Wild rumors spread of bear raids, of fabulous profits made by short-sellers, and of political conspiracies hatched by foreigners interested in bringing down the market, the dollar and the U.S. economy. In early 1932, the Philadelphia Public Ledger maintained that “European capitalists had supplied much of the cash needed to engineer the greatest bear raid in history. These proverbially open-handed and trusting gentleman had accepted the leadership of New York’s adroit Democratic financier, Bernard Baruch.” Baruch, the best known short-seller in the country, shrugged off the charge.
Extreme optimism just before the sell-off. We may not be there yet — but earlier this week, many of the largest companies were scoring 52-week highs, like Microsoft and Facebook. And according to this WSJ story, hordes of new individual investors have been diving into the stock market this year, finally shaking off their fear from 2008. It may not be “irrational exuberance” yet — but it’s trending in that direction

Written in a straightforward and accessible style, The Little Book of Bull Moves in Bear Markets reveals how you should protect your assets and invest your money when the American economy is experiencing perilous economic downturns and wealth building is happening elsewhere. Filled with insightful commentary, inventive metaphors, and pre-scriptive advice, this book shows you how to make money under adverse market conditions by using a conservative, nontraditional investment strategy.
You never know, at any point in time, if you are in a bear market. A bear market—commonly defined as a period in which a given stock index has dropped at least 20% from a peak—can only be identified after the fact. Until the market has dropped 20% from a peak, you are not yet in a bear market. Once it’s dropped 20%, you can say that you were in a bear market, but you still have no idea where the market’s going next of if you are in what will later be viewed as a bear market. Every uptick is potentially the end of a bear market and the beginning of a new bull market.
“This may seem old-fashioned, but there are skills to be learned when kids aren’t told what to do,” said Dr. Michael Yogman, a Harvard Medical School pediatrician who led the drafting of the call to arms. Whether it’s rough-and-tumble physical play, outdoor play or social or pretend play, kids derive important lessons from the chance to make things up as they go, he said. Read More
This is just the beginning of a long trip that will take us to South America (where we get to see a financial crisis underway in Argentina)… Germany (where we hope to find out more about how Germans are preparing to tighten up at the European Central Bank)… and Bermuda, where we are scheduled to give a speech to a group of readers at the Legacy Investment Summit. Read More
Paul R. Ruedi, a CFP® financial advisor in Champaign, IL, suggest investors regularly do “lifeboat drills” before a bear market starts. He says investors should “...imagine a bear market has occurred and the stock portion of their portfolio is down 20% or 30%. How will they feel? How are they going to react? Are they going to panic, or remind themselves that “this too shall pass,” and stay the course with their investments? We remind our clients to do these all the time, and when a bear market occurs, they are spared the panic and emotions that consume most investors during bear markets.”
The nominal returns, before accounting for inflation, were actually pretty decent for bonds during these real bears. Over their 45 and 50-year real bear markets, 5-year treasuries and long-term bonds returned 4.6% and 4.7% respectively on an annual basis. Bond investors would kill for those types of returns at the moment if it didn’t come with that pesky inflation.

This yearly ritual has become part of the news cycle, and the inequality it exposes has ceased to shock us. The very rich getting very much richer is now part of life, like the procession of the seasons. But we should be extremely concerned: their increased wealth gives them ever-greater control of our politics and of our media. Countries that were once democracies are becoming plutocracies; plutocracies are becoming oligarchies; oligarchies are becoming kleptocracies. Read More
Three weeks ago when GDX was trading around $17.90 I wrote a post titled "Why I Bought Gold Miners Today" in which I presented the concept that the gold miners were potentially all "sold-out" and ripe for a rally.  Since that day the GDX is up a little more than 3% but the price action has been far from convincing and GDX ran into stiff resistance just above $19 last week (double-top at $19.11 to be precise).  However, when one considers the totality of the picture it becomes easier to discern a potential head & shoulders bottoming pattern, with the recent choppy and lackluster price action as part of a larger bottoming process: Read More
The Trimtabs CEO said that, even accepting the argument about annual rebalancing and the fact that an aging demographic has greater need for income investments, investors could choose to go into cash or cash equivalents instead of bonds likely to go down in value. Some bank certificates of deposit are now yielding as much, in some cases more, than Treasurys. "There are other asset classes than stocks and bonds," Santschi said. "There's cash, real estate, commodities, precious metals."

