Rent Free for "492 Days" and Counting

Boy, do I have a deal for you. All what you have to do is have a financial institution foreclosure on your home.  This will allow you to stay rent-free for more than sixteen months.  Just think what you can do with all that extra money.  According to LPS Applied Analytics, the average borrower in the foreclosure process hadn’t made a payment in 492 days as of the end of October 2010.  That compares to 382 days a year ago and a low of 244 days in August 2007.  In other words, individuals, who default on their mortgages, can reasonably expect to stay in their homes rent-free more than 16 months.  In some states, such as New York and Florida, the number is closer to 20 months.  And, who said there isn’t any such thing as a “free lunch” in America?   

Most Overhyped Black Friday In History: A Dud!

The Wall Street Journal reports that "The shopping day that was supposed to signal the renaissance of the US consumer, and justify the massive over-hiring by US retailers (not to mention the completely dislocated from reality surge in stock price for razor thin margin retailers like Amazon), is increasingly seeming to be a dud.  The primary reason for the disappointment is that Black Friday actually started early on in the month, with most retailers offering comparable loss-leading deals such as those seen on the Friday after the national holiday early in November, reducing the actual purchasing power for the all important day.  The smaller than expected increase is due in part to discounts offered earlier in November as well as online-only promotions, stated ShopperTrak."  Bottom-line is that "Black Friday" was a dud, which does not portend very well for retailers going forward. 

TSA Proof Blog Site

This blog site is "TSA" proof!

CNBC Bull-Tarts

Let’s put things into proper perspective after today’s magical rally of 150.91 points for the DJIA.  (Remember that yesterday the DJIA was down 142.21 points.)  Why the sharp rally?  Well, according to the bull-tarts over at CNBC, the sharp rally was due to the 34,000 drop in “Initial Jobless Claims to only 407,000.  Wow!  That is really great news when only 407,000 individuals were added to the unemployment rolls.  That is really great news for our economy moving forward.  Ya, right!  We are still not creating jobs.  Folks, we just expanded the unemployment rolls by over 400,000 individuals.

Now, what CNBC failed to mention was that U.S. Factory Orders plunged in October by the largest amount in 21 months.  (Not good.)  Further, we learned Wednesday that Durable Goods Orders fell 3.3 percent in October, the biggest drop since January 2009.  Also, we learned today that New Home Sales fell in October to a near record low, down 8.1 percent to 283,000 units, just slightly above August 2010's number of 275,000, which was the worst ever reading since records started in 1963. 

Entitlement America: Sad but True

You can do as well working one week a month at minimum wage as you can working $60,000-a-year, full-time, high-stress job.  This according to Wyatt Emmerich of The Cleveland Current.  The following table illustrates that $16,000 in today's America is worth more than $60,000.

Now, tell me where the incentive to work in this country is?  Emmerich sums it up as follows: "Not surprisingly, it is not only the richest and thieves (Wall Street) that prosper, but also the penny scammers at the very bottom of the economic ladder that rip off the middle class each and every day, courtesy of the world's most generous entitlement system."  Have you had enough, yet?  

Ailing Ireland Accepts Bailout

Ireland finally sought $110 billion in bailout money from the European Union (EU) and the IMF.  I thought this whole debt crisis to stem Europe's sixteen-member common currency from unraveling was resolved last year after the Greece debacle.  That is what we were all told!  Well, so much for believing the EU, or for that matter, any government pronouncement.  We, Americans know that all so well, especially those individuals who have listened and believed all that rhetoric from the Fed.  Ok, who is next on the on the so called EU debt crisis hit-parade?  Could it be Spain, Italy, or Portugal?  My guess is all of them. 

So there you have it, another country bites the dust, which, of course, reminds me of that song by Queen. 

Pervert of the Day: TSA

Greater Fool's Theory: Alive and Kicking

Government Motor's (GM)  common stock was priced at $33 a share.  The total offering size will be approximately $20.1 billion.  Wow!  The hype from Wall Street this morning is staggering.  You would think that GM has found the cure for the common cold, cancer, obesity and whatever is out there.  To say the least, GM is not a bargain at these prices.  Who knows when it will pay a dividend.  Also, it has some auditing issues to be resolved.   But, then again, the government needs GM shares to rise sharply over the coming years for it to be repaid in full for its $49.5 billion loan. 


For today, investors will watch for the size of the first-day "pop" of an initial public offering (IPO).  If the shares rise more than the usual 10% to 20%, some observers may say GM and the government priced it too low.  If the shares falter, it will mean some investors still question GM's future.  I, for one, don't consider today's price action that critical.  The IPO will be a success!  It has to be because of the greater fool's theory.  In other words, it is not today but in weeks and months to come.  Caveat Emptor!

The Boys (Bears) Are Back in Town???

The following video clip is from Tim Knight over at "Slope of Hope."  Enjoy.  The bears just might be back in town.  If nothing else, a prelude of things to come. 

QE2 Explained in Simple Terms

QE2 Explained in Simple Terms

Putting QE2 into Perspective: Stock Market

We are looking at close to $100 billion in QE2 purchasing by the Fed each and every month for the next eight months.  That number is higher than a good year for U.S. equity fund inflows.  That figure alone is bullish for the market.  And, as per Bernanke's direct statement, it is clear the Fed is targeting equities as well as bonds with QE2.  In other words, he wants QE2 to inflate the price of financial assets in order to increase the wealth effect of individuals.  That is, if your perceived wealth increases, you are more liking to spend a percentage of that increase, which will increase GDP through your consumption.  That is the game the Fed is playing going forward.  With this game plan, the Fed has directly implied that it is willing to destroy the value of the dollar for the sake of increasing the value of financial assets with the ultimate consequences of creating a massive financial asset bubble and rampant inflation.  And, then taking "no" responsibility for its actions.  Something like Greenspan did leading up to the sub-prime mortgage debacle.

