Summary: Continue to maintain a LONG/HOLD position.
1/30/2014 – The roller coaster ride continues with the Dow Jones ending the day up +110 points or (+0.70%). With gap ups and downs galore.
It is definitely starting to feel like the volatility is coming back into the market. While VIX index is still sitting at relatively lows levels, the market is starting to exhibit signs…. Continue reading “Stock Market Update, January 30th, 2014. InvestWithAlex.com”
Wall Street’s latest trillion-dollar idea involves slicing and dicing debt tied to single-family homes and selling the bonds to investors around the world.
That might sound a lot like the activities that at one point set off a global financial crisis. But there is a twist this time. Investment bankers and lawyers are now lining up to finance investors, from big private equity firms to plumbers and dentists moonlighting as landlords, who are buying up foreclosed houses and renting them out.
The latest company to test this emerging frontier in securitization is American Homes 4 Rent. The company talked to prospective investors at a conference in Las Vegas last week about selling securities tied to $500 million of debt, according to people briefed on the matter.
“The investment and lending opportunities are immense and perhaps just beginning,” Jade Rahmani, a real estate analyst with Keefe, Bruyette & Woods, wrote in a recent report.
In just the last two years, large investors have bought as many as 200,000 single-family houses and are now renting them out, according to the K.B.W. report.
Read The Rest Of The Article Here
by Alex Dvorkin
If you were searching for evidence that our nationwide housing market recovery has been driven by speculators and massive credit, wonder no more. Massive flood of capital from the FED’s into financial institutions has created all sorts of stupidities. This is one of them.
Trust me. Hedge funds providing massive amounts of capital “to plumbers and dentists moonlighting as landlords” is not as brilliant as it sounds. As a matter of fact, it is fucking stupid. The only thing it will lead to is massive losses down the road for everyone involved. Big losses for hedge funds, for plumbers and dentists, for the FED, for the overall US Economy and for the average Joe with a house and a mortgage.
No one is talking about the elephant in the room. Overall and after taking expenses associated with being a landlord into consideration, no one is making any money. There is no yield. Everyone is betting on capital appreciation to make a profit. I am afraid such capital appreciation will never arrive. Please see my Real Estate Market Top article here.
You also have to read between the lines to see the massive system wide risk. For instance, why the fuck would hedge funds who are awash with free cash from the FED invest in plumbers and dentists who would in turn become landlords? For two reasons..
1. Everything is extremely overpriced. In bubble territory. The bond market, the stock market and even the real estate market. They are investing in plumbers because there is nothing else left to invest in.
2. Everyone is playing the game of musical chairs, chasing performance. The money is FREE, so why not. Of course, we know what happens next. The music stops and the real estate sectors gets flushed down the toilet….again.
If this article doesn’t scream “market top” to you, I don’t know what will. Don’t be fooled by Wall Street once again. I am just curious to see what will happen to the real estate prices once “investors” decide that being a landlord sucks and begin dumping hundreds of thousands or perhaps millions of properties they have purchased. I wouldn’t be surprised to see 50-70% haircut from today’s real estate prices. Here is my valuation work.
The bottom line is, stay away from this Ponzi Scheme and don’t buy real estate over the next few years. You can send me a gift basked later.
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
Brand New Real Estate Market Ponzi Scheme. Will You Buy In?
My investment book is finally ready. I am incredibly excited and proud of it. This is a one of a kind book that talks about my “Timed Value” style of investing and my secret mathematical approach to market timing. If you would be interested in learning more about the book please CLICK HERE to get 2 free chapters and further information.
Book summary….
Have you ever wondered if it was possible to generate outsized investment returns by timing the stock market and/or individual stocks with great precision?
If you have, this book is for you. Financial media and most financial professionals would lead you to believe that such a task is impossible. Yet, Timed Value challenges this traditional assumption head on by presenting a clear cut case that the stock market is not random, on the contrary, it is precise.
The book starts by discussing the traditional aspects of “Value Investing”, its hidden secrets and problems. The second part of the book shifts into the timing aspect by showing the reader the exact calculations needed in order to time the market or individual stocks with stunning accuracy.
Further, the author shows “HOW” once the stock market structure is understood in its entirety, the market or individual stocks can be timed with great precision. Not by some arbitrary technique that cannot be replicated, but through the use of modern science and mathematics. Math doesn’t lie and when the market turns/reverses at exact mathematical points of force, only one explanation remains. The market is not a randomly volatile instrument, but a mathematically precise tool that baffles the mind.
As such, this “How & Why” stock market timing masterpiece is a must have book for any true market practitioner or those wanting to improve their overall returns.
INS Writes: ‘Jews, Out of France!’
