Today's market - no, check that, the past two weeks - have been similar to watching an overmatched heavyweight slogging through the late rounds of a fight. The stumbling, grasping hulk is doing everything he can to stay on his feet, but his opponent, peppering him with body shots and head blows, is wearing him down, and eventually, that's where he's going: down to the mat for a long rest.
After a stirring speech by President Obama in the State of the Union Wednesday night, there were ample amounts of optimism, though not enough to lift stocks off the break even mark at the open. Jobless claims once again disappointed, and durable goods orders, which were expected to grow by as much as 2% in December, came in at a feeble 0.3%, giving even more credence to the thinking that the nascent recovery is giving way to larger pressures.
The deflationary cycle will not relent. Consumers aren't spending, which means companies won't hire, which will eventually be reflected in slower sales, weaker earnings and potentially even more job losses. Unemployment continues to be the weight on the economy, though housing isn't far behind.
Just an anecdotal reference from my vantage point bears reflection on where housing prices are headed. Three months ago, here in an upstate New York suburb, I searched the local multiple listing service site for homes under $90,000, and found four. Now, this is a relatively modest area, which wasn't damaged by the ups and downs of the housing boom and subsequent bust. Prices remained fairly stable throughout the years from 2003-2009. However, when I checked the same reference with the same parameters, my search showed 49 properties under $90,000, a 10-fold increase since late October, with the lowest price coming in at $36,500.
I was absolutely stunned to see so many properties around me at such low prices. In many cases, the property taxes would exceed the monthly mortgage payment on a 30-year fixed rate loan at 5.5%. I can only imagine the number of bank-owned properties that are being kept off the market (the so-called "shadow inventory") and the heartache and pain many of my neighbors are suffering.
With real estate in such a dreadful condition, if the stock market takes an extended dive - which it appears to be doing - many more families are going to be hurt, especially those with kids in college or nearing retirement. Their two great stores of value - their home and their retirement savings - are both losing value simultaneously, an unsustainable condition.
America sits on the precipice of a grand collapse and there aren't many people offering solutions, especially in Washington, where the fight is mostly political. It's almost comical to watch the daily panorama of posturing from a detached position; who in their right mind would want to be in a political position of power at this juncture? Maybe politicians are all just closet masochists, waiting to be flogged by an angry populace.
Wall Street seems to have noticed. Over the last seven sessions, the Dow has dropped 605 points, or nearly 5%. If the downdraft turns into a full-blown correction - a likely scenario - another 8-15% could be shaved off in short order, bringing the Dow not only back below the 10,000 mark, but even below 9000, a place where fear and panic both reside. It just doesn't look very pretty right now.
Dow 10,120.46, -115.70 (1.13%)
NASDAQ 2,179.00, -42.41 (1.91%)
S&P 500 1,084.53, -12.97 (1.18%)
NYSE Composite 6,956.99, -78.62 (1.12%)
Declining issues easily outdistanced gainers, 4690-1826. New highs remained modestly ahead of new lows, 131-79. Volume was strong.
NYSE Volume 6,385,494,500
NASDAQ Volume 2,906,497,750
Commodities were steady, after a few weeks of declines. Oil gained 11 cents, to $73.75; gold lost $1.20, to $1,084.50; silver finished at 16.21, down 23 cents on the day.
Friday offers the first government estimate on 4th quarter GDP, at 8:30 am, prior the the opening bell. experts are looking for gains of 4.7% to 6.8% over last year. The projects may appear overly optimistic, and may well be, but, then again, the final quarter of 2008 was one of the worst in years. Some improvement is surely there in the economy, the larger question is whether it will last.
Thursday, January 28, 2010
Wednesday, January 27, 2010
How To Create Your Own Currency
I promised to divulge information on creating your own currency a couple of days ago, and am now prepared to take a shot at it.
First, however, a quick look at today's financial market action.
Stocks were bounding around in negative territory for most of the session, until the FOMC rate policy decision came out at 2:00 pm. As this was the least hyped Fed meeting in many months, little was expected to change in either the rates or the language. The economy is clearly slip-sliding along, and fears that the recovery is more myth than meat have recently come to the surface.
Nevertheless, stocks staged a little bit of a rally, mostly on news that the Fed would continue doling out scads of free money, at nearly a zero interest rate. Banks which have rights to the discount window are making out like bandits, as they can now pick and choose with whom they desire to do business, which means that Mr. Average Joe with a sound business idea is more likely to get laughed out of the bank rather than be treated with respect. Either that, or the bank will offer him a loan at some ungodly, usurious rate of 25% interest, or more.
