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Warning: Obama Admits. Another Depression Is Just Around The Corner

Huffington Post Writes: Larry Summers’ Desperate Depression-Fighting Idea May Soon Be Reality

Learning From History

If you think people who save money are being punished by low interest rates, wait until they have to deal with negative interest rates.

Slashing rates well below zero to make it painful not to spend money is the desperate approach to avoiding an economic depression recently endorsed by Larry Summers, President Obama’s former top economic advisor and one-time pick to run the Federal Reserve. With economic growth likely to be weak for the next infinity, the job market stubbornly awful and inflation disappearing, central bankers around the world have been toying with the idea for a while. Every day it gets closer to being a reality.

Read The Rest Of The Article Here.

Well, there you have it.

First, why are they talking about a depression?  If you listen to Bernanke, Yellen and/or Obama you would believe things are great and getting better. Unemployment is down, economy is up, stock markets are surging, etc….   What the hell do they mean by “desperate approach to avoiding an economic depression.”  Is Larry Summers on drugs?

Maybe the FED’s are not as stupid as I make them out to be.  If that is true, that makes them liars and criminals, committing economic crimes against the American people. Technically speaking that is exactly what they are doing. Uhmmmm, moving on before I get a call from NSA……

Listen, they know what they did and they know what is coming. The only way to combat that is to continue pumping a tremendous amount of money into the economy while hoping that interest rates stay low. However, they are running out of options.  Given current economic backdrop there isn’t that much more they can do.  Will bringing interest rates down to zero work ?

The answer is NO. Japan has tried that for 20 years without any success.  All they succeeded at is destroying their economy while trying to stimulate it. Here is the kicker….

Everyone, and I mean everyone believes that the markets behave based on what the FED does. Everyone believes that the FED’s can control and manipulate financial markets at will. That is the biggest and the most dangerous misconception everyone has. It might look that way, but they do not.

Remember 2007-09? Eventually markets will readjust on their own accord. When they do, there will be hell to pay. With or without 0% interest rates. The bear market is coming in 2014. 

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Warning: Obama Admits. Another Depression Is Just Around The Corner 

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Stock Market Update, December 27, 2013

December 27th, 2013 chart  

Summary: Continue to maintain a LONG/HOLD position. 

The stock market continues to “Melt Up“, setting new daily highs in the process. The trend is most definitely up.  As such, there is no change in our overall position for the time being. As my mathematical work clearly shows and as I have stated numerous times here, the bear market will start in early 2014. 

From the psychological as well as the technical perspective the market is significantly overbought and is set for a pullback. People are falling all over each other calling for some sort of an Economic miracle that will propel the US over the next few decades. All of that is just noise and you shouldn’t buy into that. Simply put, this market is driven by cheap credit, speculation and structure of the market itself (timing work that I do). Yet, rest assured, the bear market is just around the corner. Short term, my work shows a significant turning point around January 1st. I would expect a significant pullback to start shortly. At the same time, it will not be the beginning of the bear market. Hence, the advice to continue holding our long position. 

My previous updates and various fundamental issues associated with the market remain right on the money. Please click on the links below to see them. 

November 22nd Report

November 15th Report. 

November 8th Report.

November 1st Report.

As we continue to hold our long position while waiting for the market reversal, right now might be a good time to start thinking about how you would liquidate your holding and/or re-allocate your capital once the bear market of 2014-2017 starts.

If you would like to take it one step further, this is a good time to start researching SHORT opportunities.  

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 Stock Market Update, December 27, 2013

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Warning: Camel Business Is Forecasted To Boom In The Middle East

CSM Writes: US to be No. 1 oil producer, but it won’t last

tiger-in-car-investwithalex

The US will lead the world in oil production for two decades starting in 2015, according to a new report. After that, OPEC will reassert its dominance in oil production.

The US is poised to become the world’s largest oil producer beginning in 2015. But its reign will be fleeting as the Middle East reasserts itself two decades from now.

Why? America’s oil boom won’t last forever, according to an annual outlook released Tuesday by theInternational Energy Agency (IEA). And the technologies that have fueled that North American boom in shale rock formations won’t be easily replicated in the rest of the world. 

