Here's The Chart That Has Stock Market Bears Ripping Their Hair Out

Stocks have had an incredible run so far since the beginning of the year. The S&P 500 is up a whopping 6.7% during the period, closing at 1342 on Friday.

In December, we surveyed 16 of Wall street's top strategists who told us that the S&P 500 would close at just 1363 by the end of 2012. At the time, five of those strategists had targets below 1342.

Well, some of the key risks cited included deterioration in the eurozone debt crisis, turmoil in the US political system, and slowing in the Chinese economy. All of which ultimately threatened corporate earnings, which is the key driver of stocks.

Here's the thing: earnings growth expectations have come down sharply. According to FactSet data, year-over-year earnings growth expectations for Q1 2012 have plummeted from 8.0 percent on September 30, all the way down to 0.0 percent this week.

Meanwhile, stocks roared ahead during that same period (See the chart below). This has the bears going nuts.

Have investors gone completely crazy? Maybe. As the saying goes, 'markets can remain irrational longer than you and I can remain solvent.' Credit Suisse's Andrew Garthwaite has written about numerous anomalies occurring in the global financial markets.

There is, however, one explanation for this bizarre disconnect between stocks and earnings expectations: valuation. Indeed, low valuations was one of the key reasons why BlackRock's Larry Fink recommended being 100 percent invested in stocks.

Soaring stock prices (numerator) amid falling earnings growth expectations (denominator) is a very quick way for valuations to rise back to historical norms.

From what I’ve heard, as soon as a foreclosed house comes available, it’s snatched up within the hour.

It's an insider game (what isn't?) and the desireable properties are gone before outsiders know they are available.

Sometimes I think the deal to purchase is set up between insiders before the foreclosure is put through.

Foreclosures that become available to the general public seem to be those that the inside investors let pass.

I agree that the deck is stacked for the money changers. Wall Street nor Vegas are in business to share the wealth or anything else for that matter.

What is the alternative to attempting to play-the-game though? There are negatives in everything:

1. Land and property are not ours as long as we do not control the ability of the government to tax and spend. What we “have” can be taken away from us just as easily as the commissars did in Russia during the revolution
2. Gold transactions are tracked and it can be confiscated by “exchange” or just taken as Roosevelt did.
3. You can’t easily go offshore because the tax collectors are chasing people to the ends of the earth. Unless you don’t want to live here anymore you have to get some money in to live on and that is traced as well. There is smuggling of course, moving money in small lots and offshore credit cards but these only go so far and one requires trips. We are being watched just as much as the Soviets watched their people. We are NOT FREE.
4. You could stuff it in cans in the backyard but what about inflation. I’ll never forget when interest rates were so high in Mexico back in the early 80s. One guy I knew thought he was cutting a really fat hog until they devalued the Peso. I never saw anyone head out the door for Mexico so fast. Same thing will happen here. Dollars are becoming worthless and dollars in coffee cans are less than worthless. We may not be Greece now but the day of reckoning will come by inflating out of the debt or collapse. We probably face an impossible task of raising nearly $200k for every person in the country to pay off the debt.

So, what does one do? You can only buy so many guns, salt away so much food etc. And yet another thing. I doubt there is safety in guns, food, fuel or gold for anyone who stands alone. It is a very John Wayne thing to say that they will pry my gun from my cold dead hands and it really feels pretty good to be defiant. As individuals thought we will not be able to defend our homes, our treasures or our family. Without a coalition we will be picked off one at a time. With a coalition and a defensible fortress we will have a very hard time of things. On the offense we stand a better chance. There is no appetite to start an offense. Is there one to finish a defense?

Honestly, I don't know. Things are just plain crazy. The government (Obama and friends) is lying, aided by their ideological protectors, the MSM. All the while, computers, brokerages and, what I must conclude as Friends-of-Hussein are raping small investors in the stock market, daily.

A whopping 6 point something gain since December 31. Whoopee. 2012 closed out even for the gullible investor, not connected, not savy, not a Friend-of-Hussein. We are BLEEDING money everyday, billions, trillions more than we produce. This is all being held together by the tenuous glue of a complicit media, AND a complicit cadre of market-connected insiders.

A word to the wise - this house of cards only has to hold together until November of this year. If this tyrant is re-elected, his plan will be compelete, and they won't feel the need to lull the investor any more. They're gonna just take what's left.

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