The chart below delivers a clear “in your face” answer. If you believe this is going to end well, call me, I have some Nortel, Pets.com and Worldcom stock to sell you.
Did Western Governments Pay For Snipers Who Killed Dozens Of People In Ukraine? Disgusting!!!
Russia wants an investigation. As I reported earlier in the week, a leaked phone call (authenticity confirmed) between the EU foreign affairs chief Catherine Ashton and Estonian foreign affairs minister Urmas Paet suggests that there is clear evidence that the same snipers were killing people on both sides. Both civilians and police. Further, the call suggests that the snipers were hired by Maidan leaders…..the people behind this so called “revolution”, the same people who were clearly financed by the West.
If proven true, this is a new low for both the US Government and their EU counterparts.
You can read my previous report on the subject matter as well as listen to the above mentioned phone call HERE.
In addition, please see the article below for more information.
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Did Western Governments Pay For Snipers Who Killed Dozens Of People In Ukraine? Disgusting Google
Russia calls for OSCE probe into Kiev sniper deaths
Moscow (AFP) – Russian Foreign Minister Sergei Lavrov on Saturday called for an OSCE investigation into who was behind the deaths of dozens of people in Kiev last month in attacks by snipers, saying the truth could no longer be “covered up”.
Lavrov’s comments came after Estonia’s top diplomat told EU foreign policy chief Catherine Ashton in a phone call leaked this weak that the then-Ukrainian opposition to president Viktor Yanukovych may have been involved in the attacks.
“The latest information about the so-called snipers case can no longer be covered up,” Lavrov told a news conference in Moscow with his Tajik counterpart.
“We have proposed that the OSCE (Organisation for Security and Cooperation in Europe) takes up an objective investigation of this and we will ensure there is justice.
“There have been too many lies, and this lie has been used too long to push European public opinion in the wrong direction, contrary to the objective facts.”
Western states have blamed Yanukovych’s now disbanded elite riot police force for much of the killing that rocked in Kiev in February.
However Russia has strongly emphasised the leaked phone call between Estonian Foreign Minister Urmas Paet and Ashton as evidence for its argument that the new post-Yanukovych government in Kiev is made up of dangerous extremists.
Lavrov’s call for a full probe indicates that this is an issue Russia will not allow to drop, risking new tensions with the West.
In the audio of the February 26 call, whose authenticity was confirmed by Estonia, Paet told Ashton he was informed in Kiev that “they were the same snipers killing people from both sides.”
Dozens of protesters and around 15 police officers were killed in the attacks.
Paet, who had held talks with Ukraine’s new leaders on February 25, added: “It’s really disturbing that now the new coalition, they don’t want to investigate what exactly happened.”
Why Everyone Should Just Chill Out & Go Grab A Beer
The video below shows how Europe’s borders changed over the last 1,000 years. Making today’s action in Crimea/Ukraine/Russia not only inconsequential, but kind of ridiculously unimportant. Relax Obama. Go Grab A Beer.
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Investment Joke Of The Day. Einstein Dies And Goes To Heaven
Einstein dies and goes to heaven only to be informed that his room is not yet ready. “I hope you will not mind waiting in a dormitory. We are very sorry, but it’s the best we can do and you will have to share the room with others” he is told by the doorman.
Einstein says that this is no problem at all and that there is no need to make such a great fuss. So the doorman leads him to the dorm. They enter and Albert is introduced to all of the present inhabitants. “See, Here is your first room mate. He has an IQ of 180!”
“Why that’s wonderful!” Says Albert. “We can discuss mathematics!”
“And here is your second room mate. His IQ is 150!”
“Why that’s wonderful!” Says Albert. “We can discuss physics!”
“And here is your third room mate. His IQ is 100!”
“That Wonderful! We can discuss the latest plays at the theater!”
Just then another man moves out to capture Albert’s hand and shake it. “I’m your last room mate and I’m sorry, but my IQ is only 80.”
Albert smiles back at him and says, “So, where do you think interest rates are headed?”
Crimea War Conundrum
The war of words, sanctions and “My Di#$ Is Bigger Than Your Di*&” continues to escalate.
USA TO RUSSIA:
- GET OUT OF THE UKRAINE OR WE WILL SANCTION YOUR ASS. – Almost Everyone.