“The capacity of technologies to unlock new types of resources … and to improve recovery rates in existing fields is pushing up estimates of the amount of oil that remains to be produced,” reads the Paris-based agency’s report. “But this does not mean that the world is on the cusp of a new era of oil abundance.”

Read The Rest Of The Article Here

In a  bit of a good news,  this is a positive development for  the US Economy and the consumer. While this positive development will not have an immediate impact on the financial markets, over the next decade it will be a huge positive for the overall US Economy.

Just as the US will be the clear winner, there will be many losers who rely on the high price of oil to sustain their faltering economies. Most notably, Russia and most of the OPEC members.  Going forward, the US should use this 20-30 year window of opportunity to make a massive investment into renewable energy and new technologies to try and completely eliminate oil dependence. I believe it’s possible and if done right should set the US Economy for massive economic growth over the next 30-50 years.  At the same time, if such independence is achieved, middle east countries like UAE (Dubai) and Saudi Arabia will face the full force of economic pain.  

Even though they have built massive cities and infrastructure I do not see how such cities can be sustained without oil money. I believe it was one of the Sheikhs who said something along the lines of (and I am paraphrasing here ) “Our fathers rode camels, my children and I ride in Mercedes and my grandchildren will ride camels again”.  It looks like his wisdom might become a reality.  

So, is now a good time to start investing in a Camel Business? 

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Warning: Camel Business Is Forecasted To Boom In The Middle East 

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Sochi Olympics Downhill Race

AFP Writes: Putin’s failure damning Russia to low growth trap

Russia-investwithalex

Moscow (AFP) – Russia’s failure to significantly change its energy-dependent economic model under President Vladimir Putin is consigning the country to potentially decades of low growth and eroding its status as a top emerging economy.

The Russian economy ministry on Thursday dramatically confirmed what was obvious to many, by downgrading its estimate of Russia’s average growth to 2030 to a paltry 2.5 percent, a far cry from over seven percent rates in the early Putin years.

“The pace of Russia’s economic growth will fall behind the global average in the forecast period,” admitted Economy Minister Alexei Ulyukayev.

This year even Russia’s official forecast puts 2013 growth at just 1.8 percent. But most worrying for the Kremlin is that the weakness cannot just be blamed on external factors but stems from domestic shortcomings.

The Russian economy faces a daunting list of troubles –- a declining population, the re-emergence of the United States as a rival energy superpower due to shale gas, and the government’s colossal spending on defense that stretches the budget.

These factors are compounded by Russia’s failure to stimulate private enterprise, reform the judicial system, improve labor productivity and turn the Russian economy into more than a lumbering energy producer.

Read The Rest Of The Article

Russia is screwed. Big time.

The only thing that kept Russia afloat over the last decade or so is high energy prices. Now that energy prices are down substantially and with no indication for them to recover, Russia is standing on the edge of the cliff looking down into abyss. No doubt, there are multiple structural problems in Russia (aging population,  low energy prices, corruption, etc…), however, the biggest problem is psychological/cultural. 

Having lived in both Russia and the USA I know exactly what I am talking about. The difference between the two economies is as follows.  In the USA everyone knows that they have unlimited potential in terms of starting their own business and trying to get rich. Everyone has an understanding that if they work hard, risk, sacrifice and get lucky, there is really no limit to what they can accomplish. As a result, everyone tries to excel at something and you end up with a highly diversified economy benefiting all.

That part of the equation is gone in Russia.  Culturally people do want to get rich, but they don’t want to work for it. They want it to happen overnight and the only way to do that is too steal or take something away from someone or to be corrupt.  That is how most “New Russians” got rich and that is what most Russians aspire to.   

Given this reality, I do not see how Russia will amount to anything anytime soon. The fact that their economy will suffer over the next decade is now a certainty. The only way to fix it going forward is to change the culture or to change the psychology.  Unfortunately, I do not see that happening anytime soon. 

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Putting It All Together (Part 2)

investing35

Continuation of Part I

Through using trading and position rules described earlier we progress even further in our risk management by minimizing mistakes in our overall investment approach.  For example, if all previous approaches agree and we decide to establish an investment position in any given stock or the overall stock market, we would still have to look for the market to confirm our research.  If the market moves against our very well researched position, we have to follow our strict trading rules and liquidate our position as fast as possible. While such actions will lead to short-term losses, over the long-term such actions will minimize losses while greatly increasing your return opportunities in more profitable positions. 