Gold: The Market's Global Currency

Please take the time to read Robert Murphy's excellent article on the historical perspective on gold and fiat currency.  The article is not only succinct but is definitely an easy read.  If you are concerned at all about Bernanke's QE2, you will want to read this article.  To entice you to read it, the following excerpt should do the trick: "Central bankers cannot be trusted with the printing press, especially when there is no formal check on their inflationary policies. It is no coincidence that gold is hitting such heights as investors the world over hunker down for what may very well be a collapse of the dollar system."

How Does He Get Away with Lying

True Confessions (Reflections)

Over the past year, I have been very disappointed in my overall market performance.  As a matter-of-fact, I would give myself a big-fat “F.”  I always stated that the “trend is your friend.”  In other words, stay with the underlying trend of the market and avoid at all cost its daily noise.  (I have definitely been guilty of listening to the daily noise of the market and its so-call market pundits.)  That was the main reason why I focused on the 15/40-weekly exponential moving average (EMA) strategy.  This strategy, if you recall, simply states that when the 15-week EMA > 40-week EMA, the market’s immediate trend is bullish; and when the 15-week EMA < 40-week EMA, the market’s immediate trend is bearish.  I even had an article published, entitled “Market Timing with Exponential Moving Averages.”  The findings from the article demonstrated that the EMA strategy outperformed the traditional Buy-and-Hold, P/E, and Dividend Yield strategies.  Following this strategy in January 2008, one would have avoided the entire market debacle that followed.  The strategy reverted to bullish (15-week EMA > 40-week EMA) on August 17, 2009.  Then, on August 23, 2010, the EMA strategy turned bearish.  Two weeks later (September 7, 2010), the strategy turned bullish.  Overall, the EMA strategy has done remarkability well in identifying the underlying trend of the market.  As I indicated, I failed to adhere to my own strategy.  Becoming way too bearish when the EMA strategy was signaling that the immediate trend was turning from bearish to bullish.  For those of you that followed the EMA strategy the way it is suppose to be followed, I give you an “A,” because I know your portfolio has benefited from following the strategy.

Now, what lies ahead for the market near term?  Let me start by saying that I firmly believe that the market will do whatever it has to do to prove the majority of investors wrong.  Also, the legendary market technician Joe Granville stated, “If it is obvious, it is obviously wrong.”  Ok, where am I am going with this?  Right now the current investor psychology is so one-sided in favor of overwhelming bullishness that something has to happen.  For example, 94% of future traders, as measured by the Daily Sentiment Index believe that the S&P 500 will continue to rally.  In regard to gold, 98% of trades, as measured by the Daily Sentiment Index, are bulls, which is an all-time high.  For silver, 92% are bullish, which is a record.  In regard to dollar, everyone hates it.  This belief is so pervasive that it has to be wrong near term.  In other words, when the psychology of the market place becomes clear to all that the current trend must continue, it is almost always close to a reversal.

 

Since I received a “F” in my own market-timing course, I am in the process of going back to the basics and focusing on the EMA strategy.  I want an "A."

Dollar's Limbo Rock

How low can it go?  That is the dollar of course.

Now, what does Ben Bernanke and Chubby Checker have in common?  Answer: They both do the "Limbo Rock."  Trouble is I definitely like Chubby Checker's version better!

Everyday Low Prices

What is wrong with "Everyday Low Prices?"  That has been the business model of one of the great American success stories -- Wal-Mart.  Nothing, unless you are the Fed.  The Fed panics at even the thought of low prices.  As a matter of fact, it has done everything ($2 trillion worth and counting) to make sure that you will never find low prices again.  Listen to the following Bloomberg's interview with James Grant, who is editor of the Grant's Interest Rate Observer:

The "BULL" Takes Charge

Yesterday, the Fed announced QE2, which will simply be another $600 billion purchase of Treasury Securities. This, of course, is on top of QE1 that totaled $1.7 trillion of purchases

QE1 did nothing to grow the economy.  It did help the large money-center banks and Wall Street investment bankers but not the consumer.  I guess if you consider the rise in financial assets, stocks and bonds, then the consumer has benefited.  The current market condition is very similar, in an eerie way, to the 2007 real estate bubble, which did not end well.  Make no mistake that this financial asset (stocks, bonds, and metals) bubble will play out just as poorly as the real estate bubble did. 

Once again, one should never under-estimate the power of the Fed, which I did.  (I definitely knew better.)  From 2008 to 2010, the Fed’s adjusted monetary base increase by 211%, which is unprecedented in the history of the Fed.  The consequences of such a massive liquidity inducement into the financial system are the current financial asset bubble and the utter destruction of the dollar.  I will have more later this evening.

  

How to Become a Millionaire

Buying 10-year Treasury Notes at 2.6% is a great way to become a millionaire, especially if you’re already a billionaire. The QE2 announcement today by the Fed will hasten that millionaire status. Get ready for the bubble to burst.

Exercise Your Right to Vote Tomorrow: It is Your Civic Duty