InvestWithAlex.com 

Subscribe Today
My Account

Category: Invest with Alex

Posted on

Why The FED Will Be Powerless To Stop An Upcoming Bear Market

Daily Chart April 8 2015

4/8/2015- A positive day with the Dow Jones up 27 points (+0.15%) and the Nasdaq up 40 points (+0.83%). 

As far as I am concerned there is only one thing, and one thing only, that is holding this market together. The FED and investors blind faith in the fact that the FED will be able to stop any and all market corrections. Either through QE, interest rates or by simply making statements to the press. So much so that every single bottom over the last couple of months can be attributed to the FED talk.  El-Erian tends to agree. Danger, Danger — ‘Market Is in Love With Central Bank Trade’

Here are the 3 reasons as to why this “herd mentality trade” will blow up in investors faces.

  1. The Fed is a Reactionary Force: If we study the past, the FED has always been late to react to any and all market developments. For instance, Bernanke was talking about the accelerating US Economy as late as Q1 of 2008. They have no clue and there is no reason to believe that this time will be any different.
  2. The Market Will Decline Anyway: My mathematical and timing work makes it very clear. Over the short-term the market is independent of all fundamental inputs. That is to say, the market will top out on a certain date in 2015 and initiate its decline. No matter what the FED does or say. That day is approaching fast.
  3. Investors Will Lose Confidence In The FED: This is unavoidable. As soon as the FED is unable to backstop the next decline, most investors will lose confidence in a millisecond.  That in itself will accelerate the decline

The main take away from the points above is as follows. The FED trade will be in place until it is not.  The problems is, by the time most investors realize this fact, it will already be too late. By the time the analysis above becomes a reality, the stock market will already be down 10-25%.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. April 8th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Why The FED Will Be Powerless To Stop An Upcoming Bear Market Google

Posted on

Another Idiotic Advice From Jim Cramer

IBB2The chart of (IBB) is from March 20th. One can easily argue that Biotech is the most overpriced and highly speculative sector within the overall stock market structure today. That doesn’t bother Jim Cramer — If You’re Not in Biotech for the Long Haul, Hit the Road  I’ll give him one thing, Mr. Cramer has perfect timing for identifying the worst investments out there.

Here is what I said about Biotech on March 20th, the day it arguable topped out. Did Biotech (IBB) Top Out TODAY?

The Nasdaq hit an Intraday high of 5,132 on March 10th, 2000, then promptly turned around and proceeded to collapse 80%. Is it possible that the Biotech Index (IBB) did the same thing exactly 15 years later?

Not only is it possible, it is highly probable. Back in 2000 it was Pets.com and NortelNetworks. Today, it is hundreds of impressive sounding “Genome” Biotech names that have

  • A few Ph.D’s on their payroll.
  • An impressive idea.
  • A white paper on how their new generation drug will change the world and make Trillions….a  paper that maybe 10 people on this Earth can fully understand.
  • No way in hell of making a cent or getting their drug to the market.
  • A whole bunch of stupid investors that believe they will get rich.

Make no mistake, Biotech is an a giant bubble that will pop. And it’s not only Biotech. We are witnessing the same thing in the Silicon Valley’s “Mark Cuban” illiquidity bubble and even on the Nasdaq. Alibaba deal values Snapchat at $15 billion Do I really need to say anything when an app with no revenue is valued at $15 Billion by a company that is in its own spectacular overvaluation bubble? I hope note.

Anyway, why do I believe we might have hit the top in Biotech (IBB) today? Today’s blow off (gap) open and some of my other work within the sector.  That is to say, don’t be surprised if we get a massive sell-off in Biotech over the next few months.

Z31

Another Idiotic Advice From Jim Cramer  Google

Posted on

The Secret Behind This Hedge Fund Manager’s Market Collapse Prediction

crispin odey

I firmly believe that the only people investors should be listening to right about now are the people who got 2000 and 2007 meltdowns right. Everyone else is just blowing smoke. Crispin Odey, the founder of London-based Odey Asset Management, is one of those people. He does not hold back….

