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Are You A Genius -Or- A Delusional Fool? Find Out Here

Yahoo Finance Writes: 3 Reasons to Re-Think Bailing On Stocks at All-Time Highs: Belski

denial - investwithalex

Uncharted territory is always scary. Whether you’re trekking the nether reaches of the Amazon jungle, or simply trying to time the top of a stock market that is trading at levels never seen before, it’s nerve wracking to be someplace you’ve never been before.

1) Quality, Transparency, Consistency

Belski says he follows the investment axiom of “buying scarcity and selling capacity,” and right now, he thinks the U.S. alone offers what investors want most. In particular, while jokes that Europe may have great coffee, he argues that the structural reforms of the past ten to twelve years have left American companies in a unique – and investable – position of strength. “That’s the U.S.” he says.

2) Way More Bull Market Ahead of Us

“Fundamentally the U.S. is in very sound position, and we think it will continue to lead for the next three to five years,” he says. Broadly speaking, he thinks a lot of new investors fail to appreciate what a bull market really is, reiterating his belief that we are “in the midst of an 18 to 20 year equity bull market cycle.”

3) The Coming CAPEX Cycle

Belski says people not only forget that the U.S. is still the world’s largest economy, and as a result, “is poised to continue to take business away from Europe and the emerging markets as manufacturing capacity comes back here.”

Read The Full Article Here

No offence, but I think even bulls are starting to run out of legitimate reasons of why the market should continue going up. While it could be viewed as a good thing, reasoning presented here clearly shows how delusional most investors are.  Let’s just take a quick look at 3 reasons above.

1. Quality, Transparency, Consistency?  Is this guy being serious. What about looking at the fundamentals and investing in undervalued companies that make sense. Do you buy a $500 pair of jeans that was made in the USA or do you just buy an identical pair of jeans for $50.  His analogy makes no sense. Well, that is unless you like losing money.

2. Way More Bull Market Ahead Of Us? As I have mentioned here before, what bull market? If they are talking about the bull market from 2009 bottom they are talking about a bear market rally. The market has topped in 2000 and has barely moved since.  While the Dow and the S&P are up a little bit, NASDAQ is still down. One should understand where  they are in the economic cycle before saying that the bull market has already started. If you haven’t figured it out yet, we are still in the bear market that will only end in 2017. Read my timing work to find out why.

3.  The coming CAPEX cycle? What CAPEX cycle? He might as well have said that the US Economy will prosper because aliens will land soon and make the USA their home base. Bringing new technologies and prosperity for all along with them. I am sick of this crap. What kind of stupidity is this. What about the fact that the US Economy and its Financial Markets being artificially maintained by huge credit infusions and the largest credit bubble in the history of mankind. What about massive speculation in all asset classes and overwhelmingly bullish stance. No, I guess those things do not matter.

Anyway, if you believe in this nonsense your money and you shall soon be separated. I guarantee you that. 

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The Secret Behind Macroeconomics & Value Investing

The Secret Behind Macroeconomics and Value Investing

 macroeconomics investwithalex

By now we have looked at value investing and what it is, how to determine the intrinsic value of any stock, what the margin of safety is and how to apply it properly, what types of stocks to look for and what to avoid.  Still, there is one more thing to consider. Macroeconomics.

I am a firm believer that as an investor one should understand Macroeconomic factors prior to making any sort of an investment.  While not an important part of an equation for short term traders, it is an incredibly important factor for most value investors who’s investment time frame is oftentimes counted in years. A miscalculation on macroeconomic front could have severe consequences on your overall investment. Let me give you an example.

For simplicity sake and without going into too many details, let’s assume that you have looked into buying a home building stock in early 2007. After doing a lot of research and valuation work you cannot believe your eyes. For some reason the stock is selling at 60% discount to its Intrinsic Value and the growth rate remains over 20% on all fronts.  Everyone is excited about the real estate market and your work shows that this stock should at least double over the next 12 months.  Based on your work you are 100% confident that this particular stock is a Rocket Ship. You can’t believe how lucky you are as you begin drool just thinking about how much money you are going to make.   