Last week, we shined a spotlight on a crack in the monetary system that few people outside of Switzerland (and not many inside either) were aware of. There is permanent gold backwardation measured in Swiss francs. Everyone knows that the Swiss franc has a negative interest rate, but so far as we know, Keith is the only one who predicted this would lead to its collapse (and he was quite early, having written that in January 2015).

“Government has coddled, accepted, and ignored white collar crime for too long. It is time the nation woke up and realized that it’s not the armed robbers or drug dealers who cause the most economic harm, it’s the white collar criminals living in the most expensive homes who have the most impressive resumes who harm us the most. They steal our pensions, bankrupt our companies, and destroy thousands of jobs, ruining countless lives.” – Harry Markopolos Read More


I would contest a little bit, Erik, the idea that we have not been monetizing the debt. The Fed, of course, has been monetized. It’s buying federal securities with credit that did not exist before the Fed tapped the relevant numbers on its computer keypad. The Fed has come to own substantial portions both of mortgage-backed securities and of Treasuries securities outstandings.
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Rebalancing back to 50-50 2x and cash daily will have provide the closest tracking, but the costs will kill. You can rebalance much less frequently, perhaps at 40% bands (when the weights have declined below 30%/risen above 70% for instance) and achieve similar general reward as the 1x with much less rebalance frequency (once every year or two perhaps), but likely with some tracking error – that has 50-50 probability of being better or worse.
Build America Bonds are a taxable municipal bond created under the American Recovery and Reinvestment Act of 2009 that carry special tax credits and federal subsidies for either the bond holder or the bond issuer. Many issuers have taken advantage of the Build America Bond provision to secure financing at a lower cost than issuing traditional tax-exempt bonds. The Build America Bond provision, which expired on January 1, 2011, was open to governmental agencies issuing bonds to fund capital expenditures.[9][10][11]

In 2008 through 2011, new public service announcements (PSAs) featuring Smokey rendered in CGI were released.[57] In 2010, the PSAs encouraged young adults to “Get Your Smokey On” – that is, to become like Smokey and speak up appropriately when others are acting carelessly.[58] In 2011, the campaign launched its first mobile application, or app, to provide critical information about wildfire prevention, including a step-by-step guide to safely building and extinguishing campfires, as well as a map of current wildfires across America.[59]
As such, the firm expects earnings-per-share (EPS) growth to slow in the second half of 2018 as the positive effect wears off. The chart below shows the downturn being forecast by Morgan Stanley's one-year leading earnings indicator. The expected slowdown would mark the end of a good run for companies in the S&P 500, which have already enjoyed seven straight quarters of profit expansion.
It’s just amazing what is happening in China. And I think that it represents a clear and present danger to everyone with money at risk. Not just the Chinese. Not just the real estate markets in countries favored by the Chinese, such as Australia. Not just in the industrial metals markets – China has been kind of 100% of the demand for the margin for steel and the like. But this debt thing is a very, very important low-hanging dark cloud over the world, and we have all gotten used to it.
I suspect it began with the top in Bitcon and the other 1300-1400 related pseudo currencies back in December. I did an interview in the first week of December where I said Bitcon was in a bubble. I believed it would do the same thing every other bubble in history did. It was going to crash and take all the money of most of the investors. The piece was posted on the 10 th of December. When I did the interview, Bitcon had been going virtually straight up for months and was about $16,858, a new high. Read More
Ten-year Treasury yields jumped 13 bps this week to 2.48%, the high going back to March. German bund yields rose 12 bps to 0.42%. U.S. equities have been reveling in tax reform exuberance. Bonds not so much. With unemployment at an almost 17-year low 4.1%, bond investors have so far retained incredible faith in global central bankers and the disinflation thesis.

