QE

The Market Implications of More QE

It has been an interesting couple of days. The move by the Fed to buy longer term bonds evidences the debt crisis that is unfolding as investors were shortening their maturities. No one in their right mind is buying 30 year government paper in the midst of a debt crisis; hence the Fed’s need to step in. People are scratching their heads right now at the movement in stocks and…

Flawed Economic Policies

Things are getting interesting on the economic front: Obama is taking a hard line on taxing the “rich” while the GOP is railing against stimulus. Basically, both sides are suggesting policies that will make things much worse. Keynes proposed deficit spending in a downturn coupled with tax cuts. He did not propose tax increases nor did he propose deficit spending that lasts decades. These were self-interested tweaks made by our…

Dividends, Bonds, And the Approaching Rally

I don’t really follow the headlines. Stocks rise, and it’s because the threat of default has passed. Stocks then fall the next day and all of a sudden it’s because of default fears. I have better things to do that get caught up in the headlines. I’d rather think about the long-term trends. All these day to day movements in stocks don’t concern me. This is how I’m thinking. Right…

Fakeout Moves Before the Gold Rally

I look for fakeout moves. For example, following the “fat finger” waterfall crash last year, there was a major rally. The spike rally in silver earlier in the year was a fakeout move in reverse. Sustained rallies and sell-offs tend to last longer than people expect, but eventually the opposite trend emerges. The market gets just enough people bulled or beared up before a suckerpunch move. This is what makes…

The Eye of the Storm

As economic indicators deteriorate (such as household income levels)  it becomes clearer that this is the calm before the storm. Yes U.S. debt was downgraded and yes markets are extremely volatile right now; however, we have yet to see unemployment spike or riots break out en masse. These are the very obvious trends of the future. The worst is yet to come. Politicians think they understand economics, but the truth is any…

The Intelligent and Creative

I often say that the solutions to this crisis aren’t simple. Yes we need to curtail spending, but we need to get the timing right. Yes we need to raise revenue, but raising taxes is not the solution. This is such a complex situation that sometimes it is hard for me to convey my thoughts. A lot of different trends are converging and there is no way to know exactly…

Experimenting With New Ideas

I think most Americans understand that no matter who we elect, we can expect more of the same. Our leaders are satisfied with failing conventionally (raising taxes, cutting spending, etc.), and this is why we’re doomed. Our leaders need to learn how to experiment with new ideas on a scale that is small enough that failures won’t be catastrophic. Solutions that work should be implemented on a large scale. As…

The Global Economy

As I think about the global economy, I notice some interesting things. People are scared to invest in this environment and this is what gives me an advantage. You shouldn’t follow your moods when you invest: don’t just sell because the economy is weak and don’t just buy because the economy is strong. It’s never this simple. Far more powerful trends affect the movement of stocks. It is far more…

Gold and Precious Metals

Precious Metal Manipulation?

Often times I’m asked: “What’s a good investment?” My answer is, it depends. Do you know how to manage risk and keep your emotions in check? Can you focus on the merits of your analysis without being influenced by the crowd? If you are a bad investor, you will find a way to be unprofitable; if you are a good investor, you will find a way to be profitable. Some people never…

Life Lessons and the Debt Crisis

As regular readers know, every once in awhile I need to take a break from writing about the markets. A lot of you probably think things like investing, stocks, and drawing trendlines on a chart consume all my time, but they really don’t. There are plenty of “experts” out there who claim to know exactly where the market is going to be tomorrow, next week, and next year. I suppose you can go over to…

When the Gold Bull Market Ends

The recent spike rally in silver and subsequent collapse have got me thinking about the future of precious metals. Events can change so quickly based on just a couple of variables. The best course of action, as always, is to be flexible and adjust accordingly. I believe gold will go from an underowned to overowned condition fairly quickly. The two main things I will focus on are price and time. I have price targets, but…

Can Gold Fly Under the Radar?

Gold is currently brushing aside seemingly bearish gold news revolving around Bin Laden’s death and moving higher. This rally in gold has a lot more to do with the debt crisis than terrorism. Commentators predicting gold’s demise based on recent events are just proving how clueless they are. Since silver’s huge run-up, gold has looked a lot more attractive to me on a relative basis. In recent weeks, gold has not…