What do 1929, 2000 and 2007 all have in common? Those were all years in which we saw a dramatic spike in margin debt. In all three instances, investors became highly leveraged in order to “take advantage” of a soaring stock market. But of course we all know what happened each time. The spike in margin debt was rapidly followed by a horrifying stock market crash. Well guess what? It is happening again. In April (the last month we have a number for), margin debt rose to an all-time high of more than 384 billion dollars. The previous high was 381 billion dollars which occurred back in July 2007. Margin debt is about 29 percent higher than it was a year ago, and the S&P 500 has risen by more than 20 percent since last fall. The stock market just continues to rise even though the underlying economic fundamentals continue to get worse. So should we be alarmed? Is the stock market bubble going to burst at some point? Well, if history is any indication we are in big trouble. In the past, whenever margin debt has gone over 2.25% of GDP the stock market has crashed. That certainly does not mean that the market is going to crash this week, but it is a major red flag.
The funny thing is that the fact that investors are so highly leveraged is being seen as a positive thing by many in the financial world. Some believe that a high level of margin debt is a sign that “investor confidence” is high and that the rally will continue. The following is from a recent article in the Wall Street Journal…
The rising level of debt is seen as a measure of investor confidence, as investors are more willing to take out debt against investments when shares are rising and they have more value in their portfolios to borrow against. The latest rise has been fueled by low interest rates and a 15% year-to-date stock-market rally.
Others, however, consider the spike in margin debt to be a very ominous sign. Margin debt has now risen to about 2.4 percent of GDP, and as the New York Times recently pointed out, whenever we have gotten this high before a market crash has always followed…
The first time in recent decades that total margin debt exceeded 2.25 percent of G.D.P. came at the end of 1999, amid the technology stock bubble. Margin debt fell after that bubble burst, but began to rise again during the housing boom — when anecdotal evidence said some investors were using their investments to secure loans that went for down payments on homes. That boom in margin loans also ended badly.
Posted below is a chart of the performance of the S&P 500 over the last several decades. After looking at this chart, compare it to the margin debt charts that the New York Times recently published that you can find right here. There is a very strong correlation between these charts. You can find some more charts that directly compare the level of margin debt and the performance of the S&P 500 right here. Every time margin debt has soared to a dramatic new high in the past, a stock market crash and a recession have always followed. Will we escape a similar fate this time?
What makes all of this even more alarming is the fact that a number of things that we have not seen happen in the U.S. economy since 2009 are starting to happen again. For much more on this, please see my previous article entitled “12 Clear Signals That The U.S. Economy Is About To Really Slow Down“.
At some point the stock market will catch up with the economy. When that happens, it will probably happen very rapidly and a lot of people will lose a lot of money.
And there are certainly a lot of prominent voices out there that are warning about what is coming. For example, the following is what renowned investor Alan M. Newman had to say about the current state of the market earlier this year…
“If anything has changed yet in 2013, we certainly do not see it. Despite the early post-fiscal cliff rally, this is the same beast we rode to the 2007 highs for the Dow Industrials. The U.S. stock market is over leveraged, overpriced and has been commandeered by mechanical forces to such an extent that all holding periods are now affected by more risk than at any time in history.”
Unfortunately, most Americans never get to hear such voices. Instead, most Americans rely on the mainstream media to do much of their thinking for them. And right now the mainstream media is insisting that we are not in a stock market bubble…
ABC News: “AP Survey: Economists See No Stock Market Bubble“
Businessweek: “Prognostications: It’s Not a Stock Bubble“
MarketWatch: “Is a stock bubble coming? No, say economists“
So what do you think?
Do you believe that we are in a stock market bubble that is about to burst, or do you believe that everything is going to be just fine?
Please feel free to express your opinion by posting a comment below…
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Platinum market deficit to hit 844,000oz in 2013 – HSBC
According to the bank, the platinum market is likely to record a significant deficit in 2013 but, this does not necessarily imply higher prices.
Author: Geoff Candy
Posted: Saturday , 15 Jun 2013
GRONINGEN (MINEWEB) –
The platinum market is likely to hit a record deficit of 844,000 ounces in 2013, HSBC says, as supply shrinks and demand, especially from ETFs picks up.
But, despite this favourable fundamental picture, the bank has cut its average price forecasts for this year and next to $1,580/oz and $1,725/oz from $1,710/oz and $1,800/oz respectively.