The public pension fund system is approaching apocalypse.  Earlier this week teachers who are part of the Colorado public pension system (PERA) staged a walk-out protest over proposed changes to the plan, including raising the percentage contribution to the fund by current payees and raising the retirement age.   PERA backed off but ignoring the obvious problem will not make it go away.
I am primarily a value investor. For me, the algorithms serve as a way to monitor whether my view about valuations is becoming accepted by other market participants. As I have mentioned, I believed earlier this year that we were in the late stage of a cyclical bull market. The markets are finally agreeing and turning the late-cycle bull into an early cycle bear.
During the bear market a heavy debate ensued as to whose fault the falling market was. The political parties were heavily divided during this period.[10] For the most part there were three camps: ones that simply blamed the economy, others that wanted to pin the passing Bush Administration and others that wanted to push the blame on the newly arriving Obama Administration.
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.
Rate and Review This Podcast on iTunesDow Swings More Than 900 PointsWell we didn't have a Black Monday today, but we did have a pretty big selloff, especially if you measure the decline from the early morning pop to the late afternoon drop. I think it was better than a 900 point selloff. Earlier this morning the Dow Jones was up about 350 poin ...…
Bear markets cost investors money because security prices generally fall across the board. But bear markets don't last forever, and they don't always give advance notice of their arrival. The investor must know when to buy and when to sell to maximize his or her profits. As a result, many investors attempt to "time the market," or gauge when a bear market has begun and when it is likely to end.
Then with a different data set, Odean [1999] 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.
@Tony – Cheers for your thoughts. As I understand it, conventional indices are constructed to take into account the compounding of their underlying holdings, so that this sort of error does not emerge. Regarding my friend, yes, the theory was (and seems quite common, from a quick Google) that the short ETF would go up in value as his portfolio fell over a few weeks. The trouble is the daily compounding means a different kind of bet is being undertaken. I agree that a plunge protection fund makes far more sense if you’re a dabbler, but most people who are draw to active strategies, even semi-responsible semi-active ones like me, find it hard to sit in cash and wait, especially at today’s rates. (Doesn’t mean it’s not right to do that, just saying I think people feel the need to ‘do something’ and feel the Short ETF is something).
Niall Ferguson is a senior fellow at Stanford University, and a senior fellow of the Center for European Studies at Harvard, where he served for twelve years as a professor of history. Niall is one of the finest economic historians on the planet; but he isn’t only an academic. What many people don’t know is that he works with a small group of elite hedge fund managers and executives as the managing director of macroeconomic and geopolitical advisory firm, Greenmantle.

"The first thing to do is check the current risk of the portfolio," Alexander G. Koury of Values Quest Inc. told TheStreet in July. "This will help the investor determine what would be the worst-case scenario if the market were to move into a bear market. That means an investor will know how much they're willing to lose of their portfolio, and they can determine whether or not that is comfortable for them."


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Eventually, probably when a recession comes along and crushes corporate earnings, it will become clear that earnings and the high valuations attached to them are unsustainable. When that happens, the same unsophisticated investors blindly plowing their money into the market will panic and rush to the exits similarly to what happened in 2001 and 2008/2009. Therefore, we can expect a minimum 50% drop in the S&P 500 and long term returns—I’m talking about 20 to 30 years—below 4% per year given that the S&P 500 earnings yield is 3.83%.
Obviously nobody knows for sure. That is what makes investing interesting and sometimes downright scary. But we need to parse through the data available and find where our convictions lie. This article is meant to give readers all the ammunition they need to discern a position for themselves but we will also provide our assessment at the end. It is fine to disagree. We need investors on both sides of the argument. That is what makes up a marketplace in the first place.
There are two crucial factors why silver will increase more in value than gold during the next financial meltdown.  These factors are not well known by many precious metals analysts because they focus on antiquated information and knowledge.  While several individuals in the precious metals community forecast a much higher Gold-Silver ratio during the next financial crash, I see quite the opposite taking place.
After appointing a municipal advisor, bond issuers recruit a syndicate of legal professionals to serve as the financing team's bond counsel. The counsel works to verify the legal details of the issuance and ensure that the issuing agency is complying with all applicable laws and regulations. As the formal legal advisor for the deal team, the bond counsel will typically draft core documentation relating to bonds, including loan agreements, indentures, and other critical documents. Along these lines, the bond counsel is also tasked with reviewing and advising on any legal issues that might arise, and interpreting how tax laws affect the issuance. For instance, the bond counsel will decide if an issuance is exempt from state or federal taxes.[12]