Chilling video shows hundreds of anti-Semites on the march in Paris, illustrating the frightening rise of anti-Semitism in France.
It is nothing short of chilling.
A video, taken on the eve of International Holocaust Remembrance Day, shows masses of French protesters marching down a Paristhoroughfare chanting openly anti-Semitic slogans and calling on Jews to get out of France.
Chants include “Jews, France is not yours!” “Jews out of France” and “The story of the gas chambers is bull***!” At one point, in a show of raw, seething hatred, the crowd simply spits out the word “Jew, Jew, Jew!”
Many of the marchers can be seen giving the “quenelle” inverted Nazi salute popularized by anti-Semitic comedian Dieudonne. The gesture is seen as a way for anti-Semites to give a Nazi salute without incurring the wrath of authorities – although one demonstrator can be seen giving a full-on Nazi salute as well.
I have written about France’s insane economic policies before in France Is Being Flushed Down The Toilet… Just As Predicted. As such, it should come as no surprise that France is slowly turning into a Nazi Germany. Maybe not to the extent, but to a degree everyone should be aware of.
If history teaches us anything, it is the economic structure and not the ideology, that leads to genocide and wars. It was the economic devastation that was the primary reason behind the rise of Nazi Germany in the early 1930’s. Now, the French Socialist Party is hell bent of destroying French economy by taxing the rich and businesses to death. Subsequent economic suffering leads to social unrest and an eventual rise of hate and fascism. We see this very same type of a situation happening in Greece as well.
Idiotic and uneducated masses always need someone to blame. Based on today’s news it looks as if the French hate the Jews. It is my only hope that all the Jews pick up and leave either for the US or Israel. Just as their exodus devastated every corner of Russia’s economic and scientific community, France should have the privilege to suffer the same faith. Let this be a lesson to those trying to turn their market economies into socialist nanny states.
One thing is for sure, I won’t be visiting France anytime soon. Au revoir connards
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
How French Economic Policies Are Turning France Into a Fascist State
Summary: Continue to maintain a LONG/HOLD position.
1/29/2014 – The market continued its initial bear market move with the Dow Jones being down -190 points or (-1.19%).
Further, the market opened up another 100 point gap in the morning, erasing all of yesterdays gains and indicating that the market will eventually come back to close the gaps. No doubt, short term picture remains bearish while the long term picture remains bullish. Raising up questions if this is just a correction or a beginning of anticipated bear market. As my timing work showed, it is highly probable that the bull market topped out on December 31st and what we are witnessing now is the initial stage of the bear market.
Again, even though the timing work confirms, we must wait for a technical confirmation that the bull market has indeed topped out before taking a short position. As such, I continue to maintain our long/hold position.
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
CNBC Writes: ‘Huge amount of downside’ in S&P: Fleckenstein
Bill Fleckenstein is not ready to call the top for the market just yet. But pointing to the S&P 500‘s valuation, he says that once stocks do start to fall, the decline could prove extremely painful.
“The [price-to-earnings ratio] is 16, 17 times earnings,” Fleckenstein said on Tuesday’s episode of “Futures Now.” “Why would you pay 16 times for an S&P company? I don’t care about where rates are, because rates are artificially suppressed. Why isn’t that worth 11 or 12 times? Just by that analysis, you’d be down by a quarter or 30 percent. So there’s a huge amount of downside.”
For Fleckenstein, a noted short seller who is famous for making money in the 2008 crash, the Federal Reserve‘s quantitative easing program has led investors to badly misprice stocks.
The Fed “printing money does not make the economy work, but it sometimes makes stocks go wild,” Fleckenstein said. “The reason the stock market did well last year is because the Fed printed $1 trillion.”
Bill is right on the money and while he is not ready to call the top, I am. In one of my previous posts MARKET TOP, I have identified December 31st, 2013 as the top of the bull run from the 2009 bottom.
It has also been my premise all along that fundamentals no longer matter. Not in terms of identifying some sort of a new stock market environment, but as of right now. The fundaments do matter a great deal under “normal” circumstances, yet normal circumstances have been greatly distorted by massive infusion of credit into our financial system.
Credit that drove our stock market prices beyond any reasonable valuation and well above 2000 and 2007 tops. Sure, earnings, P/E ratios and other metrics matter. Yet, most metrics we revert to today have been distorted by the same credit infusion. Leading to higher earnings and corporate profits. The bottom line is, when credit collapses so will all other metrics. Do not be fooled, all of this is nothing but an illusion.
As I have said so many times before, my mathematical work shows that we are in for a 3 year bear market that will take us into the 2017 cyclical bear market bottom that started in 2000. Do you need more information and exact price/time targets? My premium subscription service will be available next Monday.