The reason for this, the bank writes, is that “Platinum has been more influenced than we had anticipated by the sharp swings in the gold price and this will pull average prices lower for this year and next.”
Nonetheless, the fundamental picture for platinum remains engaging.
On the supply side, HSBC is forecasting total global production of c5.646moz for 2013, with South Africa by far the biggest producer.
This, it says, is a decline of 6.3% from its previous forecast, and is nearly flat on 2012 levels. In other words, the group expects virtually no mine output growth for the year.
Citing the bank’s metals and mining analyst, Emma Townshend, HSBC writes that much of the reason for this is that the chances of further strike action in the South African PGM minefields later this year are high.
“Miner’s unions are demanding double-digit pay increases, which are well above producer offers. Low prices mean that producers are not in a financial position to meet union pay demands and some producers such as Amplats have built stocks in anticipation of production interruptions, due to strike action.”
While the HSBC report came out ahead of the release of a draft action plan signed by government, business and labour in South Africa, committing to a number of initiatives to try and improve the performance of the industry the point stands.
See also: Did South African mining just grow up?
The bank is rightfully wary of further industrial unrest in the country as wage negotiations are likely to be exceptionally tough to get right and could well lead to further disruption to the supply side of the market.
But, it is also important to take note of the cost side of the business as this too has long term implications for the supply side.
According to Townshend, the fair PGMs basket price, which includes a weighted basket of platinum palladium, rhodium, gold, ruthenium, and iridium, currently stands at about ZAR461,855/kg, significantly above the current spot price of ZAR380,000/kg.
"The incentive price analysis suggests that current PGM prices are below levels required to provide producers with an incentive to maintain the current broad base of South African PGM production, let alone plan to increase future output," HSBC writes.
"At the very least, in the current price climate no South African producer can afford to expand capacity and some may rationalize production in 2013.
"Should demand increase, producers might not be able to respond to the increased appetite for metals. This would have a commensurate bullish impact on price."
Based on Townshend’s estimates, HSBC says it expects South African platinum production to fall 8% over the course of the year to c4.066moz – which provides its most compelling argument for being bullish on the sector.
Looking to the other producing regions, it expects Russian production, which accounts for roughly 14% of the global total, to rise around 1% over the year to around 765,000oz , while it expects Zimbabwean production to remain flat at about 375,000oz.
While it previously forecast gains from North American producers, these haven’t been forthcoming and, as a result, the bank has cut its North America production forecast by 13%, "although output should be steady from last year’s levels," it says.
Adding, "If non-South African production is more robust than we forecast, or if South African producers are forced to curtail output even further, our forecast of supply/demand deficits for 2012 and 2013 may narrow or widen, with a commensurate impact on price."
On the demand side, HSBC expects that demand for autocatalysts to remain strong in the US and China and says although it expects it to moderate somewhat it should be able to offset the impact of ongoing weak demand in Western Europe.
HSBC also expects to see a recovery in demand from glass manufacturers and oil refiners while on the jewellery front, despite a slowdown in Chinese economic growth, it says, " platinum jewellery’s status as a luxury good and effective marketing is increasing consumption in that country."
It is however, the success of the recently launched South African platinum exchange-traded fund that has caught the eye.
This rise, HSBC says, combined with steady coin, and bar demand is expected to play a key role in keeping the market in deficit in 2013.
"We are raising our forecast for ETF increases in 2013 to 600,000oz, a 140% increase to our December 2012 forecast. If our forecast is correct, demand for platinum from ETFs will have more than doubled in one year," the bank says.
It adds, that because platinum is a relatively small market, even slight shifts in investment sentiment can trigger flows that can have a noticeable impact on prices.
"Sluggish investment demand in the first few months of the year played an important role in platinum’s price decline, in our view. The launch of the South African ETF in mid-May has already attracted a whopping 371,000oz of platinum demand to date. This is more double the growth in the rest of the platinum ETFs combined this year, which grew 144,000oz. While we do not expect this rapid pace of accumulation to continue, we do believe platinum ETF investment continues to benefit from investors who are seeking hard assets, and may also attract some investors from gold."
So where does this leave the platinum price longer term?
HSBC believes that the platinum market will experience two consecutive years of deficits. The world had one in 2012 and will see another one this year but, it says, deficits do not immediately result in price rallies.
