Very few Americans have any significant savings today. Most live on credit and those with savings have it stored in financial instruments that will be wiped out as the bankers collapse the system to hide the theft they have been involved in for decades. Those who think they will retire with their IRA, pensions or social security will find them all gone never to return leaving them with no means to care for themselves. Read More
Long term, total returns come from 3 places: changes to mcap to gdp ratio, gdp growth rates (including inflation), and dividend yields. Assuming GDP grows at 2.5% a year, inflation comes in a 2% a year, and dividends stay at 2% (any dividend growth comes from GDP growth, no double counting allowed), it would take 8 years of flat market growth (ie stocks be goin nowhere) for the GDP ratio (also known as the “Buffet Indicator”) to return to normal. How likely is that, when a much easier path would be for an immediate 40% drop and some slow growth after that?
5. Historically, housing has generally kept up with inflation (whereas stocks have generally performed negatively in real terms—which takes into account inflation). For example, look at the negative real returns on stocks during the 70’s; compare that to real value of housing that stayed flat during the 70’s (housing prices moved up in line with inflation).
To be sure, with human nature being what it is, thinking about a bear market is the last thing most of us are inclined to do right now. With the S&P 500 SPX, +1.55% just 1.5% below its all-time high, and some other indexes having already eclipsed their previous all-time highs from earlier this year, we’re more inclined to be celebrating than planning for the worst.
Exactly as publicly predicted by myself and Alex Jones, the anti-American globalists are now running pipe bombs false flags against CNN. This is not merely similar to what we publicly predicted would take place before the mid-term elections; it is exactly what we publicly predicted would take place. We even named CNN as the most likely target to be selected by the globalist operatives running the operation. Read More
This trend toward working remotely is actually very close to my heart, it’s how Mauldin Economics operates. Since my partners and I founded the company back in 2012, we have been a “virtual business.” Although we have over 40 members of staff, no more than three of us are in the same location. Right now, my team lives in a wide range of locations: from Dallas to Dublin, Ireland, and Vermont to Vilnius, Lithuania.
Gambling is according to Wikipedia the wagering of money (or something of value) on an event with an uncertain outcome. Three elements are required for gambling, consideration, chance, and prize. Thus, you make a bet and if you are lucky you win a prize but you can also lose it all. Gambling has been around for thousands of years and maybe longer. The first 6-sided dice dates back 3000 years. Eventually gambling became more organised as casinos were established. The first well known casino was set up in Venice in the early 1600s. Read More
The most valuable bubble empirically for the purpose of our elucidation has to be the Mississippi bubble, whose central figure was John Law. Law, a Scotsman whose father’s profession was as a goldsmith and banker in Edinburgh, set up an inflation scheme in 1716 to rescue France’s finances. He proposed to the Regent for the infant Louis XIV a scheme that would be based on a new paper currency. Read More
In fact, there is remarkably little evidence of organized bear raiding on the U.S. market following the October Crash. In order to dispel the myths, the economist of the New York Stock Exchange, Edward Meeker, published a book, entitled Short-Selling, in 1932. Meeker claimed that bears had not precipitated the crash. In November 1929, the NYSE found that around one hundredth of one percent of outstanding shares had been sold short. A later study in May 1931 found the short interest had risen to 3/5 of one percent of the total market value. More than ten times as many shares were held on margin. Nor could the stock exchange identify any bear raids in the subsequent market decline.
RATE AND REVIEW this podcast on Facebook.https://www.facebook.com/PeterSchiff/reviews/Optimism Over No Tariffs Fueling Market MoveDonald Trump, I think, was the reason the markets ended up finishing in the black today, at least most of the major indexes. In fact, the only index that was down on the day was the NASDAQ - the NASDAQ was the only m ...…
It may seem counterintuitive, but there's plenty of support for the argument that investors are actually doing the right thing by moving into bonds. It is annual portfolio rebalancing season and, given the huge gains in all stock markets around the world last year, portfolio allocations between stocks and bonds would have moved well away from target weightings.
The Dow Jones Industrial Average plunged as much as 550 points, or 2.17 percent, before bouncing back to close down just 126 points in a wild ride Tuesday. The index remains up for the year, with some sectors such as health care and consumer discretionary shares still doing pretty well. The S&P 500 Index is up 2.5 percent year to date, excluding dividends, and the tech-heavy Nasdaq Composite Index is up nearly 8 percent.
In the following Nasdaq chart, as seen through the Powershares QQQ Trust QQQ, +2.32% you can recognize that market is much earlier in the process of a correction, but has begun nonetheless. The data here only goes as far back as 1997, so it is possible that the Nasdaq does retest its highs before continuing down. That's not a risk I am generally taking. In looking at the risk range, we see that the Nasdaq could be in line for another 40% to 50% correction. Again, I don't think that is the likeliest outcome, but it is possible. I do expect a significant correction and if I had to pick a number, I'd say about 30% off of its top.