The major banks which feed at the trough of the Federal Reserve are lending plenty to people who are buying real estate at distressed levels and/or have businesses the banks want to be a part of. Lending is going primarily to huge corporations in a final push for the perceived goal of Nazi-style fascism, in which the government and big business are in cahoots and the middle and lower classes foot the bill and struggle for existence.
That's good for Wall Street, as today's numbers reinforce the argument that bigger is better and may be all that matters.
Dow 10,236.16, +41.87 (0.41%)
NASDAQ 2,221.41, +17.68 (0.80%)
S&P 500 1,097.50, +5.33 (0.49%)
NYSE Composite 7,035.61, +7.29 (0.10%)
Advancing issued edged decliners, 3391-3082. New highs were 128, to 87 new lows, the closest gap between the two since June, 2009. The market is about to turn over completely in a new downturn which could be severe. Stocks are already off 4-6% from their highs and another 5% drop could easily occur within the next month. Volume was good, though shaky.
NYSE Volume 6,175,805,500
NASDAQ Volume 2,492,886,750
Oil gained 33 cents, to $74.00, a ridiculous number considering not only supply and demand issues, but general trends in the global economy. Expect to see oil under $70/barrel soon, despite the howls from the oil hawks. Gold fell another $13.00, to $1,086.50. Silver slid 44 cents, to $16.43. The drop in the prices of precious metals is quite foreboding, indicating that even holders of wealth fear deflation and another downturn in many of the major economies. A real tip-off that gold had reached its zenith were the number of ads on TV, in newspapers and on the internet looking to exchange cash for gold. It should have been obvious that gold was overvalued when vultures appeared. The irony is that these cash-for-gold bugs will be squashed when the price bottoms. Another industry hitting the skids.
How To Create Your Own Currency
First a definition, from dictionary.com:
1. something that is used as a medium of exchange; money.
2. general acceptance; prevalence; vogue.
3. a time or period during which something is widely accepted and circulated.
4. the fact or quality of being widely accepted and circulated from person to person.
5. circulation, as of coin.
Obviously, your currency must be something that people will use in exchange, barter, trade or for payment. It should be widely accepted and have value, and, though this is not a part of the definition - it applies - it should be in ample, ready supply.
The easiest way to explain how to create your own currency, for me, is to relate the story of how I did it, inadvertently, and without knowing I was doing it.
Back in 1982, I started up a free newspaper in downtown Rochester, New York. Appropriately, it was called, Downtown, the Unbound Magazine, later, it became known as the more common, Downtown Magazine.
My currency, though I did not know it at the time, was blank space on the pages of my fledgling newspaper. The paper carried stories of interest to locals and advertisements appealing to the same. I quickly found that writing favorable articles about people, or articles that appealed to large numbers of people (anti-government populism, mostly) won me praise, notoriety and more, including the company of beautiful women, free drinks at local pubs and other assorted niceties from merchants and the general public alike.
Once the paper became widely circulated, my living expenses dropped dramatically. I had too much to eat, drink and be merry. The blank space in my weekly newspaper, filled with appealing stories, was my first currency. I could trade it for favors, food, and much more.
Even more powerful was the advertising space. That was the currency that really clicked. I could go to virtually any merchant in my market and work a deal for cash and/or goods and services. I traded advertising for a monthly allotment of fine men's clothing. I traded restaurant reviews for cash and meals. Anything I wanted, I could get without money, because i had my own currency, which was, after all, a useful means of exchange of ideas, goods, services and good will.
My little newspaper expanded to a point at which I was able to purchase (this with real money) a chain of rural weeklies, printing presses, and a building in which my entire operation was housed. Trading ad space for everything from clothes to event tickets to transportation was available to me because my ad space had value and was widely accepted.
That's it. Get yourself into a business at which you can deliver quality goods or services at a reasonable price to a wide swath of customers and you'll never want for much of anything ever again.
All it takes is a little neediness, desire, persistence and plenty of hard work. Sound familiar? It should. It's how our great nation was built.
First, however, a quick look at today's financial market action.
Stocks were bounding around in negative territory for most of the session, until the FOMC rate policy decision came out at 2:00 pm. As this was the least hyped Fed meeting in many months, little was expected to change in either the rates or the language. The economy is clearly slip-sliding along, and fears that the recovery is more myth than meat have recently come to the surface.