Yet, you have just missed an incredibly important point that only macroeconomic analysis can provide.  You have missed the fact that the overall US Economy and the Real Estate/Financial industry in particular are in a giant bubble that is about to blow up.  You have missed the point that when that bubble does blow up it will take the entire economy and the real estate/financial sector in particular down with it. Big time. Further, when that happens your significantly undervalued home builder stock price is likely to collapse even more because it is directly tied up into that sector. 

That is exactly what happened. Even though home building stocks were already down significantly at the start of 2007 (indicating substantial value), they proceeded to decline even further (50-80% further) when the credit bubble of 2007-2009 finally blew up.

Point being, looking at the company or the sector alone, is not good enough. You must have an overview of the overall economic environment  in order to avoid situations as described above.   A value investor with a clear macroeconomic point of view would have never even looked at home builders in 2007. Well, maybe from the SHORT side, but that’s about it. Bottom line is, any good investor worth his salt should always be aware of where we are in the economic cycle. That is where macroeconomic analysis comes in.

Do not despair.  You do not need a fancy degree from a business school to understand macroeconomics. It is probably best that you don’t have one. That way you have an open mind to see how easy and straight forward this analysis can be.

First, you must understand something very important. Do not pay any attention to the financial media (or media in general) and/or professors of economics and/or the economists themselves.  All of that data and all of their fancy economic models are nothing more than garbage. If their models worked, these people would be on Wall Street making millions of dollars instead of playing with their numbers and/or teaching others.

Let’s make it as simple as possible when it comes to economists with their own interest on the line.  Simply ignore ALL of them.  Don’t give them even a split second of your attention. 

To be continued…..

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Stock Market Update, November 1st, 2013

daily chart Nov 1, 2013

Summary: Continue to maintain a LONG/HOLD position

Not much has changed since our last weekly update. Even though the DOW set a new high by a few points, it doesn’t really matter. In fact, I will leave my last weeks update mostly intact while adding a few little things here.

1. Trippe tops spread out over weeks or months are notoriously dangerous. That is exactly where we are. They typically indicate the end of a move and beginning of a counter move (or bear market in our case). Unless the market breaks to the upside here, this might be the end. 

2. My mathematical work is showing that this energy level is tapped out. The market has no room nor energy to go higher here. That is why we are seeing the triple top. 

3. The market left a huge gap around 14,800, it must go back there before any sustained rally can take place. 

LAST WEEKS MARKET SUMMARY: Still Valid 

This is where the picture gets a little bit fuzzy.  According to my mathematical work there is no doubt that we are at the inflection point with two possible outcomes.

  1. September 2013 top was indeed the top and the bear market down leg will resume shortly.
  2. The final top (a little bit higher or lower than September 2013 top) will be set in March of 2014. Thereafter the market will roll over and begin its bear phase.

As I have mentioned many times before, my mathematical work is clearly showing that the bull is ending and the 2-3 year Bear market is just beginning.  I would call the exact date, but there is just too much interference right now.  Unless a severe down leg starts over the next 2 weeks, we will have to wait until March of 2014 for the Bear to start. Until that happens a lot of ups and downs without so much as going anywhere.  The rest of my analysis remains the same.

Over the next few weeks we will find out if the if the bear market has already started or will start in March of 2014. Should the market break below 14,600 over the next two weeks, the probability is high that we have already started the bear market leg into the final 2016 bottom.  The market is certainly going back into the 14,800 as it left a huge gap there, but a firm break below 14,600 will give us a confirmation that the bear is back.

At the same time we cannot yet ignore the technical picture with the market being near an all time high. As such, I continue to advise you to maintain a LONG/HOLD position while waiting for the confirmation that the bear market has indeed started.  

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Stock Market Update, October 25th, 2013

daily chart Oct 25, 2013

Summary: Continue to maintain a LONG/HOLD position

In the last couple of updates I have mentioned that the market will bounce to the 15,300-15,500 on the DOW in order to close all the gaps and to satisfy all of my requirements. Well, we are here, what’s next?