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
In his State of the Union address, President Obama announced that he is raising the minimum wage for new federal contract workers to $10.10 an hour. Challenging lawmakers and states to do the same. In essence, hoping that the his action will lead to an eventual rise in nationwide minimum wage.
Here is the behind the scenes explanation of why he is doing it, why it will not work and why these idiotic economic policies by the FED and by the US Government are killing the US Economy.
Now, prior to understanding what is behind this move, you must be made aware of our overall economic environment. While it seems complex, it is quite easy.
As of right now the US Economy is being pushed and pulled by two opposite forces. Inflation and deflation. How is it possible?
Technically speaking we are in a deflationary environment. It is a naturally occurring cycle where the prices of goods and services go down due to over capacity, credit decline/collapse and stronger currency. If you think about it, deflation is great for both consumers and businesses.
Yet, our Federal Government and the FED’s are terrified of deflation. Why? Because they have a massive pile of debt that they have to pay back. A little over $17 Trillion.
The problem is, there is no way in hell they will be able to pay this debt pack under normal circumstances and no way in hell X 10, in a deflationary environment.
The only way out of this mess is through inflation or war. That is why the FEDs have been working overtime printing money and trying to inflate our debt (and our money) away. With mixed results.
Hence the reason behind our current deflationary and inflationary forces. Forcing some prices (ex: food) to go up while other prices to decline or collapse (ex: asset prices or services).
The bottom line is, the Government needs inflation at any cost. This brings us to President Obama’s pledge or push to increase nationwide minimum wage. Again, it has nothing to do with getting people out of poverty and everything to do with inflating away national debt and destroying the dollar.
Yet, unemployment (or true unemployment) remains high and in such an environment wages will have to stay low. No matter what President Obama does, he has very little pull in free markets and when there is a readily available oversupply of work force, wages will stay where they are.
The bigger issue here is blatant destruction of the US Economy and the US way of life through pure economic stupidity. What you are witnessing now is the end of the road and an eventual collapse of the house of cards that is the US Economy.
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
More Economic Insanity From The White House
WASHINGTON (AP) — The U.S. economy is showing more strength than at any time since the Great Recession began six years ago.
Employers are hiring. Home prices, sales and construction have surged. Corporate profits and stocks have hit records. And consumers have picked up their spending.
The economy has yet to fully recover from the most devastating crisis since the Great Depression. But it’s getting closer — a point President Barack Obama was expected to highlight in his State of the Union address Tuesday night.
The propaganda machine continues to hum along. Let me remind you that the so called “Great Recession” was caused by the insane economic policies of the US Government. Mind you, they continue the same policies today, yet on a much larger scale.
— JOBS
Job growth has been remarkably steady in an uneven recovery. Employers have added at least 2.1 million jobs in each of the past three years, creating momentum that could help the economy gain speed in 2014. Each new job puts more money in the hands of people to spend. That’s why consistent job growth can give more traction to the recovery. The unemployment rate has plunged from 7.9 percent to 6.7 percent over the past year. That’s down from a 10 percent peak in October 2009.
Still, the benefits of more hiring have been muted so far, in part because much of it has been concentrated in the low-wage industries of hotels, restaurants, retailers and temp workers. Also, millions of jobless Americans have stopped looking for work. Once people without jobs stop their searches, they’re no longer counted as unemployed. As a result, the unemployment rate can fall in a way that overstates the health of the economy.
WOW, really. I am not even sure where they are getting their numbers. While the government claims the unemployment is at 6.7%, in reality, that number is much higher. With people giving up on finding work and prolific “underemployment” the real rate is most likely to be around 15%. Hence, no pay growth.
— HOUSING
Real estate is rebounding. Home prices have climbed 13.7 percent over the past 12 months, according to a Standard & Poor’s index released Tuesday. Sales of existing homes totaled 5.09 million last year, the best such performance since 2006, the National Association of Realtors said last week. Home industry experts say the gains should continue this year, though at a slower pace because higher mortgage rates and home prices will make buying less affordable for some.
Sure, real estate has rebounded, but make no mistake. This has very little to do with an underlying economic health and everything to do with massive credit infusion and to a certain extent speculation in the sector. Once the bubble pops again, and it will, housing will decline below 2010-11 lows.
— CONSUMER SPENDING
The spending of consumers, which fuels about 70 percent of the economy, is starting to return to its pre-recession levels. The Conference Board said Tuesday that its consumer confidence index rose to 80.7 this month, well above last year’s average of 73.3. Retail sales bumped up 4.2 percent in 2013, the fourth straight annual increase. Roughly 15.6 million autos were bought last year, an 8 percent improvement and the highest total since 2007. Historically low inflation and interest rates have kept food and clothing affordable. And according to the Gallup Organization, average daily consumer spending rose $16 to $88 last year.