Nevertheless, stocks staged a little bit of a rally, mostly on news that the Fed would continue doling out scads of free money, at nearly a zero interest rate. Banks which have rights to the discount window are making out like bandits, as they can now pick and choose with whom they desire to do business, which means that Mr. Average Joe with a sound business idea is more likely to get laughed out of the bank rather than be treated with respect. Either that, or the bank will offer him a loan at some ungodly, usurious rate of 25% interest, or more.
The major banks which feed at the trough of the Federal Reserve are lending plenty to people who are buying real estate at distressed levels and/or have businesses the banks want to be a part of. Lending is going primarily to huge corporations in a final push for the perceived goal of Nazi-style fascism, in which the government and big business are in cahoots and the middle and lower classes foot the bill and struggle for existence.
That's good for Wall Street, as today's numbers reinforce the argument that bigger is better and may be all that matters.
Dow 10,236.16, +41.87 (0.41%)
NASDAQ 2,221.41, +17.68 (0.80%)
S&P 500 1,097.50, +5.33 (0.49%)
NYSE Composite 7,035.61, +7.29 (0.10%)
Advancing issued edged decliners, 3391-3082. New highs were 128, to 87 new lows, the closest gap between the two since June, 2009. The market is about to turn over completely in a new downturn which could be severe. Stocks are already off 4-6% from their highs and another 5% drop could easily occur within the next month. Volume was good, though shaky.
NYSE Volume 6,175,805,500
NASDAQ Volume 2,492,886,750
Oil gained 33 cents, to $74.00, a ridiculous number considering not only supply and demand issues, but general trends in the global economy. Expect to see oil under $70/barrel soon, despite the howls from the oil hawks. Gold fell another $13.00, to $1,086.50. Silver slid 44 cents, to $16.43. The drop in the prices of precious metals is quite foreboding, indicating that even holders of wealth fear deflation and another downturn in many of the major economies. A real tip-off that gold had reached its zenith were the number of ads on TV, in newspapers and on the internet looking to exchange cash for gold. It should have been obvious that gold was overvalued when vultures appeared. The irony is that these cash-for-gold bugs will be squashed when the price bottoms. Another industry hitting the skids.
How To Create Your Own Currency
First a definition, from dictionary.com:
1. something that is used as a medium of exchange; money.
2. general acceptance; prevalence; vogue.
3. a time or period during which something is widely accepted and circulated.
4. the fact or quality of being widely accepted and circulated from person to person.
5. circulation, as of coin.
Obviously, your currency must be something that people will use in exchange, barter, trade or for payment. It should be widely accepted and have value, and, though this is not a part of the definition - it applies - it should be in ample, ready supply.
The easiest way to explain how to create your own currency, for me, is to relate the story of how I did it, inadvertently, and without knowing I was doing it.
Back in 1982, I started up a free newspaper in downtown Rochester, New York. Appropriately, it was called, Downtown, the Unbound Magazine, later, it became known as the more common, Downtown Magazine.
My currency, though I did not know it at the time, was blank space on the pages of my fledgling newspaper. The paper carried stories of interest to locals and advertisements appealing to the same. I quickly found that writing favorable articles about people, or articles that appealed to large numbers of people (anti-government populism, mostly) won me praise, notoriety and more, including the company of beautiful women, free drinks at local pubs and other assorted niceties from merchants and the general public alike.
Once the paper became widely circulated, my living expenses dropped dramatically. I had too much to eat, drink and be merry. The blank space in my weekly newspaper, filled with appealing stories, was my first currency. I could trade it for favors, food, and much more.
Even more powerful was the advertising space. That was the currency that really clicked. I could go to virtually any merchant in my market and work a deal for cash and/or goods and services. I traded advertising for a monthly allotment of fine men's clothing. I traded restaurant reviews for cash and meals. Anything I wanted, I could get without money, because i had my own currency, which was, after all, a useful means of exchange of ideas, goods, services and good will.
My little newspaper expanded to a point at which I was able to purchase (this with real money) a chain of rural weeklies, printing presses, and a building in which my entire operation was housed. Trading ad space for everything from clothes to event tickets to transportation was available to me because my ad space had value and was widely accepted.
That's it. Get yourself into a business at which you can deliver quality goods or services at a reasonable price to a wide swath of customers and you'll never want for much of anything ever again.