RUSSIA TO USA:
- U.S. SANCTIONS AGAINST MOSCOW WOULD “HIT THE UNITED STATES LIKE A BOOMERANG” – Russia’s Foreign Minister Lavrov. Keep in mind, Russian lawmakers are already trying to push a bill that would confiscate Western assets.
In related news, Western Media is going into overdrive with the following premise…
“Nobody’s scared of America anymore”.
Call me a bunny hugger, but why should anyone be “Scared of America”? I would much rather be respected than feared. With extremist on both sides of the issue driving our foreign policy, this is not going to end well.
Oh well, at least the stock market is up. Oh wait..
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With heavily armed Russian-speaking troops patrolling the streets, the Crimean Parliament voted Thursday to join Russia and put its decision to a referendum. The all-but-inevitable annexation of Crimea is moving forward, despite protests, warnings and threats from the U.S. and its allies.
We have entered a new Cold War.
The clash between Vladimir Putin’s Russia and the forces arrayed in support of Ukraine’s independence-minded leaders has crashed the vaunted “reset,” ending hopes that Moscow and the West would smooth relations and work hand-in-hand toward common objectives.
Frida Ghitis
Nobody can predict with certainty how this conflict will end. But the world can already glean important lessons. Unfortunately, most of those lessons are cause for deep concern. Here are five clear messages from the crisis in Ukraine.
1. Nobody’s scared of America, but American and European values hold strong appeal.
Lest we forget, this all started over a move by the now-deposed Ukrainian president, Viktor Yanukovych, who broke his promise to sign a partnership agreement with the European Union in favor of closer ties with Moscow. Ukrainians were enraged, not just because they want more trade with Europe but because they have seen what Western standards can bring to a society.
They were fed up with corruption, authoritarianism and stagnation. They wanted their country to be free of Moscow’s interference, and many gave up their lives to fight for an ideal of stronger democratic institutions, rule of law and fair play.
As strong as the pull of these values is, their principal advocate, the U.S., has lost much of its ability to stare down its foes in support of those who want to institute democratic principles in their countries. We saw it when President Barack Obama declared — years ago — that Syrian dictator Bashar al-Assad must step down. We saw it when then-Secretary of State Hillary Clinton was pelted with tomatoes in Egypt. And we saw it in Ukraine, when Obama warnedPutin to respect Ukraine’s territorial integrity, only to see the Russians capture Ukraine’s Crimean Peninsula. America does not intimidate.
Its loss of influence means strongmen and dictators have a freer hand.
2. You don’t mess with Putin without paying a price.
Even if Moscow were to relinquish all control of Ukrainian territory today, Putin has already achieved a main goal. He has sent a clear message to countries that were once part of the Soviet Union — and perhaps to the USSR’s former Eastern European satellites — that they cannot defy his wishes without paying a painful price. In that sense, Putin has won.
A top Putin aide warned last summer that Ukraine was risking “suicide” if it dared to defy Moscow. Now we know this was no bluff. Putin is serious about protecting Moscow’s sphere of influence. It’s not clear how closely he wants to control what are supposed to be independent countries.
3. If you are a vulnerable state, you may regret surrendering nuclear weapons.
This may be the most dangerous of all the lessons from this crisis. Ukraine had a sizable nuclear arsenal at the end of the Cold War, but it agreed to give it up in exchange for security guarantees. In the 1994 Budapest Memorandum, Ukraine committed itself to dismantling the world’s third-largest nuclear arsenal. Russia, in exchange, vowed to respect Ukraine’s borders and its independence. Now, Russia has clearly violated those commitments. If Ukraine still had its atomic weapons, Moscow would have thought twice before seizing parts of Ukraine.
4. Don’t expect support from all international peace activists (unless the U.S. invades).
To liberal activists in Ukraine and Russia, the reaction from international peace movement must be a hard pill to swallow. Parts of Ukraine have been captured at the point of a gun by a regime that actively suppresses dissent. When liberal Russians protested, police arrested hundreds of anti-war demonstrators.