But as Sam Stewart of Seven Canyons Advisors points out, it’s never the clock that brings an end to an economic cycle. “It’s always excesses,” he says. Stewart sees “a hint” of excess here and there. But nothing like what we saw leading up to the housing-related market crisis 10 years ago. The kind of excesses that typically bring down the economy and the market may still be years away, he says.
Repayment schedules differ with the type of bond issued. Municipal bonds typically pay interest semi-annually. Shorter term bonds generally pay interest only until maturity; longer term bonds generally are amortized through annual principal payments. Longer and shorter term bonds are often combined together in a single issue that requires the issuer to make approximately level annual payments of interest and principal. Certain bonds, known as zero coupon or capital appreciation bonds, accrue interest until maturity at which time both interest and principal become due.
I think the bottom line is that the hot market is Trump Bashing stories. Pursuing a story that might vindicate him or show him to be the victim of an abusive Obama Administration would bring down the thunder of the entire Left and it would mean basically having to admit that they’ve been butt kissing enablers for the past 2 presidential terms, and that their defenses of Obama and Hillary were really just the soft bigotry of lowered expectations because they were so focused on ‘first woman’ and ‘first black man’ without bothering to listen to what either of them actually said. The cognitive dissonance would then cause the entire left side of the political spectrum of the US to collapse under it’s own weight. Think Inception.
Dr. D: The money, the unaccountable, uninhibited release of tokens can do more than just buy centuries of hard labor in seconds, it‘s also a method of control. Banks, our present issuers of money, can approve or destroy businesses by denying loans. They can do this to individuals, like denying loans to unpopular figures, or to whole sectors, like gun shops. They can also offer money for free to Amazon, Facebook, and Tesla, which have no profitable business model or any hope of getting one, and deny loans to power plants, railroads, farms, and bridges as they fall into the Mississippi. 
Great question. We are certainly in a confirmed market correction. The Four Horsemen have been released by the titans of doom. So are we in the early stages of a bear market? Is this just another selloff, as in February and April? Market movement is far more violent now that human decision-makers play a far less significant role in price discovery. Hey, humans were too slow for the big players. Well, you reap what you sow.
Relaxed is how an asset management office should be because if you know what you are doing, you can be pretty sure that you will do well in a certain time horizon. However, the reason behind the relaxed atmosphere at Vanguard isn’t because they know what they’re doing, it’s because they do absolutely nothing. Let me elaborate, out of the $4 trillion of assets under management, about $3 trillion is invested in passive index-based strategies. Investing in passive index-based strategies means investing in a little bit of everything and letting the market decide how much you’ll buy of what as the indexes are weighted by market capitalization. So Vanguard invests around $2 billion a day of new investors’ money mostly into companies like Amazon, Apple, Microsoft, and smaller amounts into smaller companies.
Two thirds of Americans get at least some of their news on social media. Google and Facebook receive well over 70% of US digital advertising revenues. The average daily time spent on social media is 2 hours. Just a few factoids that have at least one thing in common: nothing like them was around 10 years ago, let alone 20. And they depict a change, or set of changes, in our world that will take a long time yet to understand and absorb. Some things just move too fast for us to keep track of, let alone process. Read More
Additionally, having a diversified portfolio in stocks, bonds, cash, and alternative investments is important in a bear market. Alternative investments are non correlated with the stock and bond market so over time having this type of asset allocation has proven to out perform the older more traditional stock, bond and cash portfolio asset allocation model.
Misguided Tweet About PfizerAnother misguided tweet that came out today from the President had to do with drugs:Pfizer & others should be ashamed that they have raised drug prices for no reason. They are merely taking advantage of the poor & others unable to defend themselves, while at the same time giving bargain basement prices to other count ...…
The equity market continues to suffer several months of uncertainty. Predominantly, it’s because of the possibility of a Sino-U.S. trade war in the near term. President Trump recently said that he was “ready to go” on hitting China with an additional $267 billion worth of tariffs. The Trump administration is already finalizing plans to impose tariffs on $200 billion worth of Chinese products. If these measures are met with retaliatory actions by China, it could lead to a full-on trade conflict, one that could adversely affect global economies and eventually squeeze corporate profits.
Niall Ferguson is a senior fellow at Stanford University, and a senior fellow of the Center for European Studies at Harvard, where he served for twelve years as a professor of history. Niall is one of the finest economic historians on the planet; but he isn’t only an academic. What many people don’t know is that he works with a small group of elite hedge fund managers and executives as the managing director of macroeconomic and geopolitical advisory firm, Greenmantle.