All it takes is a little neediness, desire, persistence and plenty of hard work. Sound familiar? It should. It's how our great nation was built.
Geithner's Incredible AIG Testimony
Looking back on the financial panic of fall 2008, a House Committee today grilled Treasury Secretary Timothy Giethner on his recollections and his role - as President of the NY Federal Reserve, and, later, as Treasury Secretary - in the bailout of American international Group (AIG).
AIG, which received enormous sums of taxpayer money via TARP (Troubled Asset Relief Program) has been a lightning rod for all manner of political posturing by some of the very same legislators who passed the bailout bill at the height of the extraordinary events of 2008. The mega-insurer, which had engaged in the risky credit default swaps business and was in danger of default, received assistance of upwards of $180 billion, much of which was funneled back to counter-parties such as Goldman Sachs, Bank of America, and other TARP recipients to make them whole.
Geither's testimony today often included the phrase "working in the public interest" when questioned on his decisions regarding AIG. While in Tim Geithner's mind, he may believe that he works - or worked - in the public interest as NY Fed President or as Secretary of the Treasury, but, in the former, at the very least, he worked to protect the interests of the NY Federal Reserve, a private baking system.
While representatives in the house queried and posed for the cameras with what sounded like tough questions for the Secretary today, Geithner's answers continued in the same vein as all who have gone before him, making the deals by which some of the nation's largest financial firms were recipients of congress' largesse sound like there was no other choice available.
Whether Geithner, former Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke, the trokia who worked out the various aspects of the TARP and doled out the money, were correct in their assumptions concerning the bailouts - that the entire financial system would collapse - probably will never be known, but at least this much is: the collapse of Goldman Sachs, AIG, Bank of America, Citigroup and other large banks which took inordinate risks with money entrusted to them by shareholders, investors and depositors would have affected the CEOs and top executives of those firms in far greater degree than any single American taxpayer.
Geithner worked for banks, continues to work for banks and will always work in the interest of banks, bankers and friends of bankers, like the very people questioning him now on Capitol Hill. The idea that he, or any Fed president, works for the people, in the "public interest," is laughable and deserves condemnation, though not much in the way of criticism has effused from the collective mouths of the Washington babblers.
That's probably because, when the history books years from now look back on this episode, it will be recorded as one of the great and grandest swindles of all time, and will likely be regarded by future generations (if any happen to exist) as one of the key elements which took down the greatest democracy ever invented. Crooks and criminals generally, when they are caught, are tried, convicted and jailed. That is, unless they are bankers and wall Streeters wearing pin-striped suits and draped gloriously in patriotism and self-importance. Not only did the wall Street banks pull off the greatest heist ever, but they were aided and abetted every step of the way by high officials of the government, from congressmen and senators all the way up to both presidents who served during the time of this swindle, George W. Bush and Barack Obama.
Instead of the parade of toothless hearings which congress continues to hold, trials for treason should have already been well underway, though it stretches credulity to believe there would be enough innocent parties in our nation's capitol to even impanel a 12-member jury for such an event.
Geithner was at the heart of the swindle, which eventually had its roots at the Fed, Fannie Mae and Freddie Mac, where lax regulation or the absence of such created toxic financial instruments from mortgage-backed securities (MBS) to collateralized debt obligations (CDOs) to Credit Default Swaps (CDS). The truly sad and frightening chapter of this saga is that these very same instruments are still being actively promoted, traded, bought and sold, all with the implicit consent and nodding approval of the Federal Reserve and the federal government.
Apparently, $700 trillion was not enough to cripple the nation irrevocably. The captains of finance are prepared to make matters even worse with another round of theft, obfuscation and sincere lies, and, no doubt, they will, just as sure as they will make sure that they are handsomely rewarded for their work in the "public interest."
AIG, which received enormous sums of taxpayer money via TARP (Troubled Asset Relief Program) has been a lightning rod for all manner of political posturing by some of the very same legislators who passed the bailout bill at the height of the extraordinary events of 2008. The mega-insurer, which had engaged in the risky credit default swaps business and was in danger of default, received assistance of upwards of $180 billion, much of which was funneled back to counter-parties such as Goldman Sachs, Bank of America, and other TARP recipients to make them whole.