While Russia’s invasion of Ukrainian territory and its harsh crackdown on local protests have been criticized by some human rights activists, the reaction among some prominent “peace” activists has been astonishing. Several have mimicked Putin’s line, blaming the U.S. for the crisis. Instead of taking a clear stance in support of a country with invading military forces on its soil, some so-called anti-war groups have taken the opportunity to dust off their anti-American vitriol.
A favorite line of discussion is whether Washington has any right to criticize Russia’s invasion of Ukrainian territory after the U.S. invaded Iraq, a country that was ruled by one of the world’s most brutal, genocidal dictators. However misguided America’s Iraq invasion, even drawing the comparison is an insult to Ukrainians.
Opinion: Putin’s Ukrainian endgame
5. The use of brute force to resolve conflicts is not a thing of the past.
One day, if history moves in the direction we all wish, countries will solve their disputes through diplomacy and negotiation. Sadly, that day has not arrived. John Kerry has expressed dismay at Putin’s “19th-century” behavior, but power politics, forcible border expansion and brazen aggression have not been relegated to the history books; witness events in places like Syria, the Central African Republic and now in Ukraine.
Those are the first five lessons. But allow me to offer a bonus, a work in progress that could join as No. 6: When the stakes grow high enough, the U.S. and Europe may rise to the challenge.
Western nations seemed caught off-guard by Putin’s “incredible act of aggression,” as Kerry termed it. Some of Putin’s gains (see No. 2) may be irreversible. But the U.S. and Europe have been shaken up by events, and they may yet send a message of their own, helping Kiev’s government succeed and prosper as it sets out to chart a future of its own and limiting Putin’s ability to replicate his acts of intimidation.
Kerry’s visit to Kiev was a powerful moment. His unvarnished message to Putin, if backed by action, was a respectable start. The U.S. would prefer to see this crisis resolved through negotiations, he declared, but if Russia chooses not to do so, Washington’s and its partners “will isolate Russia politically, diplomatically and economically.” Already the EU is offering Ukraine an aid package comparable to the one Putin used to lure it away. Secretary of Defense Chuck Hagel is boosting ties with Poland and the Baltic States, and economic sanctions are under discussion.
If Putin wants another Cold War, he has one.
China To Russia: We Stand With You…..Suck It America
The world is being divided in half as we speak. As my in depth report (coming out next week) will show it will be NATO Vs. Russia/China coalition. Today Chinese Foreign Ministry released the following statement.
“China has consistently opposed the easy use of sanctions in international relations, or using sanctions as a threat.”
Later, Russia fought back with a statement of their own. Indicating that if sanctions are imposed they will turn to China as their primary ally and business partner. Further adding, “Western countries would largely be hurting themselves if they impose tougher sanctions.”
Who cares and why is any of this important?
As my next weeks ( Wednesday’s Report) report will show, this development will lead to an eventual war. Not in the Ukraine, but worldwide. This war will impact everyone. We are still many years away, but this is an initial development. My timing and mathematical work confirm the same. I encourage you to visit us next Wednesday to read the report and to see how it will play out.
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Warning: Are Silicon Valley Nerds About To Eat It….Again?
Yes, we are indeed playing the game of musical chairs here. Today’s valuations are out of sync by any measure, particularly for the high tech start ups like Facebook, Twitter, Tesla, etc… Are these companies about to collapse as their predecessors did in the early 2000?
My answer might surprise you….
NO. Nasdaq will not collapse to the extent it did in 2000-03 in the upcoming bear market of 2014-2017. At least based on my mathematical and timing work. Sure, the companies above will decline to the X multiple of the market when the bear market accelerates, but they will NOT collapse to the tune of 90-95% as they did back then. For instance, while it is highly unlikely that Facebook drops into the single digits over the next 3 years, it is likely Facebook will decline from today’s price of $70 to about $20. Making it a fairly good short bet.
Again, please do your own research and make your own investment decisions. Timing is the most important element here. If you would like to get it right, please check us out here.
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Silicon Valley Nerds About To Eat It….Again. Google
Not many executives have seen their companies double in value in one day. Peter Bardwick has seen it twice. Bardwick was chief financial officer of financial news site MarketWatch when it started initial trading on Jan. 15, 1999, at $17 a share. By day’s end it hit $97.50, for a market value exceeding $1 billion. Fourteen years later, on Sept. 20, 2013, Bardwick, now CFO of digital advertising firm Rocket Fuel(FUEL), watched its stock almost double in value on its first day of trading.
