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Friday, April 5, 2013

Crash of 2013

I really love this blog, and wish I could spend the time to blog daily like I used to.
Work is insanely busy, and I have a wonderful boy who is 3 turning 33, time flies.

Today I will go back 2 year ago, to the day, on a prediction I made in post "Reaffirm that I believe the market will go to heck".  Back in 2010 into 2011, I was insanely bearish on the market.  Quite clearly, I was dead wrong.

What I didn't understand then, and I do now, there are no reliable laws.  Laws are agreements today that can be changed tomorrow.  Sometimes laws change simply by en mass wink wink, lets not enforce.  Sometimes laws are changed officially to change the landscape of what is reality.

Back in 2010-2011, I understood that what was being done then is doomed to fail, as I still believe today.  But I have changed on the 'doom'.  I no longer believe that the specific issue with the global financial system is 'printing money' per say.     As I have written since then, I believe what we are seeing is a financial system established by men in pointy hats in 1913 that try to use human processes to control something that is too big to actually control.    The rapid technology assault will uncover the weaknesses and destroy the system.  This is pretty much the same pattern for every industry technology has struck.  Unfortunately, I am concerned that the global financial system under assault may lead to not so nice consequences.

Here we are, with markets going higher, never ending higher.  It should be quite clear to anyone looking around that this is not the market highs of the mid 1980s, or even 2000.  This is a game score being manipulated to appease the fans that the game is going good.

Fundamentally, there is plenty that is going really good in the economy and technology.  I am very excited about many new industries pushing forward.  But when you look at the wages and breath of impact, it is a bit disappointing compared to past decades.

Which brings me back to 2011.  I posted
"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."

What I have come to realize is, the markets have zero to do with reality at this point.  What is in control is politics front and center.  Central banks are no longer influencing based on sane decisions, but instead on the will of the environment.   Everyone but anyone thinks pressing buttons that say 'ignore accounting' and 'print more money' will end well.  I am here to tell you for 1,000's of years many societies try this, it hasn't worked yet.

So I expect in 2013 a punch in the face for the markets.  And here is when it gets hard.
Gold, Gold miners, can they withstand the pressure.   They may go much cheaper also.  But maybe they won't pull back hard leaving everyone without a bargain buying opportunity.    The precious metal mining sector will reach unbelievable heights as a limited resource is subjected to leverage to push valuations artificially high.  This of course will happen sometime in the next 4 years when people are panicking, looking for security.  After the panic passes gold will be the most spectacular crash ever seen.  I of course, want in on the upside, and I may jump out too soon on the way up.

Between now and then is really the question, what to invest in.  For now, I have no good answers.  When the crash hits, and markets start to recover, one thing is for sure, natural resources for the next pump and dump years.  





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