In 2016, the campaign launched a new series of PSAs that aimed to increase awareness about less commonly known ways that wildfires can start. The new “Rise from the Ashes” campaign featured art by Bill Fink, who used wildfire ashes as an artistic medium to illustrate the devastation caused by wildfires and highlight less obvious wildfire causes.[62]
The 2000-02 bear market environment was similar. In short, a decent market bounce was overdue but it’s too early to write off the bears. Rough start not a bad omen Prior to last week’s bounce, there was much gnashing of teeth regarding how stocks had endured one of their worst starts to a year. Investors are still scarred by 2008, when early declines proved a foretaste of further bloodletting. But, an early-year bruising is not an inherently ominous affair, says an LPL Financial note. It found 19 cases where stocks endured heavy losses during the first six weeks of the year; on average, stocks returned 5.3 per cent over the remainder of the year, with positive returns ensuing in 58 per cent of occasions. In fact, 2008 is an exceptional case: over the last 40 years, it was the only time where a rough beginning to a year was followed by double-digit losses. There continues to be much chatter about 2016 being 2008 redux but a “sizable drop from here for the rest of the year”, says LPL, “would be extremely rare”.
The past two years have seen a rather aggressive change in corporate policies toward the very customers they used to covet. Not long ago, CEOs tended to keep their political views mostly in the closet. Companies remained publicly neutral because their goal was first and foremost to make money. When they wanted to influence politics or social norms, they bought politicians — you know, the good old-fashioned way. The big banks still do this by funneling cash to both Republicans and Democrats alike
We are nearly a year into Donald Trump’s presidency, and the economic numbers continue to look quite good.  On Monday, we learned that U.S. retail sales during the holiday season are projected to be way up compared to 2016.  Yes, there are all sorts of economic red flags popping up all over the place, and I write about them regularly.  And without a doubt, 2017 has been one of the worst years for brick and mortar retail stores in a very long time.  But when something good happens we should acknowledge that too, and many are giving President Trump credit for the fact that retail sales are projected to be up 4.9 percent this holiday season compared to last year... Read More
The Dow is now gyrating after it plunged to 16,450 Friday and experienced an intra-day swing of near 1,100 points on Monday, leaving it more than 10 percent below its record close in May. The Dow hit an 18-month low at 16,106 on Monday morning before it trimmed losses. The NASDAQ is down 11 percent from a record high reached earlier this year and is on pace for its worst month since November 2008.
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Central banks may tweak a few rates here and there, announce some tapering due to “economic growth”, or deflect attention to fiscal policy, but the entire financial and capital markets system rests on the strategies, co-dependencies and cheap money policies of central banks.  The bond markets will feel the heat of any tightening shift or fears of one, while the stock market will continue to rush ahead on the reality of cheap money supply until debt problems tug at the equity markets and take them down.Read More
*** “Treasury officials said their decision to halt the issuance of the 30-year bonds was intended to save the government money,” writes Gretchen Mortgensen in the NY Times. “Traders scoffed at that explanation, viewing the move as an almost desperate attempt to push down long- term interest rates, and prod both corporate and individual borrowers to spend again.”
One famed investor who has explored this question is “Bond King” Jeffrey Gundlach. The man needs no introduction, but I’ll give him one anyway. Jeffrey is the CEO of DoubleLine Capital, where he manages $116 billion—and has a stellar track record. Jeffrey has outperformed 92% of his peers over the last five years. His flagship DoubleLine Total Return Bond Fund (DBLTX) has also outperformed its benchmark by a wide margin over the same period.