As it points out, "Large deficits in 2002 and 2003 elicited higher prices, but the gains were not significant, and platinum prices stayed well below USD1,000/oz."
But, it adds, at current low price levels, a sizable amount of current production uneconomical. Thus, higher prices are needed if production is to be maintained over the longer term.
"Additionally, the newly launched South African platinum ETF is absorbing a significant amount of metal at a time of static mine production growth. Jewellery demand remains strong and may be benefitting from the dip in prices. Should industrial or auto demand push above forecasts, we believe the market response may be soundly positive for prices, especially if investment demand remains firm."
Statistics: Posted by DIGGER DAN — Mon Jun 17, 2013 8:49 am
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Bull Market, Really?
Tim W. Wood
Posted Jun 12, 2013
I told my subscribers back at the 2009 low that the longer the rally out of that low lasted, the more convincing it would become. At the time I made this statement, I did not truly understand how profound it would become. I have maintained, ever since the rally out of the 2009 low began, that it was a rally within the context of a much longer-term secular bear market. I have also maintained, ever since the rally out of the 2009 low began, that this rally would continue until my DNA Markers, which have appeared at every major top since 1896, are seen. At that time I did not think that this rally would carry price to new highs, but in spite of that fact, the data continues to suggest that this is still, nonetheless, a rally within the context of a longer-term secular bear market. The fact that this advance has carried price to new highs has changed nothing. Nor has the fact that the advance has continued as long as it has. Rather, the data tells me that this has turned out to be a much bigger trap with a much bigger train wreck to follow once the setup with the DNA Markers is complete.
With this all said, I realize that it may be beyond hard to understand how a move to new highs can be considered a rally within the context of a much longer-term secular bear market. For starters, let me explain that since 1896, secular bear markets have run about a third the duration of the preceding secular bull market. I want to also add that it is a historical fact that at secular bear market bottoms the PE Ratio on the S&P has been roughly at par with the dividend yield.
Here’s the details and a little background. Prior to 1921, the secular bull and bear markets were one and the same with the upward and downward portion of the 4-year cycle. Beginning in 1921, these secular periods began to grow in duration with the first extended secular bull market running from 1921 to 1929. This 8 year secular bull market was then followed by the secular bear that concluded at the 1932 low and which proved to be approximately one-third the duration of the preceding secular bull market. Furthermore, the PE on the S&P at that low was under 10 with a dividend yield of 10.50.
The next secular bull market began at the 1942 low and extended up into the 1966 top, which was a period of 24 years. The secular bear market that followed bottomed in 1974, which was an 8 year period, which again, was some one-third the duration of the preceding secular bull market. At the 1974 low the PE on the S&P was 7.24 and the dividend yield was 5.9.
The next secular bull market began at the 1974 low, not the 1982 low. Reason being, this was the low point, which was confirmed by a bullish primary trend change in accordance with Dow theory and a value low, as is represented by the historical PE and dividend yield. Furthermore, Richard Russell called that bottom using Dow theory within weeks of the low.
Now, this brings us to the 2002 and the 2009 lows. The first problem with the 2002 low is that it was preceded by only a 2 year decline, which if we assume for the moment that the secular bull market peaked in 2000 the bear market decline would have been less then 10% of the duration of the preceding secular advance. This falls far short of the historical one-third average and the PE at the 2002 low was 33.12 with a dividend yield of 1.79, which is hardly at par.
Now if we assume for the moment that the secular bull market ran from 1974 to 2007, which I think is the case, it makes the secular bull market 33 years in duration. Again, the decline into the 2009 low was a mere 2-years, which in this case was only 6% of the duration of the preceding secular bull market and which also falls far short of the one-third historical norm. Also, at the 2009 low the PE on the S&P was at 23.76 and the dividend yield was at 3.58, which again is hardly at par.
So, based on these historical relationships and measures, which go back to 1896, I can only conclude that neither the 2002 nor the 2009 lows marked a secular bear market bottom. My historical research also shows that in every extended secular bear market period, each 4-year cycle has violated the previous 4-year cycle low. Therefore, with the 2009 low having violated the 2002 low, the data further suggests that the 2007 high marked the secular bull market top. If this is true and if the secular bear market that follows holds to the historical one-third duration relationship with the previous secular bull market, this secular bear market should run some 11 years, which would take it out until approximately 2018.
