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2/4/14
This morning's key headlines from GenerationalDynamics.com
�Monday's market plunge continues 'that 1929 feeling��
The Dow Industrials index fell more than 2% Monday, continuing a decline that has been almost steady since the beginning of 2014. The experts blamed Monday's plunge on bad manufacturing data and an apparent slowdown in China.
The S&P 500 Price/Earnings index (stock valuations) fell to 16.9%. This is lower than the 18.72 peak of last year, but it's still astronomically high by historical standards. It was only as recently as 1982 that the P/E index was 6, and it's about due to return to that level, as it does periodically, every 30 years or so. This would push the Dow Jones Industrial Average from its current 15,400 down to the 3,000-4,000 level, or lower, which is what Generational Dynamics is predicting.
A week ago, I wrote "'that 1929 feeling' may be back on Wall Street". As I said, what I'm looking for is a certain pattern that preceded the 1929 crash.
For the seven weeks preceding the 1929 crash, starting from 9/3/29, the market declined gradually, but with some wild gyrations along the way. That's the pattern I'm watching for today. The market has, in fact, been declining gradually since Jan 1, but we've only begun to see the wild gyrations. If the decline continues, and if there's a fall of 6% one day, followed by a rise of 8% the next day, or some sort of abrupt change like that, then that would indicate a looming crash.
However, there are no guarantees, one way or the other. The market might fall 10% and then go back up. The stock market is in a huge bubble, and Generational Dynamics predicts a major financial panic and crisis, but the exact date that the bubble will burst is impossible to predict. However, as I said, this is the first time in a long time that I've thought that the market has that "1929 feeling." Reuters

2/3/14
On Monday, weaker than expected factory data and continued concerns over emerging markets sent the Dow Jones Industrial Average nosediving 326 points to shave 2.08 percent off the Dow as the S&P 500 posted its worst loss (40.7 points) since June.
The selloff marked the seventh triple-digit drop in 2014 to put the Dow down 7.3 percent on the year.
"The disappointing data provide further confirmation of a dramatic slowing in economic growth momentum," TD Securities chief economist Millan Mulraine told Reuters.
Some blamed bad weather. Others, like Morgan Stanley's Ted Wieseman, were unconvinced. "It's hard to believe that weather was the whole or even most of the story, but it's not clear what else triggered the suddenly much slower growth these results point to," said Wieseman.
The dour market news comes on the heels of a treacherous January which saw Wall Street posting its worst month in over a year.
"There has been a discernible change in behavior in the market from last year," Cuttone & Co. senior vice president Keith Bliss told the Wall Street Journal. "You didn't have to be real smart in 2013 to make money. You just didn't want to get in the way of the Federal Reserve. The behavior change now is people are absolutely paying attention to fundamentals," said Bliss.

Maybe zero percent interest rates are too high. They might have to start paying interest to borrowers to turn this economy around.

Let 'er burn.

oulufinn, before you say "let 'er burn" do us one favor: find one person who lived through the Depression and thinks it was a good time to be alive.

The article appalls me. It smacks of a self-fulfilling prophecy to say we are in a pattern that predicts a market collapse.

Well Obama's idea of printing money because he ran out of other peoples money didn't work like he was told it would. Another obama fail. Hold on and hope.

If you have cash, wait for it to settle and buy. Everything will be on sale. This is the "buy low" part of "buy low, sell high" strategy. Warren Buffett loves corrections. Makes good companies affordable to invest in.

75% cash and 25% in market....waiting patiently. too conservative last year got a $100 invested so now I am gonna get RICH!

Should a person buy silver?

No brass, lead and powder.

I knew when I got my year-end statements that there was going to be a correction. I did that well in 2013.

BTDT. BFD. YMMV.

If by silver you mean a silver plated colt, then by all means yes

pretty good head of steam on the indices last year


would seem to me that a pullback would be in order based on past charts.


probably at some point in the not too distant future you might see a really collapsing Dow and S&P 500 but i'd be surprised if it's right now.

This is correct. The smart money was buying during the crash of '29. In the big picture, quality companies hold their value, despite fluctuations. Buy low is a good strategy.