What is the opposite of a margin of safety? That is a question this market has had me asking myself for some time now. A margin of safety is a discount to intrinsic value that provides a safety net in the result of an error in analysis or unforeseen negative developments. The opposite of a margin of safety then is a premium to intrinsic value than can vanish even if your analysis is correct or things go unexpectedly in your favor. There are times when a security reaches a valuation such that even if everything goes right you’re unlikely to profit. The price has already discounted a perfect outcome. This “priced for perfection” scenario is the opposite of a margin of safety and this is currently where the stock market finds itself today. Read More
Early in 2018, we detailed Bridgewater's massive short bet against Europe, peaking at a record total short against the EU's biggest companies of around $22 billion. At the time we noted that, since Bridgewater is not known for picking individual stocks, the manager’s position was the result of a view on the wider economy according to James Helliwell, chief investment strategist of the Lex van Dam Trading Academy.
One thing that turns a correction into a bear market can be investor psychology. Since much of investing, especially in the short term, is about trying to guess what other investors may be thinking and react accordingly, selling can breed more selling. That is, people who think other people are selling may try to get out of positions before they lose more value, depressing stock prices in the short term.
Such behavior is rare, however. To illustrate, consider the several hundred stock market timers monitored by my Hulbert Financial Digest. These are professionals, needless to say, rather than amateurs like the rest of us. It’s their job to identify market tops and bottoms, which is yet another way of saying that they will be more heavily exposed to equities at those bottoms than at tops.
Written in a straightforward and accessible style, The Little Book of Bull Moves in Bear Markets reveals how you should protect your assets and invest your money when the American economy is experiencing perilous economic downturns and wealth building is happening elsewhere. Filled with insightful commentary, inventive metaphors, and pre-scriptive advice, this book shows you how to make money under adverse market conditions by using a conservative, nontraditional investment strategy.
Trade wars are usually bad for all parties in the end but between the beginning and the end there can be some surprising developments. Human actions and delusions on the part of the public can produce strange results at times. All of our systems are based on trust. When that trust is lost, everything will come crashing down. Until then, things will go on. Read More
Over the last decade many traditional and new market participants have begun to apply current technology solutions to the municipal market remedying many of the latent problems associated with many aspects of the municipal bond market. The emergence of products like small denomination municipal bonds, for example, is a result of new bond financing platforms. Such products also open up the muni market to middle-income buyers who otherwise couldn't afford the large, $5,000 minimum price in which bonds are typically bundled. The general idea with modern platforms is to leverage technology to make the market more responsive to investors, more financially transparent and ultimately easier for issuers and buyers. Many believe that, in doing so, more people will compete to buy muni bonds and thus the cost of issuing debt will be lower for issuers.[15]
Now a money manager at Janus Henderson, Gross was the co-founder of Pimco, which he helped build into the world’s largest bond fund manager and was dubbed the “bond king” by the financial media. In his note, Gross said he expected the 10-year yield to rise above 2.75% by the end of this year. But he waved away worries that rising yields would deal pain to investors, saying higher yields could sit along with slightly positive returns for bonds.
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