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Thursday, August 4, 2011

Market Crash?

Today's market decline seemed anti-climatic to me. Frankly, I didn't even care. It is amazing to see how watching the market as close as I have since 2006 has abused me so much, I view today just an anomaly.

The market may have bottomed today, positioned for a snap back rally. The S&P 500 may hit 1300, maybe even a little bit higher. But you only have to look at three historical records to have your own answer for what is in store over the years to come in the markets.

1) Watch my GUIDE about timing the market for long term traders. I myself foolishly ignored this indicator back in 2009. I respect it. I advise you do too. History has shown it to be best market indicator to follow. It is positioned for a market sell signal. Also look at Monday's warning shot.

2) Look at Japan's market history. Their markets have not advanced in 20 years. If you put money in the market in Japan 20 years ago, your still waiting to get back all your money. Japan followed "Keynesian Economists" to use paper and political games to fix their economy. America's demographics and problems are following Japan, and as such, Japan is a good indicator of our future success.

3) The market WILL NOT BOTTOM until the US government follows the steps I have quoted many times before. This includes returning the accounting standards to 1941-2008 standards. Fictional accounting does not work, it may make it legal for insolvent companies to remain operating, but it fixes nothing with the sickness within. Also government must enforce the law and get it's own fiscal house in order. NONE of this will happen without a crisis that will make 2008 seem like fun, unfortunately.

I still maintain the best long term investment is a mixture of fixed income (US debt) and key resources (gold, energy, rare earth metals, food). This will protect your savings from a deflationary collapse OR a currency crisis. Read here for a full reasoning of mixed investments.

I will be quick to lighten up on Gold with weakness, which may have started today. Once a panic passes, Gold will correct before resuming it's multi-year climb.

NOTE: Shorting the market will be a fools game, the final end game may be beginning. There will only be house rules. In 2008 there was bans on shorting, changing of accounting rules, government taking over companies, all sorts of games. This time around, the gloves will come off and the free capital markets will no longer be capitalism based by the time this is done.

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