This is where the picture gets a little bit fuzzy.  According to my mathematical work there is no doubt that we are at the inflection point with two possible outcomes.

  1. September 2013 top was indeed the top and the bear market down leg will resume shortly.
  2. The final top (a little bit higher or lower than September 2013 top) will be set in March of 2014. Thereafter the market will roll over and begin its bear phase.

As I have mentioned many times before, my mathematical work is clearly showing that the bull is ending and the 2-3 year Bear market is just beginning.  I would call the exact date, but there is just too much interference right now.  Unless a severe down leg starts over the next 2 weeks, we will have to wait until March of 2014 for the Bear to start. Until that happens a lot of ups and downs without so much as going anywhere.  The rest of my analysis remains the same.

Over the next few weeks we will find out if the if the bear market has already started or will start in March of 2014. Should the market break below 14,600 over the next two weeks, the probability is high that we have already started the bear market leg into the final 2016 bottom.  The market is certainly going back into the 14,800 as it left a huge gap there, but a firm break below 14,600 will give us a confirmation that the bear is back.

At the same time we cannot yet ignore the technical picture with the market being near an all time high. As such, I continue to advise you to maintain a LONG/HOLD position while waiting for the confirmation that the bear market has indeed started.  

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Warning: Another Hedge Fund Manager With A Perfect Track Record Is Predicting A Market Crash

CNBC Writes: Scary! This bearish call points to 40% market drop

 market crash investiwthalex

The stock market is trading at unsustainable levels that could eventually lead to a major sell-off, with a possible 40 percent drop in stock prices, hedge fund executive Mark Spitznagel told CNBC Wednesday.

“The simple answer, the mom and pop answer, I think, is just to step aside,” said Spitznagel, founder of Universa Investments and an associate of “Black Swan” pioneer Nassim Taleb.

Spitznagel, incidentally, has some Street cred when it comes to predicting downturns: He called it in 2000 and 2008 and made one of the biggest profits on Wall Street during the 2008 financial crisis, while many other investors were losing money.

Appearing on “Closing Bell,” Spitznagel suggested the Federal Reserve, which last month reaffirmed its policies on bond purchases and record-low interest rates, is basically propping up stocks and otherwise distorting the market.

“It’s a market that is sort of set up, I think, for a major crash, a major sell-off,” said Spitznagel. “I would argue all the major tops we’ve seen in the market over the last 100 years look very much like it does today.”

“The ultimate causes of crashes is the distorted environment we’re in,” he continued. 

In turn, Spitznagel recommends retail investors step aside and wait for opportunities to come.

Watch The Video Here 

I agree with his analysis 100%. The only thing I would add is my mathematical timing work. There will be a 40% decline but it will happen over the next 2-3 years and not in a crash type of an environment. It will be very similar to the 2000-2003 move.  Further, my work indicates that this decline will really get going after March of 2014.  

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Warning: USD Is About To Kick Ass

CNBC Writes: De-crowning the dollar, and the ‘collapse’ ahead

 3D chrome Dollar symbol

The gradual erosion of the U.S. dollar’s status as the world’s reserve currency has been greatly hastened of late. This is due not only to the perpetual gridlock in D.C., but also our government’s inability to articulate a strategy to deal with the $126 trillion of unfunded liabilities.

Our addictions to debt and cheap money have finally caused our major international creditors to call for an end to dollar hegemony and to push for a “de-Americanized” world.

China, the largest U.S. creditor with $1.28 trillion in Treasury bonds, recently put out a commentary through the state-run Xinhua news agency stating that, “Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated.”

In addition, Japan (our second largest creditor holding $1.14 trillion of U.S. debt) put out a statement through its Finance Minister last week saying, “The U.S. must avoid a situation where it cannot pay, and its triple-A ranking plunges all of a sudden.”

Read The Rest Of The Article Here

I disrespectfully disagree with CNBC once again (no surprise there) for a couple of reasons.   