Agree on the colt , lead etc. Thinking of silver bars. Price has been hanging around $20. for quite awhile now. Will it go up if market continues down?

Yeah, it's amazing how long the status quo can be preserved, how long a bubble can be sustained, and how long a delusion can be maintained.

The dream dies hard doesn't it?

We've religiously avoided doing the necessary debt restructuring in this nation for over a decade. I'm convinced we won't until we are forced to. Not only would many of the most politically influential people and businesses in the US be wiped out but an entire ideology would have to die.

Trying to predict when/if that happens is a chancy thing ain't it?

Will

Whatever they blame, look elsewhere for your answer.

Look at a long term 30-60 year chart. Unless the US goes bankrupt ( probably at some point bu not this week), equilibrium looks to be around $5. We are on the backside of a long slide with a ways to go in my opinion. But I'm just a internet gun looney so what do I know.

A 5% correction does not make a 1929.

You're not accounting for inflation. A 1975 five dollar bill could buy many times over what a 2014 five dollar bill can.

$5.00 silver, sure, if we make it back to a growth rate of 6% on the GDP, but that's not going to happen under the current administration.

^^^^^


This�



Market had a 10% correction in 2011, and I think in 2012�though I might be wrong about that.


We are still 700 points from a full 10%



As soon as the chicken littles start running around screaming " The Sky is Falling"�you need to be buying.

This has historically been good advice. It's what the big shots do, and it's worked for them. Of course they are able to make themselves liquid in preparation for these nosedives in a way that most cannot.

Don't ruin the alarmists fun.


If things keep getting cheaper, keep buying, with the intentions to go long.

Or the next one either.

Not unless we agree to restructure our debt and abandon this appalling failure known as Neo-liberalism. How much tax revenue we spend on food stamps and welfare checks doesn't really matter in the big picture.

Will

I also did very well in 2013 !!! Posted on here in November 2013 asking if should take the $$$ and run. Which is what I did.

Best 'market protection' one can buy..

If there is anything that research has shown time and time again, it's that no one, and I mean no one, can accurately predict the market.

Picking old guns which may go up in value in five years is a lot more fun than picking stocks. But it's just as hard to do.

True dat.

If I could predict it, Id be posting from Aruba�..

Warren Buffet is worth $60 billion.

On paper!

Warren has been very good at picking stocks. Anyone have his phone #. Need to give him a call.

Well ... Berkshire Hathaway also had a tuff January.

He gets inside information.

Warren didn't predict the market, in terms of whether it was going to rise or fall. His strategy was to buy good companies and hang onto them, which is the complete opposite of the guy who tries to time the market, moving in and out of stocks to take advantage of the "next move."

Buffet can manipulate the market. Big difference.

I believe that happens every day of the week. But it is illegal, just ask Martha Stewart about it.

I believe Mr. Buffet once said, "if the market is scared, I'm buying. If the market is buying, I'm scared."


"Da market, she go up, den da market, she go down. But in da long run, she gwine up. You jes got's ta live long enough and you be okay." - Jimmie "Spats" Washington

Need to buy good companies and hang onto them. Also buying when the market is low and the price is cheap. However, I am not saying that is easy. If it was easy we would all be rich.

No accounting for inflation


1985-2005 average was ~$5

1932-1980 average was ~$5

Aside from the 1980's spike and the 2006- current spike, it's been ~$5 for a very long time. Add in inflation and it looks even worse over the long term. Unless you buy before a market panic and sell sell at the peak of the panic, it's been a looser for over 100 years.

Well. The absurd practices of manipulation that brought us to where we are will come home to roost. It really has little to do with whether the 1930s were a good time to be alive.

With the assaults coming from every direction within, and without, our .gov, I'll not apologize for not giving much of a ---- anymore. Stuff nearly always gets greener after it burns, so think of it as ultimately being an optimist, or not.

Bubbles always pop. Always.

Thompson SMG's and STEN MK II's/III's are going for stupid prices, those have been money-makers. Old Norden bombsights and other similar military hardware have been good investments, too.

Spot on, as usual.