Amid such Day One stock pops, high valuations, and buoyant equity markets, warnings of an asset bubble are again echoing across Silicon Valley. Nasdaq’s(NDAQ) 38 percent climb last year, and deals such as Facebook’s (FB) recent agreement to spend as much as $19 billion on fledgling messaging service WhatsApp, have added to worries about a crash like the one that sent the Nasdaq Composite Index plummeting about 80 percent from its March 2000 peak. By the end of 2004, 52 percent of dot-com startups that had sought venture capital—including investor darlings Pets.com and Webvan.com—were extinct, according to research by the University of Maryland and the University of California at San Diego.
“The real question is whether a crash will occur now or after the markets rise another 30 percent,” says Ian D’Souza, an adjunct professor of behavioral finance at New York University who co-founded Tri-Ring Capital, a technology-focused equity fund. Other investors, bankers, and venture capitalists say too much has changed to put the initial public offering market in danger of imploding now. “Investors have become more discriminating and more focused on the individual businesses,” says Bardwick. “In the ’90s, everything was just going up, and when that stopped, it happened in a really bad way.” MarketWatch never exceeded its opening-day value, falling to a low of $1.26 in 2001 before Dow Jones acquired it in 2005 for $18 a share, just above its IPO price. Rocket Fuel remains at almost double its IPO price.
Last year 208 companies went public in the U.S., raising more than $56 billion, according to data compiled by Bloomberg. Their stocks rose an average 21 percent on their first day of trading, the biggest annual average increase since 2000. In their debuts in November, Twitter (TWTR) jumped 73 percent and Zulily (ZU), a shopping website, rose 71 percent.
Companies and bankers are setting initial prices at reasonable levels, according to data compiled by Jay Ritter, a finance professor at the University of Florida. IPOs were priced at a median of 30 times sales in 2000, compared with 5.2 times last year, the data show. MarketWatch traded at 46 times 1999 sales on its first day, while Rocket Fuel’s valuation was 7.6 times 2013 revenue.
Thanks in part to the Fed’s low interest rate policies, startups have been able to delay IPOs while receiving repeated rounds of funding from hedge funds, private equity funds, and institutional investors. That means businesses are older when they go public and have longer sales and profit histories, making it easier for investors to value them accurately. Businesses backed by venture capital or private equity firms were 12 years old on average in 2013 when they went public, compared with six years old in 2000 and four years old in 1999, according to Ritter’s research. Twitter was seven years old at its IPO. “You want to make sure you have a company of reasonable scale before you go public, which ensures much more certainty in the planned financial results,” says Doug Leone, a managing partner of venture capital firm Sequoia Capital.
The median annual revenue for companies going public in 2000 was $17 million, compared with $109 million in 2013, adjusted for inflation, Ritter’s data show. And fewer companies are doing IPOs with no profits. Last year 64 percent of all initial offerings were done by profitless companies, compared with 80 percent in 2000, according to Ritter’s data.
The high cost of going public is a hurdle that discourages smaller companies and may lead to a more stable offerings market. The Sarbanes-Oxley Act, passed in 2002, requires extensive financial disclosure, raising the cost spent on auditors and legal work. “There’s just a much higher bar today,” says Ron Codd, a consultant to companies on the IPO track.
Another element missing this time: The boutique banks that underwrote many of the Internet IPOs in the 1990s don’t exist independently today. They were known as the “Four Horsemen”—Hambrecht & Quist, Montgomery Securities, Alex. Brown & Sons, and Robertson Stephens. None remain independent. Technology IPOs today are underwritten by the larger banks, primarily Goldman Sachs (GS) and Morgan Stanley (MS), which tend to decline underwriting IPOs of smaller companies, says Ritter.
While bankers and venture capitalists are confident about today’s IPO market, the shadow of the dot-com bust lingers. “Now in the Valley, the idea of a bubble is a practical conversation,” says Ted Tobiason, who worked at Robertson Stephens beginning in 2000 and now heads equity capital markets for the technology industry at Deutsche Bank (DB). “It’s a healthy discussion, which gets people to think about risk and not just potential upside.”