1.  As of  right now there is no alternative to the US Dollar to even attempt any kind of a shift. Chinese Yuan is not a freely traded currency yet and if anything it is still decades away from any sort of an attempt. Plus, China is in the midst of its own Economic Bubble that is surely to blow up soon.  Euro? Not a chance. Europe is a basket case and a one common sense politician away from breaking up.  Bottom line is, there is no currency out there to replace the USD. Yes, the US has its a share of problems, but so does everyone else.

2. USD Collapse?  What collapse?  Listen, we have to make a distinction between Credit Outstanding (which is a huge problem in the US) and the Actual Currency Dollars available. The former is a lot less than Credit Outstanding. That means the demand for USD needed to repay these huge balances will go up substantially over the next decade, pushing the dollar ever higher.

That is one of the reasons I am so bullish on the USD.  While it remains everyone’s favorite target, the USD fundamentals and technicals are looking very good. I would anticipate the USD to appreciate substantially over the next few years. 

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The Secret 5 Year Stock Market Cycle and What It Is Predicting For 2014

Dow Jones Long Term Chart 2

There is a prominent 5 Year stock market cycle that oscillates between the bull and the bear markets. While the cycle does show up as a bear cycle at various points, for the most part this cycle is more clearly identifiable during the bull stage. Let’s take a quick look. More importantly, let’s see what does this cycle can tell us about the future. (We are looking at the DOW)

  1. 1982-1987 From 1982 bear market bottom to pre crash 1987 the cycle lasted exactly 263 week and moved up 1977 points. That is exactly 5 Years + 10 trading days.
  2. 1994-2000 From 1994 bottom on 11/23/1994 to 01/14/2000 the market advanced 8296 points in exactly 1298 trading days. So, this cycle lasted 5 Years +32 trading days.
  3. 2002-2007 From 2002 bottom  on 10/10/2002 to 10/11/2007 top the market advanced 7209 points in exactly 1259 trading days or EXACTLY 5 years.
  4. 2009-2013/14  From 2009 bottom on 03/06/2009 to 9/18/2013 (or march 2014)  the market advanced 9241 points in 1144 days (so far).

AMAZING, isn’t it? I mean we are talking about exact hits. Bottom to top. If you go back and study the market before 1982 you will find the same cycle showing up again and again. The slight deviation by a few trading days at the end of each cycle is caused by other cycles arriving around the same time. Just by knowing this one 5 year cycle you can predict what the market will do and beat 95% of the pros.  

Now, let me warn you. This cycle is not as easy as just timing the 5 year period of time. There is something behind the scenes that causes this cycle to happen. As of right now, I cannot discuss what causes this in the public forum, but the chart above doesn’t lie. Just more prove that the market can be predicted to the day.

I confirm that another 5 year cycle has indeed started at March 2009 bottom. It is due to complete in March of 2014. However, my other work is showing that the DOW has probably already topped in September of 2013.  There is a lot of interference right now.  

As such, this leads me to believe that the DOW will oscillate here over the next few months until some sort of a top is set in March of 2014 (maybe a little bit higher or lower than September 2013 top). Thereafter, the market should resume its bear market and go down hard into the 2016/17 lows. 

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The Secret 5 Year Stock Market Cycle and What It Is Predicting For 2014

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Get Rid Of Bears Once and For All

CNBC Writes: Bull market’s got another 10 to 15 years left: Pro

bear attack investwithalex

The stock market is only in the second of three phases of a secular bull market, Altaira’s director of technical research, Ralph Acampora, said Monday.

“The first phase of a secular bull market is usually led by quality,” he said. “Second phase of a secular bull market, when people start to feel a little better about things, they buy secondary stocks,” Acampora said. “The third and final phase is totally greed and complacency, and we’re not even close to that. So, the secular bull market has a lot of life left.”

On CNBC’s “Fast Money,” Acampora said that his 1,800 year-end target for theS&P 500 could easily be 50 points higher.

