I'm afraid we are looking at a whole new set of rules should the same kind of crash come now. JMHO
Posted on 10/17/2005 7:59:53 AM PDT by Travis McGee
The October Newsletter The Leaves Won't Be The Only Thing To Fall! Enrico Orlandini Lasco Report 17 Oct, 2005
We're heading into that time of year where the word "crash" tends to command a bit more respect among market specialists, i.e., the months of October and/or November. Maybe it's just a coincidence, but I see an ominous cloud on the horizon. Actually, I see a large mass of clouds and they're as black as night. Anyone who's invested in the stock market over the last three or four years has little or nothing to show for it and, if you're still invested, you can't be feeling too comfortable right now. In short, a simple saving account would have been a better investment. Then again, when you buy into a market that's selling at 20 times earnings and paying a miniscule 1.75% dividend, what can you expect? Two weeks ago I warned my clients about the "probability", not the possibility, of a crash. What did I see that made me so worried that I would crawl out on a limb all by myself? Frankly, there were and still are any number of warning signals, and I would like to delve into some of them in the space provided below.
The first such warning sign comes from the market itself. Focus your attention on the following daily chart of the cash DJIA and follow along:
Lots of charts and analysis follows, HERE
Especially when the Fed is determined, above all else, to squash inflation like an armadillo on a Texas interstate...
Never Fight the Fed
There are so many doom and gloomers.
People want to believe the worst........I prefer to think positive....I am positive that the economy is going to crash....we are all going to starve to death and we then will have our homes and cars repossessed.
The banks will then sell our property to ...oh wait....there aint going to be anyone because we all starved to death or died from the damned bird flu.
Crimeny
Well said. Never.
In that case the preferred portfolio would include canned goods and ammunition.
Which 24 periods did gold outperform? Which 4 did the S&P 500 outperform?
Where have I ever said anything close to that?
What is a house's earnings and what dividend does it pay? By this same logic, nobody should buy a house.
The difference is you can't live in your gold.
Presently, the stock market indices are going nowhere; its a sideways market currently. A resumption of a bull market would require the indices to take out their 2001 highs and that just is not going to happen.
Never?
Profits are where you find them. There is no single magic bullet for anything. My personal favorite is this:
DJIA, 1971: 1000
DJIA, 2005: 10500
Total Return: 1050%
Sounds a little low, you have a source?
Gold, 1971: $35
Gold, 2005: $470
Total Return: 1343%
You sure about this? Source?
When Gold appears to have topped, I'll sell mine and move on to the next thing, just like when I sold out of the stock market in 2001 and plowed into commodities and gold - and laugh my way to the bank.
Wow!! Did you sell out at the very top? Is this Warren Buffett?
I'm afraid we are looking at a whole new set of rules should the same kind of crash come now. JMHO
So, 300,000,000 Americans times $40,000 each equals $12 trillion. I don't suppose you or he have a source that shows foreigners own $12 trillion in Treasuries?
Since We the People are the issuers of such debt, by proxy we owe money to foreigners.
So, by proxy I own a portion of ANWR and a slice of the Grand Canyon? Sweet?
You'll have to check with Mr. Lurk about the numbers. I was attempting to explain the concept...poorly.
So, by proxy I own a portion of ANWR and a slice of the Grand Canyon? Sweet?
Well, yes...but claiming your ownership by proxy of those assets would have as much impact as telling the traffic cop who stopped you that you pay his salary.
Sounds like a good time to put the retail sector ETF's. Banking too.
We are not spending much at all this Christmas. Everyone is getting a gift card from Mobil Oil for a tank of gas. Not cheap either. But that's it.
Thanks for catching the drift. You can't compare golds return to the S&P 500's return without considering dividends. 'Cause gold don't pay none!!
I knew what you (and he) meant. I just knew the numbers were off by at least several hundred %.
GOLD OUTPERFORMS S&P - 73 to 96 inclusive, 05
S&P OUTPERFORMS GOLD - 97 to 02 inclusive
ROUGHLY EQUAL RETURNS - 72, 03-04 inclusive
based on the chart posted above ..
This monthly chart shows a strong gold market since it bottomed out in 99 with a retest of the low in early 2000.
http://charts3.barchart.com/chart.asp?vol=Y&jav=adv&grid=Y&org=stk&sym=GCY0&data=H&code=BSTK&evnt=adv
Don't let anybody kid you. This is a strong bull market. We're still on the first leg with a flag breakout pattern.
Course, I could be wrong.
No, but you can certainly ride it up, sell it off, and live quite comfortably off the proceeds. Isn't that what people do with their investments or have I missed something?
Never?
Bull markets are always followed by bear markets. Switching out when the change happens and finding another investment to ride up is how one preserves capital and locks in gains. This is not a bull market we are in. Right now we're in an echo bubble as I see it. The indices have failed to take out the prior heights and Dow Theory has been singing a sell signal for a few years now. This is a trader's market, not a buy and hold market.
As for my calculations of Gold, keep in mind that Gold backed our currency until Nixon closed the Gold window. In 1971, it was statutorily $35/oz in the beginning of 1971 and was then raised to $42.22 per oz later in 1971 -- after which the gold window was closed. You can do your own research on that, but it is common knowledge to anyone with a set of encyclopedias around. All the gold held at Ft. Knox is still listed on the books at the statutory price of $42.22/oz.
Source
"The price of gold had been fixed at $35/oz since the Roosevelt administration."
As for the Dow, check this table and you'll see that in 1971, the DJIA was at 884.76 on average. It bounced around a bit in there, but failed to take out 1000, as shown on this chart:
Any questions?
Did you sell out at the very top?
No. I sold out a couple of months early as I was very twitchy for the year previously and felt I'd made enough in the market. Turns out I was right.
I expect to be right again and even if I don't pick the exact top, I'll come close enough to be happy with the gains and then I'll find some other undervalued, unappreciated investment, ride that up, wash, rinse, repeat.
Maybe you should have said...
Another way of interpreting that chart is that for a 24 year periods Gold returned more, sometimes a lot more, than the S&P 500.
Every so often, there's a prediction of economic disaster. Of Biblical disaster. Of Environmental disaster.
I wanna know what Art Bell's financial planner has to say!!
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