But, what about the fact that price has moved to a new high? How could we possibly be in a secular bear market period with price having moved to a new high? Well, I have included a chart of the 1966 to 1974 secular bear market below. As you can see, in conjunction with the rally out of the 1966 Phase I low, the Transports moved to a new high, but was still followed by a move to new lows in conjunction with the decline into the Phase II low in 1970. Then, as the market rallied out of the 1970 Phase II lows, the Industrials moved to an all time new high in January 1973. In looking at the chart of this period do you not think that with the market at new highs following the two severe, declines into the 1966 and 1970 lows that the public was not convinced of a new bull market when it was sitting at new highs in January 1973? I’d say so. I mean, what idiot would argue otherwise with this kind of market recovery? After all, the advance had even produced a so-called “Dow theory buy signal,” as was also the case with the advance out of the 1966 low. Well, things aren’t always as they appear and those who understood Dow theory phasing understood what was going on. Those that did not, were ultimately slaughtered. I’m telling you, the data tells me that the sheeple are again being lead to the slaughter house and it’s not going to be pretty.
Want a little more evidence? Something other than just these historical relationships that go back to the inception of the Dow Jones Industrial Average in 1896? Okay, let’s look at the foundation that this so-called bull market rests on, Total NYSE Volume. I have included a chart below showing a phenomena that has never been seen before. Total volume, as is represented by the red line on the chart, peaked in August 2007, which was two months before the price peak. There were, of course, volume spikes as price moved into the 2009 low. Then, volume dropped off as the advance out of the 2009 low initially began, but finally did pick up in association with the advance into late 2009. But, note that it was less than what was seen in association with the low. Volume then contracted in December of 2009 and into the decline that was seen into early 2010. Since then, note that the advances have occurred on shrinking volume and the expansions have occurred in association with the price declines. In particular, look at the most recent advance that has followed the November 2012 low and that has carried price to new all time highs. New Bull Market? Seriously? Common sense should tell anyone that this is not what bull markets are made of. This behavior is indicative of a bear market rally. I simply fail to see any other way of reading this. I don’t care what the politicians, commentators, economist, some so-called expert, Phd or any other analyst says. Since 1896 there has never been a bull market like this. There is no historical precedent for such behavior. This data cannot be overcome, the data does not lie and this is not good.
The talking heads and so-call analysts that are advocates of this being a new bull market have simply not done their homework. In my opinion, as is the case with the public, they too are being lead by emotion. Plus, it’s a whole lot easier to sell people on something they can see rather than something that they can’t. I wish my conscience would let me take the easy road out and make the easy sell, but it won’t. When I called, in print, the top in 2000, few listened. When I explained, in print and on the air, throughout the 2005, 06 and 07 period that we were dealing with an extended 4-year cycle advance and that the stretching of that cycle would only make matters worse, few listened and, yes, the call of The top was made to my subscribers in 2007. I also saw the exact same thing with the call of the top in housing in 2005, which yes, that too was in print. Then, there was the call of the top in crude oil in 2008. I gave the details to my subscribers in print, but there was so much hype about $200 oil that I could not resist the temptation and I made this call on the air. You can not imagine the negative response I got from that. Oh, and more recently there was the 2011 top in gold and the even more recent decline seen there. Yes, this too is in print in my research letters. My point here is not my previous calls of major tops. Rather, my point here is that I am not afraid of sticking with my data and not letting the emotion drive me to join the herd to the slaughter, even when it maybe a hard sell. My point here is that the same methods used to make these other calls is currently being used today and just as was the case with these previous calls, the DNA Markers that I have found to have occurred at every major top since 1896 are key. All the while, the longer the rally lasts, the more convincing it becomes and the bigger the trap and train wreck that follows will be. If you would like to know more about the DNA Markers, current expectations and the identification of the DNA Markers, that data is available realtime as it all unfolds through the research letters and short-term updates at Cycle News & Views. Please, don’t be fooled by the mainstream hype and emotion.
Tim W. Wood
Statistics: Posted by yoda — Wed Jun 12, 2013 1:25 pm
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UBER is a cell phone app which makes the business of hailing a cab much easier.
One need only press the UBER button and instantly one knows where the next cab is, how long the ride will take, how much the ride will cost, and the fare will even come right out of a linked account. No fuss no muss.