“I’m being a little conservative. Longer term, oh, good god—much, much higher,” he said. “This is a secular bull that has at least another 10, 15 years to run.”

Umm…. CNBC you never disappoint me. I just have 1 question for your PRO.

What bull market?

Let’s take a look. Since the secular bull market top in 2000 (13-14 years ago) the

  • DOW: + 30% (sitting at a bear market top about to reverse and go below 10,000 by 2016)
  • S&P: +14% (sitting at a bear market top about to reverse and go below 1,200 by 2016)
  • NASDAQ: -20% (sitting at a bear market top about to reverse and go below 2,500 by 2016)

Once again, which bull market has another 10-15 years to go? We are not in the bull market. The markets barely moved since the 2000 secular top. Some remain in the negative territory. Perhaps they are talking about the bear market that started at 2009 bottom, but even if such is the case there is very little evidence that it was the start of a full on bull market.

The numbers and dates you see above are based on the precise mathematical work that I do. Not some arbitrary statement. If Mr. Acampora have studied the markets since its opening in 1790 he would soon realize that the bull and bear markets alternate in easy to see and understand 17 year cycles.

As such, we still have another 3-4 years of the bear left.  Don’t let the bear bite you. 

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Stock Market Update, October 18th, 2013

daily chart Oct 18, 2013

Summary: Continue to maintain a LONG/HOLD position

In my last weekly update I suggested that traders should set themselves up for a rally that was surely to come due to the US Government resolution. We did get that rally over the last couple of days and the DOW now sits close to the previously suggested range of 15,300-15,500.

Most importantly, we are approaching the moment of truth.

Ladies and gentleman, this is the moment we have all been waiting for. Over the next few weeks we will find out if the bear market has already started or will start in March of 2014. Should the market break below 14,600 over the next two weeks, the probability is high that we have already started the bear market leg into the final 2016 bottom.  The market is certainly going back into the 14,800 as it left a huge gap there, but a firm break below 14,600 will give us a confirmation that the bear is back.

What’s more, my timing work is giving me further confirmations that September 2013 was indeed the top. I will discuss these points over the next few weeks, but there are clear mathematical points of force that lead me to believe that a higher top on the DOW over the next couple of months is highly improbable.

At the same time we cannot yet ignore the technical picture. As such, I continue to advise you to maintain LONG/HOLD position while waiting for a confirmation that the bear market has indeed started.  

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Buffett Agrees…..How US Politicians Just Destroyed America

Reuters Writes: Buffett calls threat to not raise U.S. debt limit a ‘political weapon of mass destruction

Nuclear_explosion_investwithalex

NEW YORK (Reuters) – Warren Buffett, chairman and chief executive of Berkshire Hathaway (NYS:BRK-A – News), said Wednesday that the threat of not raising the U.S. debt ceiling is a political weapon.

The idea that Congress could fail to raise the $16.7 trillion U.S. borrowing limit is a “political weapon of mass destruction,” Buffett told cable television network CNBC.

Buffett said Berkshire Hathaway owns short-term Treasury bills and is “not worried” about the bills being paid, despite concerns about the U.S. debt ceiling.

Of course Mr. Buffett is correct. What happened in Washington over the last couple of weeks is nothing short of a disaster. An absolute disaster. What Mr. Buffett forgot to mention is that this “political weapon of mass destruction” has already gone off.

Surely, the US will not default on its debt. In my previous posts I have clearly stated that neither the market nor should you care about that. The damage has already been done and will be eventually felt on a different front.  This front has to do with our creditors.  I bet you my left leg that this situation was very closely watched and analyzed by both Japan and China (two of our biggest creditors). 

Their conclusion will be very simple. Washington is being run by idiots who have no problem putting the wealth and the future of our countries at risk. Therefore, we should diversify.  I bet you my right leg that these countries will start to lessen their US Debt exposure (if they haven’t started already) as soon as possible. Interest rates will go up and that will cause a significant slow down in the US Economy and a substantial DROP in the financial markets.

BOOM. Thank you Washington.  

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