Fair enough, but consumer spending is a simple function of the economy. When the economy goes up, so does the consumer spending. Yet, keep the following in mind. Today’s economic recovery is driven primarily by credit infusion and speculation. As the result, consumer spending is being artificially levitated. When easy credit and speculation goes away, consumer spending will not only decline, but collapse.
— STOCKS
The Dow Jones industrial average enjoyed a monster 2013, climbing 28 percent. Corporate profits are at their highest share of the economy in the 66 years of tracking by the government. Shares were bolstered by a Federal Reserve bond-buying program that is now being wound down. The eventual end of the program, paired with weak growth in China and troubles in Argentina and Turkey, help explain the 4.1 percent decline in the stock market since the start of this year.
Again, everything associated with the stock market has been goosed by the FED and their “unlimited” money supply. That includes corporate profits and emerging markets. It is similar to living a high life while maxing out your credit cards. Eventually the bills will come due and the cards will be maxed out. When that happens, there will be hell to pay in all financial markets. As I have stated so many times before, my mathematical work indicates that the bear market has already started and it will take us into the 2017 bottom.
It is prudent that you get yourself ready.
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
Summary: Continue to maintain a LONG/HOLD position.
1/28/2014 – The market rebounded nicely today with the Dow Jones being up +91 points or (+0.57%). Is this the bottom of the first or “initial sell off”? It is hard to say. While it looks promising the short term picture remains bearish.
If you look at the five day chart above you will note two gaping holes on Jan 23rd and 24th. As I have mentioned many times before, the stock market tends to close such gaps before any sustained bear or bull moves can take place. Since our work indicates that the Bull market from 2009 bottom has topped out on December 31st, 2013, the market must jump back into that territory and close the gap before a sustained bear market move can take place. As such and based on my calculations, a rally from this point on into the 16,400 on the DOW would make perfect sense.
With that said, there is nothing left for us to do except sit on our hands and wait for some sort of a confirmation. I believe we are still weeks away from such an event. It is too early to go short and it is prudent to remain long in case the analysis above is incorrect.
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
Breakout Writes: Underwater mortgages are a bigger problem than the national average suggests
If you follow real estate prices or sales trends or the number of homes going into foreclosure, you’re apt to have a pretty positive feeling that things are improving. If you dig a little deeper, however, and look only at the 15 hardest hit states, you’ll find a totally different story.
While these outlier markets and metropolitan areas are also seeing improvement, they are still years away from breaking even and being whole again.
For example, December’s headline data from RealtyTrac showed the national rate slipping to 18% of homes being underwater or having negative equity (which simply means a homeowner owes more than the property is believed to be worth), but at the bottom of the scale, there are still 9.3 million “deeply underwater” homes that are in the hole by twenty five or more. In fact, six states that are at least ten points above the national average of 18%, including Nevada (38%), Florida (34%), Illinois (32%), Michigan (31%), Missouri (28%), and Ohio (28%).
The case in certain cities is even worse, as the latest data shows towns such as Las Vegas, Orlando, Tampa and Chicago still have negative equity ranging from 33 to 41 percent.
What a shocker. Las Vegas still has negative equity to the tune of 33-41% even though Blackstone and other investors have been buying real estate by the billions in the city (to the tune of 50-70% of all transactions in the city are to all cash buyers/investors). I wrote about it in my previous article Timing The Real Estate Market Crash.
Is this good or bad? It depends on who you listen to. If you listen to traditional media and real estate professionals, this is of course, great news. The real estate market has bottomed and on the way up. Eventually, the negative equity in question will be recovered. However, if you listen to assholes like me, someone who would publish a blog post titled I Am Calling For A Real Estate Top Here, you would have a different point of view.
Listen, this is fairly basic and easy. The real estate market recovery has been driven by excessive credit available to financial institutions, private equity and investors (not you). Still, while some select markets, such as So. Cal, have almost fully recovered, the rest of the country continues to lag behind. As the article above suggests, to the tune of 30-40%.
What troubles me the most is the fact that the real estate market is starting to roll over. As the stock market declines into the 2017 bottom, the US Economy will once again experience a severe recession. The real estate market will also roll over and begin its 3rd leg down. As I have suggested previously, the 3rd down leg down is the most severe. As such, I wouldn’t be surprised to see real estate decline to the tune of 20-50% from this point on.
My valuation work displayed HERE showed that real estate could and technically should decline to the tune of 45-70%. As such, it pays to anticipate things.
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!