Geither's testimony today often included the phrase "working in the public interest" when questioned on his decisions regarding AIG. While in Tim Geithner's mind, he may believe that he works - or worked - in the public interest as NY Fed President or as Secretary of the Treasury, but, in the former, at the very least, he worked to protect the interests of the NY Federal Reserve, a private baking system.
While representatives in the house queried and posed for the cameras with what sounded like tough questions for the Secretary today, Geithner's answers continued in the same vein as all who have gone before him, making the deals by which some of the nation's largest financial firms were recipients of congress' largesse sound like there was no other choice available.
Whether Geithner, former Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke, the trokia who worked out the various aspects of the TARP and doled out the money, were correct in their assumptions concerning the bailouts - that the entire financial system would collapse - probably will never be known, but at least this much is: the collapse of Goldman Sachs, AIG, Bank of America, Citigroup and other large banks which took inordinate risks with money entrusted to them by shareholders, investors and depositors would have affected the CEOs and top executives of those firms in far greater degree than any single American taxpayer.
Geithner worked for banks, continues to work for banks and will always work in the interest of banks, bankers and friends of bankers, like the very people questioning him now on Capitol Hill. The idea that he, or any Fed president, works for the people, in the "public interest," is laughable and deserves condemnation, though not much in the way of criticism has effused from the collective mouths of the Washington babblers.
That's probably because, when the history books years from now look back on this episode, it will be recorded as one of the great and grandest swindles of all time, and will likely be regarded by future generations (if any happen to exist) as one of the key elements which took down the greatest democracy ever invented. Crooks and criminals generally, when they are caught, are tried, convicted and jailed. That is, unless they are bankers and wall Streeters wearing pin-striped suits and draped gloriously in patriotism and self-importance. Not only did the wall Street banks pull off the greatest heist ever, but they were aided and abetted every step of the way by high officials of the government, from congressmen and senators all the way up to both presidents who served during the time of this swindle, George W. Bush and Barack Obama.
Instead of the parade of toothless hearings which congress continues to hold, trials for treason should have already been well underway, though it stretches credulity to believe there would be enough innocent parties in our nation's capitol to even impanel a 12-member jury for such an event.
Geithner was at the heart of the swindle, which eventually had its roots at the Fed, Fannie Mae and Freddie Mac, where lax regulation or the absence of such created toxic financial instruments from mortgage-backed securities (MBS) to collateralized debt obligations (CDOs) to Credit Default Swaps (CDS). The truly sad and frightening chapter of this saga is that these very same instruments are still being actively promoted, traded, bought and sold, all with the implicit consent and nodding approval of the Federal Reserve and the federal government.
Apparently, $700 trillion was not enough to cripple the nation irrevocably. The captains of finance are prepared to make matters even worse with another round of theft, obfuscation and sincere lies, and, no doubt, they will, just as sure as they will make sure that they are handsomely rewarded for their work in the "public interest."
Tuesday, January 26, 2010
The January Barometer Is Sending Sell Signals
I know that yesterday I said I'd write about creating your own currency, but, having spent the bulk of the day poring over New york State Surrogate's Court Procedure (in my case, this is an exercise in learning how to get a house for nothing from Bank of America, but that's another matter), I haven't had time to crystalize my thinking on the topic. Suffice it to be said that anyone can create their own currency, the trick being getting others to accept it. I will make every effort to cover this enticing topic tomorrow.
As for today, the stock players didn't do well. Markets were decidedly higher in the AM, but began to unravel in pretty distinctive fashion around 2:00 pm EST. In other words, the nascent rally tanked into oblivion, leaving investors and fund managers holding a little bit less than they did yesterday. All averages were lower on the day, though the Dow performed better than the others.
As of Friday, the major indices had fallen below where they closed 2009, bring us to the first 2010 mention of the "January Barometer," which invokes the old saw, "as goes January, so goes the rest of the year." The theory, which holds true 90% of the time, is based upon the movement of the S&P 500. It was dead wrong last year as stocks sulked in January and February, but made up the lost ground and then some beginning in March.
So far this year, the S&P is down, from 1115.10 on December 31, 2009, to today's close, so, unless the market decides not to continue to scare the bejesus out of everyone, the tone will be set for a losing year on Wall Street. Hogwash! Balderdash! The nerve of some people to suggest that one could lose money investing in stocks. Unheard of!
Well, since the predictive value of this "barometer" is 90%, and it was off last year (I know, I know, that doesn't change the odds), I'd be looking for some downside movement over the next month to six months, for starters.