The taxi companies hate UBER however and the start-up has had to fight entrenched interests in nearly every urban area it has entered. Detroit is no different. But unlike in most urban areas the taxi companies are not particularly strong in the Motor City so UBER has an advantage.
Disruptive technologies are always fought by vested interests. Even, and especially when such technologies make life better for the average person. Hopefully in Detroit innovation will win out.
View full post on AgainstCronyCapitalism.org
Gold Trader: “Stock Market May Crash 10-20% In Next 5-10 Days, Will Create Setup For Bubble Phase In Gold”
June 2, 2013 | By Tekoa Da Silva
**This interview was recorded Friday evening, 5/31/2013**
I had the chance on Friday to reconnect with technical gold trader Gary Savage, publisher of the “Smart Money Tracker” daily gold market commentary and trading service, which has outperformed most of the world’s hedge funds in 2011 and 2012.
It was a powerful conversation as Gary indicated the S&P 500 is at its most overbought level in nearly 40 years, and may crash 10%-20% within a few trading days as a result. Following this crash, Gary expects a massive central bank monetary intervention to create the “launch pad” for an explosive move higher in gold and gold equities, ushering in the final bubble stage of the bull market.
“We’re at a very important crossroads here,” Gary explained at the beginning of the interview. “The S&P 500 [broke] through 1640…and I expect we’re going to have some kind of crash, or semi-crash over the next 5-10 days…The selling is probably going to get huge…and it [may] take everything [down] with it.”
When asked why he’s expecting a crash of such magnitude to occur, Gary replied, “If you look at [a] long-term market chart…you can see that at the recent peak, [it] was stretched further above the 200 day moving average then it’s ever been in the last 30 or 40 years. So the forces of regression are going to be extremely powerful…We’re probably going to [cut] right through the 200 day moving average and [it] may make the 2011 correction look small [in comparison].”
This fragile equities market plays a key role in determining gold’s next move according to Gary, in that, “When it breaks, the Fed is going to freak out, [and] they’re going to double, triple, and quadruple down on QE to try and pump stocks back up, [and] that liquidity…[is] going to find something else…I don’t believe it’s going to pump up a double parabola in stocks…[It's] going to look for something that’s undervalued…and that right now is commodities in general, more specifically—gold.”
As to the consequences of gold being driven down so far when compared to this blow-off in equities, Gary stated that, “Regression to the mean not only works on the upside, but also on the downside, and gold is in the mirror position of the stock market—it’s stretched extremely far below the 200 day moving average. So when [the] regression occurs, it’s going to be an extremely violent move back towards the 200 day moving average, and like I said, I think what will trigger this [move in gold], will be the stock market crash, the Fed, and the central banks’ response to [the] unraveling…[it's] what I imagine would happen before the bubble phase begins.“
When asked about the small signals investors should look for in gold and gold equities to identify an early start to the bubble move, Gary said, “At some point the selling exhausts…and [when] the liquidity starts to flow into that area…value investors [start] coming in, and then you start to get these 5%-6% days, and [the] next thing you know you’ve got an 11% week, and then the momentum starts to shift and then you get a buying panic into the area where people are making money…So I think we have a [perfect] setup for the bubble phase in gold.”
As a final comment Gary advised further patience in holding gold equities, saying, “They may temporarily follow [the market] down, but they’re going to rebound out of that extremely violently, and leave the stock market in the dust.“
Statistics: Posted by yoda — Mon Jun 03, 2013 12:12 am
View full post on opinions.caduceusx.com
Jamen Shively, a former Microsoft executive, wants to create the Starbucks of marijuana.
From CNET News:
His idea, as he explained to the Seattle Times, is to buy his own dispensaries in pot-friendly states such as Washington and Colorado and begin his long march toward a branded fortune.
His company is to be called Diego Pellicer–this a homage to Shively’s great-grandfather, who was once governor of Cebu in the Philippines.
His plan is to import from Mexico. Indeed, former president of the country Vicente Fox appeared with Shively at a Seattle news conference Thursday (video at the link).
Fox said at the news conference: “What a difference it makes to have Jamen here sitting at my side instead of Chapo Guzman.” Guzman is one of Mexico’s most notorious drug lords.
There is a problem: until the federal criminal law on marijuana is repealed, the climate is especially risky for investors in such an enterprise.
For Cato work related to the drug war, go here.