Once again, by combining all of the factors above into what I call a “Timed Value” style of investing, one gains the ability to compound oversized gains over an extended period of time. All while minimizing risk. An allocation that should ensure in market beating performance if timing techniques used in this book are used in their proper format. It is also important to understand that properly exercised timing techniques can lead not only towards market beating performance, but to capital gains that are typically not available to traditional market participants. If fact, when the market structure is understood in full from the 3-Dimensional perspective, it can be timed with great precision, leading to astronomical returns and very little (if any) risk.  

To summarize the Timed Value approach discussed in this book…

  1. Identify “Rocket Ships” value stocks through the use of fundamental analysis
  2. Confirm your investment thesis through proper understanding of the Macro Economic environment.
  3. Use 3-Dimensional analysis to time the stock market or the individual stocks with great precision.  
  4. Use Cycle Analysis to confirm your timing work.
  5. Follow strict trading rules to properly enter and exit financial instruments in question to minimize risk.

In conclusion, I have developed this unique investment approach after more than a decade long participation in financial markets and tens of thousands of hours studying various timing techniques. While the above might not work for everyone, it is the most powerful and the most risk averse approach to the investing that I know of.  While “Value” portion can be replaced with many other investment styles (growth, technical, etc..), the timing principles discussed in this book are indeed timeless and cutting edge. An analyst who dedicates his time to studying the market in 3-Dimensional environment should walk away with a much better understanding of how the markets truly work. An understanding that will eventually morph into an exact science allowing the said analyst to time the stock market with the precision most other market participants can only dream about.    

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Putting It All Together (Part 2) 

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Why Do You Hate Me?

bear market investwithalex

It’s hard to be a bear. No one likes bears.  Here are the top 10 signs that you might be a bear hater as well. 

  1. You define a bear who got it wrong simply as “An idiot”.
  2. You define a bear who got it right as “An idiot who got lucky.”
  3. Short squeezes give you a hard on.
  4. When you go to Russia you always order a Grilled Bear Steak.
  5. You can’t stop laughing when Mr. Market mauls all the bears.
  6. You secretly wish that Mr. Bernanke would round up all the bears and ship them to where they belong….. Siberia.
  7. You think that throwing bears out of airplanes should be an Olympic sport. 
  8. When up in the mountains you steal “Slow Down For Bears” signs and replace them with “No Speed Limit” signs. 
  9. You believe all bears are communists. 
  10. You believe bear mafia controls the toilet paper market.

This goes to all the bears out there. 

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Why Do You Hate Me? 

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Why Most Economists Should Be Treated Like Terrorists

Bloomberg Writes: Why Germany’s Export Machine Is Under Attack

 EconomistsMessedUp

Imagine someone who runs a thriving luxury car dealership, yet does the weekly shopping at a no-frills discount store. That pretty much describes the Germans. The global No. 3 exporter is famously thrifty at home, so Germany runs a trade surplus equaling nearly 7 percent of its economy.

Now, imagine telling the Germans that this is bad. That’s what is happening as a growing chorus of international critics warns that Germany’s trade surplus is endangering global growth, and putting Germany’s own future at risk.

On Nov. 5, the European Union threatened to probe Germany’s trade surplus, which since 2007 has exceeded EU guidelines of a maximum 6 percent of gross domestic product. Germany must boost consumption and raise wages “to open the bottlenecks to the growth of domestic demand,” EU Economic and Monetary Affairs Commissioner Olli Rehn said.

Rehn’s comments follow recent criticism from the International Monetary Fund, which says German export policy is hindering Europe’s economic recovery. A “significantly smaller current account [surplus] would be useful,” David Lipton, the IMF’s first deputy managing director, said in Berlin last week.

The U.S. has weighed in, too, with a recent Treasury Department report (PDF) warning that German policies were placing “severe pressure” on troubled European economies and creating “deflationary bias for the euro area, as well as for the world economy.”