Dow 10,194.29, -2.57 (0.03%)
NASDAQ 2,203.73, -7.07 (0.32%)
S&P 500 1,092.17, -4.61 (0.42%)
NYSE Composite 7,028.32, -44.81 (0.63%)
Declining issues danced on the heads of advancers, 4283-2220, belying the soft headline numbers. It's just this kind of stealth movement that sets up investors for a nasty roller coaster ride. The gap between new highs and new lows narrowed to 161-78, with the lows rising to their highest level in at least a month. The turn is upon us. The market appears to have done everything but roll over, but there's every indication that it will. Volume was better than yesterday, though nowhere near as robust as the selling days of the past week, another indicator pointing towards the floor.
NYSE Volume 5,477,897,000
NASDAQ Volume 2,406,876,000
Like stocks, commodities didn't move much. Oil fell 3 cents, to $74.68. Gold was up $3.20, to close at an even $1,100.00. Silver continues to take the brunt of the selling, off another 31 cents, to $16.84. The selling in gold and silver seems to be based upon speculation that the dollar's decline is over. For much more on that topic, from a person with eminently more knowledge than myself, I direct you to commentary from Kitko's John Nadler.
Considering the massive move in gold - less so in silver - over the past decade, a correction on the back of a rising dollar makes plenty of sense. If, as I've been saying for years, and the Fed has been fighting for an even longer time, deflation continues to be the crazy aunt in the attic which nobody particularly cares to have roaming about the house in free fashion.
All one has to do these days is go food shopping at the neighborhood market to see deflation in progress. Or, head to a dollar store or witness the fast food chains pushing not prices lower, but portions higher - for the same price, a la Burger King's larger-than-McDonald's double cheeseburger (it is bigger and, yes, better) to understand the dynamics of deflation, which begs the question, if people are willing to pay to lose weight (Weight Watchers, Jenny Craig, etc.), shouldn't restaurants pay us to eat?
It may come to that.
As for today, the stock players didn't do well. Markets were decidedly higher in the AM, but began to unravel in pretty distinctive fashion around 2:00 pm EST. In other words, the nascent rally tanked into oblivion, leaving investors and fund managers holding a little bit less than they did yesterday. All averages were lower on the day, though the Dow performed better than the others.
As of Friday, the major indices had fallen below where they closed 2009, bring us to the first 2010 mention of the "January Barometer," which invokes the old saw, "as goes January, so goes the rest of the year." The theory, which holds true 90% of the time, is based upon the movement of the S&P 500. It was dead wrong last year as stocks sulked in January and February, but made up the lost ground and then some beginning in March.
So far this year, the S&P is down, from 1115.10 on December 31, 2009, to today's close, so, unless the market decides not to continue to scare the bejesus out of everyone, the tone will be set for a losing year on Wall Street. Hogwash! Balderdash! The nerve of some people to suggest that one could lose money investing in stocks. Unheard of!
Well, since the predictive value of this "barometer" is 90%, and it was off last year (I know, I know, that doesn't change the odds), I'd be looking for some downside movement over the next month to six months, for starters.
Dow 10,194.29, -2.57 (0.03%)
NASDAQ 2,203.73, -7.07 (0.32%)
S&P 500 1,092.17, -4.61 (0.42%)
NYSE Composite 7,028.32, -44.81 (0.63%)
Declining issues danced on the heads of advancers, 4283-2220, belying the soft headline numbers. It's just this kind of stealth movement that sets up investors for a nasty roller coaster ride. The gap between new highs and new lows narrowed to 161-78, with the lows rising to their highest level in at least a month. The turn is upon us. The market appears to have done everything but roll over, but there's every indication that it will. Volume was better than yesterday, though nowhere near as robust as the selling days of the past week, another indicator pointing towards the floor.
NYSE Volume 5,477,897,000
NASDAQ Volume 2,406,876,000
Like stocks, commodities didn't move much. Oil fell 3 cents, to $74.68. Gold was up $3.20, to close at an even $1,100.00. Silver continues to take the brunt of the selling, off another 31 cents, to $16.84. The selling in gold and silver seems to be based upon speculation that the dollar's decline is over. For much more on that topic, from a person with eminently more knowledge than myself, I direct you to commentary from Kitko's John Nadler.
Considering the massive move in gold - less so in silver - over the past decade, a correction on the back of a rising dollar makes plenty of sense. If, as I've been saying for years, and the Fed has been fighting for an even longer time, deflation continues to be the crazy aunt in the attic which nobody particularly cares to have roaming about the house in free fashion.