“I just think that you and I have got grandstand seats here [to an imminent market shock] and my point is having found myself in the second quarter of last year selling a lot of equities and starting to go short, I found out just how illiquid it all was. You never actually see it until people try and get out of these things.”

That’s quite a powerful statement and I wholeheartedly agree.  A lot of gold in this The Sydney Morning Herald article and it is definitely worth 5 minutes of your time.  He goes on to say…

“For me, what I find very interesting is given the risk of recession, how is it the West stock market can be hitting all-time highs? History tends to be not very generous in this regard. If you get a recession in a low inflation environment it tends to impact the ratings of stocks dramatically. It was akin to “watching the markets take drunken bow after drunken bow. It’s amazing that nobody else is on the same page.”

The upcoming recession and the approaching stock market meltdown are so easy to see, I am not sure why the 99% go on missing it. The attitude was exactly the same at 2000 and 2007 tops. Greed or stupidity? I am not sure, but it is amazing indeed.

Z30

The Secret Behind This Hedge Fund Manager’s Market Collapse Prediction  Google

Posted on

Will Lower Earnings Plunge The Market?

Daily Chart April 7 2015

4/7/2015 – A down day with the Dow Jones down 8 points (-0.04%) and the Nasdaq down 7 points (-0.14%).

The stock market continues to behave, more or less, as forecasted. If you would like to find out what happens next, please Click Here. 

How can I tell that we are in the stock market bubble?

This is rather simple. Just take a look at today’s P/E ratio (see the chart below). The chart displays Shiller Adjusted P/E Ratio of 27.12 (Current S&P 500 PE Ratio: 20.39). As you can see for yourself, we are once again pushing the limit. This ratio becomes even worse when we realize that most of the earnings over the last few years have been driven by QE, Zero Interest Rates and stock buybacks. Not fundamentals. Just as a reference points, bear markets end with a P/E of 5-10 (after earnings have collapsed).

In the meantime, the US Economy is rolling over the earnings are expected to decline……BANK OF AMERICA: We’re heading for an earnings recession

“In the last two periods of dollar strength (1978-85, 1995-02), which each included at least one recession, PE multiples expanded by 39% and 52% (3 and 8 multiple points), respectively,” BAML notes. “Similarly, in this cycle the S&P 500 PE multiples have continued to rise amid the years of significant dollar strength.”

I have to laugh at this. Bank Of America expects P/E expansion to continue while earnings collapse, the US economy rolls over and the FED possibly hikes rates?????

This insanity only makes sense in a financial bubble and that is precisely where we are today. In other words, the stock market is perfectly setup for a big decline here. The question is, are you ready for it?

PE Ratio

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. April 7th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Will Lower Earnings Plunge The Market? Google

Posted on

When The Russians Are More Rational Than The FED Clowns…….

bailout investwithalex

….it is time to worry. Make no mistake. Russia was on the receiving end of an all out economic attack last year. A deliberate act against Russia that will eventually come back to haunt the US/EU. Collapsing oil prices, western sanctions, currency and stock market declines. With that in mind, what are we supposed to think or do when Russians end up being a hell of a lot more fiscally responsible than the Americans?

Russia rules out joining the QE gang

I know what you are thinking. Russian economy is “complete crap” and the US economic/stock market recovery has been an outright miracle. At least the Western Media proclaims that to be the case. Perhaps.

At the same time, taking such a view is like driving 200 MPH while looking in a rear view mirror. Here is what we know. While the US Economic data is collapsing and the US stock market indices have been in distribution for over 9 months, the Russian Rubble and the Russian Stock Market (RSX) are surging. In fact, they have been some of the best performing financial instruments in the world thus far this year. As was theorized on this blog at the beginning of the year – due to their incredible undervaluation at that time.