Not surprisingly, the Germans are furious. Trade surpluses “are a sign of the competitiveness of the German economy and global demand for quality products from Germany,” the country’s Economy Ministry said on Oct. 31. “There are no imbalances in Germany which require a correction of our growth-friendly economic and fiscal policy,” spokesman Martin Kotthaus told reporters in Berlin. An article in the magazine Spiegel 

The critics, though, aren’t really asking Germany to export less—although that certainly would help such EU trading partners as Spain and Italy, which are struggling to export more of their own goods. The Germans are mainly being asked to spend more money on themselves. Over the past decade, Germany has dramatically lowered labor costs and reduced unemployment by creating a large number of low-wage and part-time jobs.

Read The Rest Of The Article Here

Sometimes I feel like I live in the parallel universe where only stupidity is rewarded.

Germany is running its economy as any responsible country should (well, besides being a part of the European Union) and IMF/USA have the balls to tell Germany to that it is doing everyone a disservice by not spending more.  I have never heard anything more ridiculous.

While I understand the reason behind such a statement, this is equivalent to having a friend who has already maxed out all of his/her credit cards telling you that you should live it up a little and instead of saving money should blow it all on coke and hookers.

It is terrifying, but that is the state of our economic leadership today.   It leads to nothing more than an eventual  decline in economic standard or worse…..an economic collapse that is just around the corner.  

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Putting It All Together

timeless-investing

Throughout this book we have talked about a number of important investment concepts. We started out by looking at the traditional value investment approach and how to use it in order to minimize risk while maximizing returns. We followed on by looking at things like margin of safety, how to determine the intrinsic value of any stock like a pro, the different types of stocks out there and how to apply macroeconomic analysis in order to supplement fundamental analysis.  Basically, this section of the book allowed us to concentrate on the fundamental approach to investing and the best practices associated with it.  At the same time, we were able to identify a number of significant problems associated with value investing.

The most significant of them was the fact that value investing doesn’t give us the ability to properly time entry and exit points into the financial instruments we are investing in. Even if our fundamental research is proven to be correct, we might be months or even years away from a properly timed entry point.  Yet, timing is the most important element. Properly timed investments allow us to further reduce risk while maximizing our returns. Not only that, but properly timed investments can either confirm or challenge the validity of our fundamental analysis.

This understanding forced us to look at the various timing techniques and their associations with the stock market. Primarily, by introducing a completely new way to look at the stock market we were able to concentrate on the 3-Dimensional analysis as our primary tool to time the markets. As this book clearly illustrates, the stock market is not random, but is, indeed, highly structured. Once the structure is understood through the use of 3-Dimensional analysis, one can time the market with great precision.   

Further, an analyst working with the timing techniques described in this book should be able to identify with great accuracy not only what any given stock or the overall market will do, but exactly when it is going to happen. This was followed by the cycle analysis and an explanation of how cycle analysis truly works. Most analyst have had issues with using cycle analysis in the past because cycles tend to work over a certain period of time, only to break down and to never work again. This conundrum was clearly explained and it was shown how the cycle analysis can be used to mimic the stock market with great precision. Once the cycles are arranged in proper configuration an analyst can determine with great precision not only the price and time, but the velocity of the upcoming move as well. Once again, confirming price/time and minimizing risk in the process.

So, what is Timed Value?

It is exactly what it sounds like. Three powerful investment strategies, all wrapped into one. Fundamental analysis, 3-dimensional analysis and the cycle analysis. Combining all three into one allows us to predict the stock market (or individual stocks) with great precision in both price and time. This further reduces risk while maximizing the returns. For instance, working with fundamental analysis and macroeconomic understanding we would be able to identify “Rocket Ships” stocks that are set for rapid and significant advance. We would then use 3-Dimensional analysis and cycle work in order to confirm our fundamental analysis and timing. If everything aligns and the price movement confirms, it is ideal to start building a trading or an investment position.

To be continued….

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Putting It All Together

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Bears In Lamborghinis

bear in lamborghiniI remember 2006 very well. I was going around telling people the following,  “Listen guys, this is unsustainable, this market is in a crazy bubble driven primarily by mortgage finance and it will blow up soon”.   Most didn’t care and those who did called me “Boy who cried wolf”.

