MORE parabolic... but buying here seems unwise (but I could be wrong).... See, the US$ has already collapsed (IMHO) vs the ROW currencies... and the U.S. is NOT Zimbabwe.  The U.S. will default on Social Security and Medicare (by raising the retirement age and decreasing benefits) LONG BEFORE it will default on its debt.... and that is enormously deflationary, not inflationary.

The Fed has been reasonably successful in their re-inflationary efforts, at least as far as asset prices go... but please note that the desired effect - reinflation of house prices - has NOT occurred.  There can be no inflation - hyper or otherwise - without inflation in housing prices.  Even the U.S. Treasury and the Federal Reserve cannot prevent the necessity of the U.S. housing market to be "cleared", and in order for that market to "clear" prices must fall farther and for some time.

Not that this makes it easy to profit from.  The various central banks are stepping all over themselves and all over the markets.

10 comments:

Anonymous said...

And meanwhile, the US imbalances continue and or accelerate-

*US Fed Budget Deficit continues at USD 1,500 Billion/year and rising. It takes an awful lot of optimism to think that this situation can continue for too much longer.

*Over 45 US States are insolvent and will require a Fed bailout

*US Trade Deficit continues at over USD 500 Billion/year

*U6 measure of unemployment continues at around 20%

*RE Crash accelerating again

*US importation of 65% of crude oil continues as oil exporters still ship valuable oil for bad debt paper. For how long?

*Hollowing out of US economy continues as jobs continue to migrate outward

*NO progress on any kind of Peak Oil mitigation with public ignorant of the whole issue.

*US loses front positions in innovation and research. China patents up 18%. US patents down 11% in last two years.

*US economy running on war and bad debt paper continues as the real economy hollows out.

So where does this all end up?

Cheers, Marshall

Greg T. Jeffers said...

Marshall... you pretty much summed up my next post... So if you don't mind... in the near future I am going to use your template and fill it out a bit... or you could do it as a guest post...

bureaucrat said...

It ends up in the same 20 year malaise that we experienced in the 1970s. Not a lot of fun, but no disasters. We are forced to live "less," the inevitable reduction in SS & Medicare is not a "default," the Chevy Volt may indeed change the world of personal transportation, and Iraq could rev up oil production hugely. Perhaps an invasion of Venezuela by the US?

That leaves us with a continuing housing malasise, an implosion in corrupt China, someone FINALLY ending the opportunitistic U.S. wars, and bad, bad news for dedictated government employees like me. :)

Though we don't cost anywhere near as much as people are saying, compared to the big government budget items.

bureaucrat said...

(Illinois is the only state I'm aware of that is nursing its budget deficit by not paying anyone for 6 months after the products or services are provided -- $19 billion in the hole. These other states should try it sometime. :) We've done it for years and the world hasn't come to an end.)

Bill said...

Are you saying I should sell my silver?

Greg T. Jeffers said...

Bill:

I don't think hyperinflation is around the corner, and I do think that the silver market thinks that it is.

Remember this, though.... "markets can remain irrational longer than you can remain solvent."

Greg T. Jeffers said...

Bill:

I have no idea what any other individual should do. I am saying that the precious metals market went vertical - and that that has never worked out for long.... unless this is the big one.... or unless I am just plain wrong... or unless a lot of things...

Crybaby said...

How bad is it?

African television stations are now showing 'Sponsor an American Child' commercials!

.... Wives are having sex with their husbands because they can't afford batteries.

.... I ordered a burger at McDonald's and the kid behind the counter asked, "Can you afford fries with that?"

.... CEO's are now playing miniature golf.

.... Exxon-Mobil laid off 25 Congressmen.

.... My ATM gave me an IOU!

.... A stripper was killed when her audience showered her with rolls of pennies while she danced.

.... I saw a Mormon with only one wife.

.... I bought a toaster oven and my free gift with purchase was a bank.

.... If the bank returns your check marked "Insufficient Funds," you have to call them and ask if they meant you, or them.

.... McDonald's is selling the 1/4 ouncers.

.... Angelina Jolie adopted a child from America .

.... Parents in Beverly Hills fired their nannies and learned their children's names.

.... My cousin had an exorcism but couldn't afford to pay for it, and they re-possessed her!

.... A truckload of Americans were caught sneaking into Mexico .

.... Motel Six won't leave the light on anymore.

.... A picture is now only worth 200 words.

.... They renamed Wall Street " Wal-Mart Street ."

.... When Bill and Hillary travel together, they now have to share a room.

.... The Treasure Island casino in Las Vegas is now managed by Somali pirates.

And, finally...

.... I was so depressed last night thinking about the economy, wars, jobs, my savings, Social Security, retirement funds, etc., I called the Suicide Hotline. I got a call center in Pakistan , and when I told them I was suicidal, they got all excited, and asked if I could drive a truck.

Bill said...

I understand that you don't know what's going to happen and you aren't giving official direction.

Let me ask it another way..if you had silver would you sell at least some of it?

Greg T. Jeffers said...

Bill:

I sold some Silver and Platinum.