Chinese Companies Skidding Towards Default. What’s Next?
On March 4th, 2014 China experienced it’s first ever onshore default when Shanghai Chaori Solar Energy Science & Technology Co. failed to pay full interest on its bonds. Signaling two things. 1. Chinese government is no longer interested in bailing out (most) Chinese companies and 2. A lot more defaults to come. Here is where China is today.
- $21 Trillion Debt Mountain. Roughly the same size as the entire US Banking Sector. It took the US 220 years to get to that number, it took China just 5 years of explosive credit growth.
- $6 Trillion In Shadow Banking. Actually, no one knows how large this number is. I have read good data/reports putting this number at $10-15 Trillion range.
- Empty cities, shopping centers, massive speculative bubble in real estate, built out infrastructure, rising cost of labor and export driven economy.
With massive debt burden, increasing borrowing costs and an upcoming bear market/recession in the US/Worldwide (2014-2017), shit is about to get real.
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Chinese Companies Skidding Towards Default. What’s Next? Google
China Heralding $1.5 Trillion Emerging Debt Wall: Credit Markets
A surge in interest rates and the worst currency rout since 2008 in developing nations from Russia to Brazil are inflating corporate borrowing costs as $1.5 trillion of obligations come due by the end of 2015.
Companies in the MSCI Emerging-Market Index (EEM) are facing the highest debt loads since 2009 as profit marginsnarrow to the least in four years, according to data compiled by Bloomberg. More than 36 percent of bonds and loans by Turkish companies will mature by 2015, while Chinese firms need to pay off $630 billion, or 29 percent, of their borrowings just as the country experiences its first-ever onshore corporate-bond default.
Even as higher rates help shrink trade deficits and stabilize currencies, they are damping emerging-market economic growth, eroding corporate profits and curbing bank lending. That’s increasing the cost to refinance debt for companies from Yasar Holding AS, the Turkish maker of Pinar dairy products and DYO paints, to Brazilian sugar and ethanol producer Grupo Virgolino de Oliveira SA.
“Tightening interest rates in a bad economic cycle exacerbates the stress,” Michael Shaoul, New York-based chairman and chief executive officer of Marketfield Asset Management LLC, which oversees $21 billion, said in a March 5 telephone interview. “If economic and credit conditions start to fall apart, then how can you refinance your existing bonds?”
Junk Bonds
That stress is already being reflected by a jump in bond yields. Investors demanded 166 basis points, or 1.66 percentage points, more to hold non-investment grade debt of developing-country companies than their global peers, Bloomberg data show. The premium jumped from 34 basis points a year earlier and reached a 16-month high of 172 basis points on Jan. 31.
In China, Shanghai Chaori Solar Energy Science & Technology Co. failed to pay full interest on its bonds, leading to the first default in the nation’s onshore bond market and signaling the government will back off its practice of bailing out companies with bad debt.
The maker of energy cells to convert sunlight into power is trying to sell some of its overseas solar plants to raise money to repay the debt, Vice President Liu Tielong said in an interview today at the company’s Shanghai headquarters.
Policy makers have reined in credit expansion, helping boost the yields on three-year AAA-rated corporate bonds to 6.26 percent in January, the highest since at least 2010, according data compiled by ChinaBond, the nation’s biggest debt clearing house.
Rate Increases
Russia’s central bank unexpectedly raised its benchmark interest rate 150 basis points to 7 percent on March 3, joining central banks in Brazil, Turkey, India and South Africa in raising borrowing costs to stem their currency declines this year. Brazil’s real has retreated 24 percent over the past two years, increasing their foreign debt payments in local currencies. Turkey’s lira, India’s rupee and Russia’s ruble each tumbled 18 percent.
Interest-rate increases may slow emerging-market economic growth to the weakest expansion since 2008, increasing the financial risks for banks and corporates, economists led by Dominic Wilson at Goldman Sachs Group Inc. wrote in a note on Feb. 19. Emerging-market economies grew 4.5 percent in 2013, the slowest since the 4.45 percent expansion during the 2008-2009 credit crisis, according to the International Monetary Fund.
