Let me be clear, the world financial markets are in great danger of an all out horrific decline, the likes that will make 2008 look like an opening act. I am a firm believer that in the next few years, the market and world economies will be shaken harder than ever before.
BUT, that is not to say this will start tomorrow, next month, but you can bet by end of 2012 we will be facing this financial crisis once again. I actually believe it may start as early as May. But at the end of such ridiculous rises in the market......in the face of reality being exact opposite....markets tend to soar to highs never thought possible. It could be that the high is in the past, just a couple of months back. But it also could be the next few weeks.
So for now, I am playing long, I am also adding stop losses all over the place, with a bit of room to maneuver. I suspect that most of the market is doing the same, which makes this truly an insane game of chicken. I really don't know when I will jump off this ridiculous ride back into cash. For part of this game is the fear the USD will implode next.....something I agree will happen, but it's too soon. 2013-2016 is my thinking.
So if you have some tidy profits, selling some right here is not crazy. Putting stop losses is a must as we enter the final round of financial parabolic blowoff chicken.
Why do I think this will happen? It's pretty simple. Resources are flying too high, causing too much political stress around the world. The free money printers will need to take a break to apease the critics. Then once we have a nice disaster, the critics will silence and the money printers will resume. The NEXT time the resource train will take off quicker and possibly steeper.
The problem with all this pontification, is I could be wrong (no matter how unlikely that may be!) . Maybe the USD is about to take an epic nose dive, then being in resources is a great place to be. So there is always that doubt, that pure cash is just different risk.
I wanted to set the record straight, what I said in 2008 STILL HOLDS today!
To fix the system, its pretty simple, and until we see the following, the system is broken.
1) Return to basic accounting standards in place from the 1940's until 2000.
2) Return to mark to market accounting in place from the 1940's until 2009.
3) Force companies that are insolvent....to go bankrupt! (US government get out of private companies)
4) US government debt machine come to a screeching halt. Lets try 500 billion debt per year instead of 1.6 trillion!
5) ENFORCE ALL EXISTING FINANCIAL LAWS....PUT PEOPLE IN JAIL FOR MASS FRAUD!
Until above happens, the bottom is not in. And my theory is, above won't happen until all other shortcuts and scams are tried....and fail. The moment of truth will be the US choosing collapse of us currency or do above. Until then, I do not have faith in my fellow man to do the right thing ahead of such a disaster.
Therefore, we will have a rocky road of meager attempts to appear respectable to the past 2 years of outright irresponsible actions by the government. This will result in wave after wave of market turmoil in the years to come.
I am thinking the moment of truth comes in 2013-2016 with the next president's term.
Think thats too long? Look at Japan, their stock market and economy has been flatlined for over 20 years...and counting. And that country had one of the highest savings rates in the world! Good luck to good old Americans living on borrowed debt to make this crisis last 20 years. I give it 8 starting from 2008.