Just FYI. 

z32

When Russians Are More Rational Than The FED Clowns…….Google

Posted on

Julian Robertson: The Repeat Of 2008 Sell-Off Is Likely

Here is a question for you. Who would you rather listen to…..some Charles Schwab yahoo financial adviser who keeps screaming that today’s market is a “buying opportunity of a lifetime” or hedge fund legend Julian Robertson (founder of Tiger Management).  I will leave that decision up to you. But if you are wondering, here is what Mr. Robertson thinks.

  • Twin bubbles: In bonds and equities.
  • The FED is frightened to death.
  • It is possible the market will boil over into an explosion. The bigger this bubble gets the bigger the burst will be. The repeat of 2008 sell-off is now a real possibility.
  • The FED will raise interest rates….be ready.
  • The stock market is in a bubble that will surely pop.

I’ll tell you one thing. It’s nice to be on the same analytical side as Julian.   


Z30

Julian Robertson: The Repeat Of 2008 Sell-Off Is Likely  Google

Posted on

Why The Stock Market Is INSANELY Overvalued

Daily Chart April 6 2015

4/6/2015 – An up day with the Dow Jones up 117 points (+0.66%) points and the Nasdaq up 30 points (+0.62%). 

The bulls are breathing a sigh of relief after Friday’s dismal job’s report is interpreted as “No Imminent Rate Hikes”. In fact, FED’s Dudley confirmed this view earlier in his speech.

“Whenever the data support a decision to lift off, I think it is important to recognize what this would signify.  It does not mean that monetary policy will be tight.  We will simply be moving from an extremely accommodative monetary policy to one that is slightly less so.”

With that in mind, I continue to maintain that most bulls are missing the big picture here. Today’s market action is identical to an out of fuel plane barely making it over a mountain range only to realize that there is no way in hell that it can glide over the next one.  Maybe not a good analogy considering the timing, but you get the picture.

One of the primary bullish arguments is a claim that the stock market is not expensive by any historical measure. I have argued against this notion by presenting a number of metrics over the last 6-9 months. The article below summarizes most of them in a nice fashion and with charts. It is definitely worth 5 minutes of your time.

Forbes: Disaster Is Inevitable When The Two Decade-Old Stock Bubble Bursts

The case, charts and numbers presented in the article above are right on the money. However, here is one crucial factor that most analyst, even the bearish ones, miss. ALL of today’s valuation metrics would be even more out of sync with reality if analysts considered how much “extra juice” zero interest rates, QE and share buybacks infused into the corporate earnings over the last 5-6 years.

What is that number? 

Given current distortions, no one knows and the real number in question cannot be calculated at this time. It is arbitrary at best, but I would estimate that the drivers above added somewhere between 50-100% to today’s corporate earnings.

Here is what that means. If we are to take out QE stimulus, zero interest rates and share buybacks, today’s P/E ratio would not be around 19.65 (which is freaking expensive) , it would be somewhere in the neighborhood of 35-50. Making today’s stock market not only overvalued, but are you “f&*$ing kidding me” overvalued. Hmm, I wonder how that ends.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. April 6th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Why The Stock Market Is INSANELY Overvalued Google

Posted on

Why You Should NOT Buy Stocks Now

bull-vs-bear1

Let’s assume you were in a comma and/or forgot to buy stocks over the last 6 years. If so, MarketWatch has an advice for you How to buy stocks now if you’ve missed this massive bull market. It is…..

  1. Admit that you were an idiot.
  2. Start buying now and keep buying (keep averaging in)…. no matter what.

By the way, the strategy above summarizes the strategy of 99% of financial and investment advisers out there. This is foolish. Here is why.

Imagine yourself following the advice above at 2000 or 2007 tops and you get a quick realization of what happens next. A much better strategy would be to

  1. Realize that we are at a major top.
  2. Accumulate cash or go short while waiting for a bottom.
  3. Load up on the stocks when the bottom arrives.

Most people believe that timing market is impossible. And it is, but only if you are too lazy to do any real stock market analysis work. For example, my work clear shows when this bottom will arrive and how this top will play out. Click Here to find out.

Again, there is no reason to buy at the top and average down. Well, unless you enjoy losing money.

Z31

Why You Should NOT Buy Stocks Now Google