Wednesday, July 29, 2015

A VERY TROUBLED MARKET.....ANOTHER PESKY FACT!

A VERY TROUBLED MARKET

They do ring a bell at the top. The bell is ringing loud and clear. The bell is ringing so hard, it broke. Anyone not heeding the warnings will end up being much poorer. This will not end well. 
The market has fallen for five consecutive days. The Chinese market is already crashing. I wonder how many people are prepared to see their investment portfolio or 401k fall by 50% – again. We're gonna find out.

Why the big slowdown? Why is the world falling apart? Because you can't fake an economic recovery... Instead of "stimulating" a recovery, the feds have "simulated" one.

So far, all the Fed's cheap credit has done is exaggerated and prolonged our false sense of security, and created the illusion of recovery.

The Fed dropped the price of capital to near zero. Commodity producers took the bait. They borrowed money and increased production. You can't get real demand from empty credit. Real demand comes from Main Street, not Wall Street. And for that, you need a real recovery, not a phony one.

57% of Americans believe the US economy is "getting worse," which has left Gallup's Economic Confidence Index tumbling to its lowest in 10 monthsThe decline in Case Shiller home price index is the biggest since July 2014 which confirms the view that "over the next two years or so, the rate of home price increases is more likely to slow than to accelerate.

Historically, the occasions of large numbers of New Highs AND New Lows at the same time did not bode well for the stock market. This is another example of the growing emergence of data points that echo the previous 2 cyclical tops.

The worst market outcomes in history have always emerged after an overvalued, overbought, overbullish advance has been joined by deterioration in market internals. Look at the data, and you'll realize that our present concerns are not hyperbole or exaggeration. We simply have not observed the market conditions we observe today except in a handful of instances in market history, and they have typically ended quite badly.

This is one of the most important moments in a generation to examine all of your risk exposures, the extent to which you believe historical evidence is informative, your tolerance for loss, your comfort or discomfort with missing out on potential rallies even in a wickedly overvalued market, and your true investment horizon. Review all of your risk exposures here.


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