Rate and Review This Podcast on iTunesOverwhelming Evidence of a Weakening EconomyThe Dow Jones was the only one of the major indexes to close the day higher. The S&P was down slightly, we had larger declines in the Nasdaq and the Russell 2000. More importantly than the movements that we've just seen on the day, or even the week, look at what's ...…
Appeal Case – “As you know I needed to appeal but was not sure of the best approach. I was surprised when you told me you only accept certain appeals because you want to make sure they are valid appeals. Now I understand your process and your appeal expertise. I am so happy my appeal was valid, your service is the best investment I have ever made.” – Sophia H. – Arizona [Appeal Award $11,000]
A while ago, I asked a regular commenter at the Automatic Earth, who goes by the moniker Dr. D, to try and write an article for us. Not long after, I received no less than 31 pages, and an even 12345 words. Way too long for today’s digital attention spans. We decided to split it into 5 chapters. After we work through those 5, we’ll post it as one piece as well. Dr. D, who insists on sticking with his nom de plume, picked his own topic, and it’s -fittingly- bitcoin. A topic about which one can cover a lot of ground in 12345 words.
Erik: I want to come back to something you said earlier where you described if Treasury yields were to double that would obviously double the government’s cost of debt service. And the cost of debt service was about the same as it is now, ten years ago. But it was half as much debt. So with twice as much debt, if we go back to ten-years-ago Treasury yields, we would double the cost.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, municipal advisors gained an increasingly important role in overseeing financial and legal circumstances surrounding the issuance of bonds. The municipal advisor serves as a fiduciary for the municipal issue, taking care of all of the assets and finances involved in the issuance process. Legally, the advisor is obligated to represent the interests of the issuer and serve as a source of financial advice. This entails offering advice on structuring, selling, and promoting bonds, as well as serving as the central liaison between other members of the financial team, especially the underwriters and credit rating agency. Although municipal financial advisory services have existed for many years, municipal advisors have played a key role in the bond issuance process since the Securities and Exchange Commission enacted the Municipal Advisor rule in 2014, which prohibits certain communications between issuers and broker-dealers unless one of four exceptions is met, one being that the issuer has retained an Independent Registered Municipal Advisor ("IRMA").
What if real estate prices remain the same for another decade? As I look at economic trends in our nation including the jobs we are adding, it is becoming more apparent that we may be entering a time when low wage jobs dominate and home prices remain sluggish for a decade moving forward. Why would this occur? No one has a crystal ball but looking at the Federal Reserve’s quantitative easing program, growth of lower paying jobs, baby boomers retiring, and the massive amount of excess housing inventory we start to see why Japan’s post-bubble real estate market is very likely to occur in the United States. It is probably useful to mention that the Case-Shiller 20 City Index has already hit the rewind button to 2003 and many metro areas have already surpassed the lost decade mark in prices. This is the aftermath of a bubble. Prices cannot go back to previous peaks because those summits never reflected an economic reality that was sustainable. A chart comparing both Japan and U.S. housing markets would be useful here.
Then with a different data set, Odean  finds that “the securities individual investors buy subsequently underperform those they sell. When he controls for liquidity demands, tax-loss selling, rebalancing, and changes in risk aversion, investors’ timing of trades is even worse. This result suggests that not only are investors too willing to act on too little information, but they are too willing to act when they are wrong.
The most recent drop puts stock prices, even after more than two weeks of losses, only back to where they were in July of this year. And yet, we may be much closer to panic territory than it appears. Based on valuations, all it would take for stocks to enter a bear market would be a 5 percent drop in the S&P 500 from here. At the low on Tuesday, when the S&P 500 was down 60 points, the market was within 90 points of that threshold.
As this stock market correction progresses, it is natural to consider what levels may be effectivein halting the decline. We have recently taken a stab at a couple potential “support” levels in the U.S. market with excellent success, so far. Those posts include Monday’s The Mother Of All Support Levels on the broad Value Line Geometric Composite which held precisely, as well as a few Premium Posts at The Lyons Share covering key sectors, which also held on cue: Market Leaders At Must-Hold Levels and Finally Some Support To Bank On (if you’d like to see these posts, shoot us an email at [email protected] and we’d be happy to share). Read More
Peter Schiff has been saying for weeks this is a bear market. Well, now even Pres. Trump has said investors may see some short-term pain in the stock market. But the president says it will all be worth it because we will get long-term gain, referring to the benefits we’ll reap when we win the trade war. In his most recent podcast, Peter said that’s not how it’s going to play out. Read More
First, more NYSE stocks are bought on margin now than at any time since the 1950s, and Faber interprets this as a sign of overvaluation. Indeed, he finds that stock prices are "out of control," per Money, with the market P/E ratio nearly double its historical average. Once a selloff begins, Faber expects it to become an avalanche in which "asset holders will lose 50% of their assets [and] some people will lose everything," as Money quotes him.