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Thursday, August 11, 2011

Market thoughts month to year ahead.

Back in June 24th, I posted that there maybe a Major Rally ahead. That did come true. But the markets rallied WAY to far to fast, as I posted on July 1st. I had hoped for a nice upswing in July, until the bear market return mid August, that's when I started to post much less on this blog.

Once August came, a freaking crazy downswing ensued, SPX 1350 down to about 1100 in a couple of weeks. Woosh, all gains for the year and beyond gone, taking the markets to levels back to 1998. How's that for a nice loss 13 years of profits...AGAIN.

I do have some hope for the next 1 month into possibly next year. For example, Europe is banning short selling of some banks in France, Spain, Italy, and Belgium. I am quite positive the Federal reserve bank is up to illegal (either explicitly or Bill Clinton level splitting hairs of what does the word "is" mean.) Plus, the market has not been this oversold since 9-11-01! These items are sowing a market to firm up, but also setting the stage for the final market swan dive. How these governments get away interfering with private business on a whim is frankly outrageous, and stupid.

People may look at the recent market fall as a possible 2008 repeat. I seriously doubt it. Back then pretty much the world sat on their tuckus and just followed America without serious questioning. When the stuff hit the fan in Sept 2008, the rest of the world plunged with America, completely blindsides by the wall street games.

This time around, the governments are fully and painfully aware of the house of cards they have built. Instead of facing the core problems the financial world faces and fixing them, the governments decided to do more pretending. First and foremost abolishing Great Depression era accounting practices of valuing assets using "mark to market" accounting. To date, the fantasy accounting is still used to value companies. If things were normal, accounting would be too. It is not.

Then we have good old man of the year 2009, Ben Bernanke, who has made it his life's mission to work in the exact seat he is in now, and to play out his doctorate paper, that he, a single man, can prevent the Great Depression from happening. That he alone, has the secret sauce, and the rest of the world is idiots. His belief system is Keynesian ecomonics, and I for one, believe it is dead wrong.

What he is doing is adding to extend and pretend. All that is truly being done between government debt, Bernanke Quantitative Easing (raw money printing), and fictional accounting is to double down on the problems of 2008 making them exponentially worse.

What Mr. Bernanke is missing is, this is not 1929-1939. Technology will expose the fraudulent system he supports. The banking system is very sick at it's core, and it doesn't know it. See my post on how technology will undo the existing system.

For now, the reality is, the governments will do one last , heroic feat to thwart the market implosion. The only question is when. Will the markets hit much lower lows THEN the heroics begin? Or has the markets seen a bottom to build from for months or possibly a year to come?

I am betting on bottom is in, or near in for months, and re-evaluate if I think we may make it into February 2012 or so.
Whatever the timeline, this is the final act that I have been concerned over since August 2006. For general investing, I still maintain a mixture of cash and resource investments, as posted will be most prudent.

I post this now, to allow me to refer back to these thoughts in a few months, or maybe 9 months from now. In the near term, I still own natural resources, sold all GLD, DGP, but I kept my gold miners as a gamble.

I await Gary of the smart money tracker to inform me of when it is safe to enter GLD and the next play. The stocks I have now are my "long" from here, I have completely different stocks than Gary, but in general, a rising market rises all stocks, and from that perspective its the same play.

If we break the lows set on Monday, when I posted DONT PANIC!, It may be then time to panic. Lets hope the market forms a bottom here and now, until the next swan dive, hopefully in 2012.

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