Fair enough. I decided to take matters into my own hands by shorting subprime mortgage lenders and multiple other real estate related companies that I believed are nothing more than a pile of stinky (but worthless) mortgage paper. Yet, the companies kept going up throughout 2006 and early 2007. Not only going up, they kept surging up like they were the best investments in the world. This was before my timing work and I was feeling miserable. My research was 100% accurate, yet the market was going the other way.  When these stocks did finally collapse in the summer of 2008, they have collapsed within weeks. With one stock price going from as high as $87 to as low as ZERO (filed for bankruptcy) in 11 trading days. I was vindicated, but it didn’t matter.

What’s the point of this story?

Even though I am currently a huge bear based on fundamental, macro and timing analysis, I do not currently hold a short position.  Quite the opposite. I am long the market, but solely based on my timing work.  My mathematical work clearly illustrates that a severe (3 year) bear market is starting in 2014 to complete in 2017. Before that happens, I feel the pain the bears are going through. Of course, they are right but they are suffering through the most difficult stage of all…. market blow off top.  This is the time where there are almost no bears left. Most of them have been killed.  Case and point.

S&P 500 Will Be at 2,000 Sooner Than You Think article that not only makes fun of the bears, but claims that everyone is bearish and that’s why S&P will hit 2000 soon. Well, maybe everyone is bearish if you can find any bears left. I don’t know of any. Even permabears have turned bullish.  

 

Perhaps he is talking about Carl Icahn who has turned bearish CARL ICAHN: The Stock Market Could See A ‘Big Drop’ And I’m ‘Very Cautious’

To moral of the story is this. With the market surging ever higher, this is the most difficult time to be a bear.  Every bear looks like a complete idiot and loser. Yet, as the saying goes, it is always darkest before the dawn.  True bears who maintain their position at this time will soon be greatly rewarded.  So much so that every true bear will be able to afford a Lamborghini.   

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What You Ought To Know About Today’s Bull Orgy

Bloomberg Writes: Junk Glistens Under ‘Bernankecare’ as Worst Stocks Win

bull orgy investwithalex

Carl Giannone says he’s given up hunting for quality stocks. Now he’s simply riding the wave of upward momentum in the U.S. market. “It’s a game of musical chairs,” said Giannone, who manages an equities team at T3 Trading Group LLC in New York. “You just want to make sure you can sit down.”

The Federal Reserve’s near-zero interest rate turns five years old next month, the longest period without an increase in history. Coupled with more than $3 trillion of asset purchases, it adds up to “Bernankecare,” said Joshua Brown, chief executive officer of Ritholtz Wealth Management in New York. And it’s causing parts of the market to behave strangely. Stocks of companies with weak balance sheets are rising twice as fast as stronger ones; junk borrowers get rates lower than their investment-grade counterparts did before the credit crisis; and initial public offerings are doubling on their first day of trading.

While in the minority, some investors say prices have climbed so high it’s possible to look ahead and see an ugly end.Laurence Fink, chief executive officer of BlackRock Inc., the biggest U.S. money manager, said in an interview with Bloomberg Television on Nov. 12 that he feared a bubble and the Fed ought to quit buying so many securities.

Read The Rest Of The Article Here

Have you ever seen a real bull orgy? I haven’t, but a fathom it would be a fairly gross site to feast your eyes upon. Luckily for you can see an artificial one by turning on CNBC or reading any other kind of financial media. Bulls are salivating over each other, predicting the DOW at 20,000, 25K, 50K, to infinity and beyond. It’s quite entertaining to watch.

The article above is right on the money. At this stage everything is in the speculative bubble that will pop and it has become a game of musical chairs. However, that is not why I bring this up. I want to point your attention to a psychological breakdown of market participants. We all know the saying “Buy Low Sell High” or “Buy When There Is Blood On The Streets”, yet not a single person I know actually does it. 

Case and point, March 2009 bottom. Not a single person I know, not on TV or elsewhere advocated buying. No, they were all talking about the end of the world, how low the market will go and what stocks to short best. The blood was running on the street, the stocks were being given away and these fools couldn’t see the forest through the trees. Now the situation is completely reversed. When everyone should be selling and/or going short, everyone is screaming BUY, BUY, BUY.  It’s a fools game and if you buy today you are that fool.  I guess human psychology, the primary driver behind the stock market, will never change.

With such a backdrop it is very nice to know exactly when the Bear leg of 2014-2017 will start and the damage it will do. While Bulls are busy having their orgy, the market is getting ready for a massive haircut. You have been warned. 

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