All one has to do these days is go food shopping at the neighborhood market to see deflation in progress. Or, head to a dollar store or witness the fast food chains pushing not prices lower, but portions higher - for the same price, a la Burger King's larger-than-McDonald's double cheeseburger (it is bigger and, yes, better) to understand the dynamics of deflation, which begs the question, if people are willing to pay to lose weight (Weight Watchers, Jenny Craig, etc.), shouldn't restaurants pay us to eat?
It may come to that.
Monday, January 25, 2010
Dead Cats Don't Bounce, At Least, Not Very High
All those guys in their pinstriped suits went down to lower Manhattan today wondering if the market would recover from its worst week in 9 months. A few minutes into the trading session, there were probably more sighs of relief than pictures of Brad Pitt and Angelina Jolie in today's newspapers, as stocks took off right out of the gate and posted healthy, though uninspired gains early on.
The Brangelina episode notwithstanding, the stocksters were to be found mostly standing around, wondering still. Somewhere in the deep recesses of the collective brains of these Harvard whiz kids who populate the trading desks and exchange floors must be thoughts of rebellion. Thoughts that somehow tick up in the night and are pushed back into dreams, only to resurface just under the consciousness during the daytime speak of cashing out and buying a farm, or opening a franchise business out West, or maybe just dumping it all into a sailboat in the Florida keys.
Certainly, we all have these thoughts, about the day our annual investment income becomes greater than our yearly take-home pay, about retirement and lingering, lounging and Early Bird specials with the wife. But the market is cruel, or lately, has been. We've just endured the worst decade of returns on equities since the Great Depression, and some say the 2000s weren't even as good as the 1930s. Being that you'd have to have a pretty good memory and generally be over 90 today to accurately recall what the stock market was like during the depression, there aren't many opinions like that, though charts and history offer clues.
The last ten years were by no means anything even closely resembling a depression, though we did burst two bubbles - dotcom and housing - and suffer the downdraft afterwards on both. 2010 ought to be better, we believe, but we're still unsure. Besides, there are other ways to save and invest outside of stocks, aren't there?
Coin collectors have been having field days of late, such with the prices of gold and silver up so much. Art seems to still be appreciating in certain circles, and for the rest of us, there are always baseball cards, Barbie dolls and eBay. The answer is a resounding "yes," and more and more people are discovering a world outside of IBM, Apple and Microsoft.
Certainly, some people make money in stocks. Many small investors, lacking in patience, experience and wisdom, do, however, end up with losses, sometimes larger than they'd like. It is because of those who have tried and failed that I write about money, stocks, cash, commodities and such. There are other options. You just have to know the rules, and which of those can be broken or bent enough for you to make a small - or maybe sizable - fortune.
More on that tomorrow, when I discuss the creation of your own currency, but for today, stocks were slightly higher. Everybody's indexed portfolios show a profit. Good thing, too, because they've been losing for the past few days, but they didn't make much in the end, and participation (volume) was light, so cash still looks really, really good.
Dow 10,196.86, +23.88 (0.23%)
NASDAQ 2,210.80, +5.51 (0.25%)
S&P 500 1,096.78, +5.02 (0.46%)
NYSE Composite 7,073.13, +42.52 (0.60%)
Advancers were barely ahead of decliners, 3586-2954, with new highs surpassing new lows, 145-51.
NYSE Volume 5,164,265,500
NASDAQ Volume 2,148,828,000
Commodities rebounded, with oil up 72 cents, to $75.26, gold higher by $6.70, to $1,096.40, and silver gaining 19 cents per ounce, to close at $17.12. Commodities were the place to be on Monday. While stocks gave up most of their gains late in the day, precious metals held well, and could be setting up for some spirited buying, since souring on stocks is all the fashion this Winter.
Getting yourself away from stocks isn't a bad idea. Somebody reminded me of the old rule that says to subtract your age from 110, and the result will be the percentage of your investments that should be in stocks. The concept sounds reasonable enough, until you start asking questions.
Does that include my home? Let's say you have $100,000 equity built up and you're 55, and have another $100,000 in cash. Since your number would be 55% (110-55), you'd have to take out some of your home's equity to get your stock percentage up to the proper speed, so, I say, exclude your home from your investment ideas. The equity you have in your home, you earned, and you're going to keep it. Besides, we all need a place to live, so why put it at risk?
