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Wednesday, March 24, 2010

New Market Highs

The market run can last a while, week, year, i have no idea.
But there is no real growth economy, infact with the health care bill in essence a new tax for every person was added. This cost will hurt small business not help, this cost will not help job growth. We are in a bubble, I am actually trying to enjoy the rosier outlook, but I unfortunately know the truth.

The banks are still operating under fictitious valuations for their assets, since FASB still has not returned to international accounting standards. There is no "mark to market". The government is still not enforcing the law, and when it does banks that are being taken over are woefully underwater. The unemployment rosters are still adding 100,000's per week to unemployment. There is no American economic boom driver, unless you count government programs.

The US is spending trillions of dollars per year in debt. We are witnessing what may turn out to be the implosion of the US as we all know it. It may take years, but this trajectory is unsustainable. The US isn't alone in this game, China has a huge part in it, as well as Europe.
But pretending we have a booming economy when there is no basis for it, except stock valuations, is not going to make it so.

It is the equivalent of giving every student in school an A in hopes that it inspires the students to actually become A students. Life doesnt work like that. As a matter of fact, when you mislead people through lack of law enforcement, when reality hits, it hits harder.

What I cannot tell anyone, including myself, how does this manifest? Through US dollar becoming devalued and stocks continue to rise as everyone's monthly expenses rise?
Through interest rates rising, crippling the debt machine and bringing the house of cards down?
Through a catalyst creating a stampede for the door as people try to keep their profits since march 2009?

I really cannot criticize anyone about keeping in cash, buying resources, or buying stocks. But I can say this. Look at your positions and make a firm GET OUT if the valuation crosses a line, and DO IT. Do not get caught hoping for a turn around.

I can tell you first hand, that strategy does not work.

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