‘Less Room’
Gross debt in companies in the MSCI emerging-market index amounted to 2.93 times earnings before interest, taxes, depreciation and amortization in February, up from 1.46 times in June 2009, Bloomberg data show. Profit margins declined to 7.81 percent from 8.34 percent in December and 10.35 in March 2011.
“We’ve moved into this environment where weaker growth in emerging markets, slower credit growth and compressed corporate margins give them less room to absorb higher costs,” Vanessa Barrett, a credit strategist at Morgan Stanley in London said in a phone interview on Feb. 6. “That certainly will challenge the debt servicing capabilities of emerging-market corporates.”
Morgan Stanley recommends its clients sell emerging-market bonds and currencies, predicting non-performing loans for Brazilian banks may increase to 5 percent from 3 percent.
Fitch Ratings Ltd. warned in January that almost 1 trillion rupees ($16.2 billion) of Indian bank loans are at risk of souring as companies’ ability to generate cash and service debt deteriorates.
Yasar Maturity
Turkish companies including Yasar, which owns everything from meat and dairy producers to fisheries businesses, and Dogan Yayin Holding AS, a media conglomerate, may have their credit outlook cut to “negative” after the lira weakened, Fitch said Feb. 14.
Yasar has $250 million of speculative-grade notes maturing in October 2015. More than 70 percent of Yasar’s debt is denominated in foreign currencies, while most of its revenue is generated in the lira, according to Fitch. Should the local currency decline further, Yasar’s net debt will rise beyond 4.5 times Ebitda, the upper limit for the B rating assigned by Fitch, the ratings firm said in a report on March 3. The company’s leverage was 4.4 times earnings in 2012.
The company’s 9.625 percent, dollar-denominated notes due next year were yielding 11.9 percent last month in trading on Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Virgolino de Oliveira
A telephone call to Yasar’s finance department wasn’t returned and Murat Dogu, vice president at Dogan responsible for finance and capital markets, didn’t respond to calls and e-mails seeking comment.
Bonds sold by Brazil’s Virgolino de Oliveira tumbled this year as Standard & Poor’s said lower sugar prices and higher interest rates may it more difficult to refinance its “sizable” short-term debt. The $300 million of debt due in 2018 fell to 56 cents on the dollar from 80 cents in November.
Virgolino is seeking financing in the international market and is getting “a very good response,” Chief Financial Officer Carlos Otto Laure said in a telephone interview on Feb. 28.
Companies in emerging markets went on a borrowing binge following the crisis five years ago as central banks cut rates to spur economic growth.
Private credit growth in each of China, Brazil and Hong Kong was more than 60 percent of their GDP since 2008. That’s second only to Ireland, at about 90 percent, among major countries tracked by Deutsche Bank AG.
Maturity Wall
Companies in the 20 largest developing countries have $808 billion debt maturing this year and another $645 billion coming due in 2015, Bloomberg data show.
Turkey has about $36 billion in debt and loans coming due. About 86 percent of the borrowings are denominated in foreign-currencies, making them more expensive as the lira’s value declines.
Russia’s companies need to pay off $142 billion in debt within two years, accounting for 25 percent of the total, Bloomberg data show.
Borrowing costs are still low compared with three years ago. Yields on dollar-denominated corporate bonds traded at 5.21 percent, down from a peak of 7.35 percent in October 2011, according to Bloomberg Emerging Market Corporate Bond Index.
Boom-to-Bust
“Higher refinancing cost alone is usually not sufficient to cause a ‘meltdown’,” Zsolt Papp, a money manager who helps oversee $2.6 billion of emerging-market debt at Union Bancaire Privee in Zurich, said in an e-mail on Feb. 21. “It would have to be coupled with a collapse in the economy and no access to credit, basically a 2008-2009 scenario. And that looks not likely.”
Capital is becoming less available, making it more difficult for companies to roll over their maturing debt. Global investors pulled $11 billion out of emerging-market bond funds this year through Feb. 26, already approaching the full year outflow of $14 billion in 2013, according Barclays Plc.
A “multi-year elongated EM cycle of underperformance” is likely as the credit and economic growth slows, according to Alan Ruskin, the global head of Group of 10 foreign exchange at Deutsche Bank in New York.