If you invested at a reasonable price, in good companies, that pay a good dividend, there isn't a way you can really lose if you hold long term and reinvest those dividends. The market could crash to 6k again, and you'll just reinvest those dividends on the way back up and make crazy amounts of money when things return to normal.

The market won't bottom until the nervous Nellies are flushed out.

The only reason to abandon the market now would be if you think that the country itself is going to implode/go bankrupt. Otherwise, staying in the market at all times is the only sure method of making money over time.

If you don't have time though, then you need a different exit strategy altogether.

Not hoping for it at all, but I fear that is the only thing that will fix the current USA. miles

They only proved that the Government can lie to you, but you will go to jail for lying to the Government. miles

It ain't a bad thing that they are slowing down the presses.

If you ask Warren Buffet how and average guy should invest, he would (has) point you toward a balance of money and index funds based on your current life circumstances.

And, Penguin, you are wrong again, about it not mattering how much is spent on food stamps and welfare. If that were true, socialism would have been a raging success in the world laboratories where it has so routinely flopped.

I assumed Penguin meant that it did not matter how much money (or not) was spent on social programs--the country is so messed up that it only kicks the can down the road either more or less distant.

Then you haven't read many of Penguins posts. He's a hard core Keynesian who thinks all this social spending is actually good for the economy.

Not to defend that turd but bogus money was being printed long before Bammy arrived on the scene. He and his just brought it to another level entirely. And on it goes.

Yeah, I mean it ought to be pretty obvious (though it obviously ain't).

Social welfare programs have morphed over time. Lord knows they ain't going to fix the broken families and communities across this nation. Even if they do provide a vital lifeline for those tossed out of the sinking USS Middle Class (and they do) they are still being tasked to do things that the system wasn't designed to do.
But the money spent on welfare and social safety nets ain't the problem.

A US based housing bubble spawned within a greater global credit bubble blew up and took what was left of the US economy with it. This bubble was based on fraud and corruption. In one fell swoop those private parts of the US housing market which were left were nationalized. In effect the Treasury and the central bank opened the coffers and paid out somewhere between 3 and 5 Trillion USD buying up toxic mortgage debt. This was done to keep the most powerful and influential people in the US solvent.

You want to meet the most harmful and parasitic welfare queens in the US? I present to you Jamie Dimon, Lloyd Blankfein, Michael Corbat, Brian Moynihan, and the rest of the ruling cast at America's largest banks. All of which were bailed out courtesy of the US taxpayer.

Behold the "service economy". The rest of us in indentured servitude to the largest criminal enterprise in the world: The US banking system.

And thanks to unlimited campaign contributions, a revolving door between regulator and regulated, and a complete lack of human decency in DC we haven't fixed a damned thing since the housing bubble popped. So the system limps on waiting for the banks to get past a 10 Trillion USD insolvency or the band-aids on the system to pop off.

That is the problem. Not some social program you don't like.

Will

Since when?

As the only forum member still active who predicted the housing bubble I resent that. I told you guys what would happen and I got laughed at. 5 years later we still haven't fixed the problem.

And it is damned tough to fix a problem when you have 40% of the country chasing Ayn Rand phantasms like food stamps and elementary school lunch programs instead of prosecuting criminal conduct from our most powerful citizens.

Will

I think that's pretty close, but it's not what I'm looking for.

The reason that $85B/mo that Bernanke's been printing hasn't made inflation absolutely wild is that most of the banks are keeping it on deposit at the Federal Reserve: they're scared to death to loan it out, because they understand the pyramid effect of "high-powered" money. The Fed is creating the money, but mostly the banks aren't lending it, so it's staying out of the economy, so inflation is rising only slowly.

What this means is that the banks are making themselves a layer of isolation between the Fed, which is printing all that money specifically to weaken the dollar, and the dollar itself, which isn't being weakened nearly as fast as the Fed wants it to be.

Eventually, sez I, the Fed is going to start charging the banks reverse interest for keeping all that high-powered money on deposit (not paying a borrower to borrow, but (sort of) charging a lender (depositor) to lend (deposit), which is kind of the same thing), forcing them to lend it or lose it.

Then we're going to see some fireworks.