So, adding our caveat, you've got $100,000 in equity in your home, $100,000 in cash, $55,000 of it which should be in stocks, according to the formula. The rest, I suppose, would go into CDs or bonds or both. Still, 12 years from retirement (yes, it's 67 for this age group, thank you, congress), do you really want to put $55K into stocks, and which ones? Especially after the decade from hell we've just gone through, it sounds pretty risky.
But, hey, says your broker, it's only money.
The Brangelina episode notwithstanding, the stocksters were to be found mostly standing around, wondering still. Somewhere in the deep recesses of the collective brains of these Harvard whiz kids who populate the trading desks and exchange floors must be thoughts of rebellion. Thoughts that somehow tick up in the night and are pushed back into dreams, only to resurface just under the consciousness during the daytime speak of cashing out and buying a farm, or opening a franchise business out West, or maybe just dumping it all into a sailboat in the Florida keys.
Certainly, we all have these thoughts, about the day our annual investment income becomes greater than our yearly take-home pay, about retirement and lingering, lounging and Early Bird specials with the wife. But the market is cruel, or lately, has been. We've just endured the worst decade of returns on equities since the Great Depression, and some say the 2000s weren't even as good as the 1930s. Being that you'd have to have a pretty good memory and generally be over 90 today to accurately recall what the stock market was like during the depression, there aren't many opinions like that, though charts and history offer clues.
The last ten years were by no means anything even closely resembling a depression, though we did burst two bubbles - dotcom and housing - and suffer the downdraft afterwards on both. 2010 ought to be better, we believe, but we're still unsure. Besides, there are other ways to save and invest outside of stocks, aren't there?
Coin collectors have been having field days of late, such with the prices of gold and silver up so much. Art seems to still be appreciating in certain circles, and for the rest of us, there are always baseball cards, Barbie dolls and eBay. The answer is a resounding "yes," and more and more people are discovering a world outside of IBM, Apple and Microsoft.
Certainly, some people make money in stocks. Many small investors, lacking in patience, experience and wisdom, do, however, end up with losses, sometimes larger than they'd like. It is because of those who have tried and failed that I write about money, stocks, cash, commodities and such. There are other options. You just have to know the rules, and which of those can be broken or bent enough for you to make a small - or maybe sizable - fortune.
More on that tomorrow, when I discuss the creation of your own currency, but for today, stocks were slightly higher. Everybody's indexed portfolios show a profit. Good thing, too, because they've been losing for the past few days, but they didn't make much in the end, and participation (volume) was light, so cash still looks really, really good.
Dow 10,196.86, +23.88 (0.23%)
NASDAQ 2,210.80, +5.51 (0.25%)
S&P 500 1,096.78, +5.02 (0.46%)
NYSE Composite 7,073.13, +42.52 (0.60%)
Advancers were barely ahead of decliners, 3586-2954, with new highs surpassing new lows, 145-51.
NYSE Volume 5,164,265,500
NASDAQ Volume 2,148,828,000
Commodities rebounded, with oil up 72 cents, to $75.26, gold higher by $6.70, to $1,096.40, and silver gaining 19 cents per ounce, to close at $17.12. Commodities were the place to be on Monday. While stocks gave up most of their gains late in the day, precious metals held well, and could be setting up for some spirited buying, since souring on stocks is all the fashion this Winter.
Getting yourself away from stocks isn't a bad idea. Somebody reminded me of the old rule that says to subtract your age from 110, and the result will be the percentage of your investments that should be in stocks. The concept sounds reasonable enough, until you start asking questions.
Does that include my home? Let's say you have $100,000 equity built up and you're 55, and have another $100,000 in cash. Since your number would be 55% (110-55), you'd have to take out some of your home's equity to get your stock percentage up to the proper speed, so, I say, exclude your home from your investment ideas. The equity you have in your home, you earned, and you're going to keep it. Besides, we all need a place to live, so why put it at risk?
So, adding our caveat, you've got $100,000 in equity in your home, $100,000 in cash, $55,000 of it which should be in stocks, according to the formula. The rest, I suppose, would go into CDs or bonds or both. Still, 12 years from retirement (yes, it's 67 for this age group, thank you, congress), do you really want to put $55K into stocks, and which ones? Especially after the decade from hell we've just gone through, it sounds pretty risky.
But, hey, says your broker, it's only money.
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