“A rapid increase of credit tends to associate with boom turning into bust,” Ruskin said in a phone interview on Feb. 21. “In an environment where there’s excess of credit, a slowing economy feeds on itself as assets go down and the banking system starts to decline. When financial markets seize on a theme, then things can accelerate.”
Shocking Truth Revealed: Why Both Bulls & Bears Are Idiots
Last night I had an unfortunate privilege of having dinner with both a Perma Bull and Perma Bear. To say these two guys almost forked each other to death would be an understatement. Foaming at the mouth, they both tried to prove why their point of view on the market is the correct one. At the end of the meeting, only one thing was clear.
They were both fools and bound to lose money in the market. Why?
As investors we should never be too vested in any particular outcome. Having a cemented point of view leads only to losses. Instead, one should be able to see the forest through the trees and be able to allocate capital based on analysis, not a fixed point of view. Better yet, it is a lot better if you know exactly what the stock market is going to do. That way you can make money in both bull and bear markets.
That is exactly what we do here. If you would be interested in knowing the exact structure of the upcoming bear market (2014-2017), please Click Here.
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Shocking Truth Revealed: Why Both Bulls & Bears Are Idiots Google
Margin Debt. Just Another Scary Bear Market Confirmation.
In an incredibly important story that no one is talking about, Margin Debt is at an all time high. In fact, it is at dizzying levels of $451 Billion as investors continue to speculate in the stock market on margin. By comparison,this same margin debt was at $275 Billion at 2000 and $390 Billion at 2007 tops. By using this simple measure one can easily figure out what the stock market is going to do over the next few years.
If you can’t, you don’t belong in the stock market.
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Margin Debt. Just Another Scary Bear Market Confirmation. Google
NYSE Margin Debt Hits Record $451 Billion; Watch Out If Rate Drops
Margin debt hit a record $451 billion on the New York Stock Exchange in January, as investors borrowed more money than ever to buy into the post-financial-crisis bull market.
And that’s a good thing, for now. But rapidly rising margin debt can also signal a market top, especially if the rate of borrowing starts to drop below its 12-month average. That was a strong signal to get out of the stock market in late 1999 and 2007 — if 0nly investors had been able to see the data in real time. The NYSE margin statistics are released after a six-week delay.
“You can’t use this for timing, but you can use it to be prepared for trouble,” says Ricardo Ronco, head of technical analysis at Aviate Global in London who shared the charts here with me. The net level of margin debt “gives you an important color on the mentality of the market,” he told me.
The chart below shows the level of the Standard & Poor’s 500 Index, with the trend in NYSE margin debt below it. The important line in the middle panel is the 12-month moving average. As long as margin debt remains above its 12-month moving average, Ronco says, the market is probably “safe.” When it dips below the 12-month average, investors are using less of the rocket fuel needed to keep stocks aloft.
The bottom panel shows the trend in net margin debt, or credit minus debt. History doesn’t always repeat itself, but the parallels to 1999 and 2007 are obvious.
The chart below adds detail to Ronco’s analysis. The bottom panel shows the ratio between the Wilshire 5000 Index and NYSE margin debt to strip out the inflationary effect of rising stock prices. “This ratio tells us how much equities are running away from borrowing levels,” Ronco says. “Spikes in this ratio are associated with euphoria peaks driven by speculative excesses.”
Another indicator is the 12-month rate of change of the Wilshire and margin debt. When the margin debt ROC exceeds 40% (the red line in the middle panel), the market is in the territory of a top. More important is the combination of the two indicators. When the rates of change of equities (the blue line in the middle panel) and margin debt (the red line) diverge, watch out. Investors are still borrowing money to buy stocks that are no longer going up in value. They get the picture eventually and give up.
Margin Debt is still rising and well above its 12-month m.a. confirming the uptrend in prices; it is rising at 20%+ rate in line with stocks and there are some signal of important divergences developing between the rate of increase in stocks vs debt.
Investors are still partying like it’s 1999 — or maybe 2007 — but if you believe in technical indicators the charts might be showing signs of vulnerability. And remember, when the trend really turns, you won’t see it until 6 weeks later.
Ronco’s advice:Prepare your strategy for a market reversal, including stop-loss protection. And this: “If you want to jump on a bull market and see the margin debt is below the 12-month average, you should hold your horses.”