View full post on Cato @ Liberty
Markets are much more than multinational corporations, banking firms, and stock brokerages on Wall Street, though all of those things are the result of a market system.
Sound economies, from the biggest multinational banks to a child’s sidewalk lemonade stand, operate on the principles of private property and exchange. These concepts are the building blocks of free societies, and it is the system of countless small trades, taken as a whole, that we call “the market.”
It is important to note that these trades are positive sum (win-win) situations: each party agrees to a trade because they value what they’re getting more than what they’re giving up.
And when those trades are voluntary—when nothing is preventing people from making trades or forcing people to make trades—that results in a free market, which makes everyone healthier, wealthier, more peaceful, and more technologically advanced.
That’s what libertarians mean when they defend the free market.
Produced by Evan Banks and Aaron Ross Powell.
View full post on Libertarianism.org
Trader Dan’s Market Views
Market Insights and News
“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people. Source – The Declaration of Independence
Friday, May 17, 2013
Gold has come off of one horrific week in terms of price action. As noted on the price chart, the metal pushed into the region where it recently had its LOWEST CLOSE in some time. You might recall that after the spike down towards $1320, physical demand was unleashed in what can only be described as a torrent. That demand spooked bears and resulted in a wave of short covering that took price nearly $160 off that low. It was at that point that the big selling re-entered.
The resistance at $1485 – $1475 proved to be a bridge too far and down went the metal. It encountered some decent buying near $1440 but once that gave way, especially once $1420 collapsed, sell stops did the rest. Once it lost its "14" handle, many buyers stepped back, expecting that downside momentum would enable them to acquire the metal even cheaper.
I am now watching to see whether or not this market can hold support down at the shaded rectangle I have marked on the chart. Personally, I am welcoming this move back to that recent low because I want to see how it now responds. I do not like buying into markets with spike lows or selling spike tops mainly because the risk/reward can be too great based on the entry point and the exit point that tells you that the trade has soured. A test of a low, that holds is a much better entry point with lower risk. The flip side to this is that if $1320 fails to hold, it will confirm that bearish flag formation noted on the chart with a potential price projection down closer to $1100. Yikes!
It did not help matters any for gold to see in the most recent 13F reports to the SEC, that very large institutional investors have been jettisoning their shares of the gold ETF, GLD. Northern Trust dumped some 910.5 thousand shares alone in Q1 with BlackRock in second place dumping 428.5 thousand shares. If you take the largest institutional investors combined, their selling accounted for nearly 75% of the shares being dumped in GLD.
Paulson is holding firm but it would appear most are not. This is where the pressure keeps coming on the paper markets over here in the West. Institutions see no reason whatsoever to own the metal when they can better put that client money to work achieving historic gains in the US equity market bubble.
The current investing strategy is therefore very simple here in the West – SELL EVERYTHING GOLD and GOLD RELATED and buy equities; i.e. anything that is not a gold or silver mining equity.
With nearly every single passing day bringing us yet another new lifetime high in US stock markets, the pattern is clear – institutional money, and hedge fund money, are buying equities in what they now firmly believe is a NO LOSE SCENARIO. This sure bet is what the Fed and the Central Banks globally hoped to create and they have done just that.
As mentioned many times here – trying to fight the tape is a fool’s errand. Traders have to go with the money flow. Investors had better be damned careful is all that I can say. There is a vast difference between trading and investing. This is coming from a professional trader so please do not casually dismiss this.
The Fed has managed to annihilate the very concept of "RISK". If anything, the only risk that now exists is the RISK OF NOT BEING IN the STOCK MARKET and angering your clients who are sure to take their money elsewhere. Money has no loyalty – it goes to where it can gain the largest yield and all money managers understand this. If they wish to retain their client base, they must chase stocks, whether or not they want to. Again, this is just a reminder, they are not investing client money – they are trading it.
We are living through monetary history. Others coming behind us are going to pour over this period that we are privileged to be first hand participants in trying to come up with explanations for this speculative frenzy in equities that we are now experiencing. Mark it well and remember it; you can tell your kids and grandkids what it was like to watch an entire generation collectively lose their minds and throw caution out of the window. This is what ZERO YIELD environments produce.
Posted by Trader Dan at 12:22 PM
Statistics: Posted by DIGGER DAN — Sun May 19, 2013 7:07 am
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