Always take what the Market gives, “The Trend is Your Friend”
$PG, $T, $KO, $MMM, $GLD, $SLV
The world’s central bankers have declared a “War on Cash” to punish savers and reward speculators and in the process destroy the middle class.
The only way to maintain the illusion that all is well is to get Average Joe to embrace this illusory economic recovery and what better way to achieve this then by forcing them to speculate in the stock market.
The best way to force savers to speculate is to punish them for saving, and will worsen as central banks worldwide embrace negative interest rates.
Those calling for higher interest rates or hoping for them are living in Dreamland. The new trend is negative rates and investors need to adapt or perish.
When savers start getting charged for saving money, they are going to withdraw these funds and try to find alternative investments.
Some will buy safes and hoard cash, and some will turn to Gold but the vast majority will look for something to invest this money into and for most this will be the stock market.
The big A: Why turn to the stock market?
The Big A: Well, because most investors are not familiar with the concept of “hard money” and do not understand that precious metals in general preserve one’s purchasing power over time. So, in this environment, allocating a percentage of investment funds to Gold and Silver seems pruDent.
Most people are reluctant to invest in a market where the prevailing themes are fraud and manipulation.
Gone are the days when the US Fed tried to be overt and cover its tracks, today manipulation is the order of the day. If the supply of “hot money” is cut, this Bull Market will end immediately and what will follow is a very scary meltdown, and that is why the US Fed will not stop intervening.
They will inflate to infinity or until the “masses revolt”, who knows when that event will happen.
The masses are not just asleep, but they are in a deep coma, and it is going to take a miracle or massive shock to snap them out of it. .
The US Fed has been actively intervening in the market for the past 30 yrs, their 1st brazen attack was shortly after the crash of October 1987, on my birthday incidentally.
The US Fed been creating money out of thin air since we went off the Gold standard and most individuals today are not even aware of this concept.
Try to bring it back and most people would resist. As you cannot accept something you do not understand even if it is for your good.
One need to understand the problem to find the solution.
Ignorance is today’s 1st Key problem, and diversion is the 2nd. People do not want to focus on the real issues, they seek distractions so they can ignore reality and live in the illusory world of “Puff the Magic Dragon”.
QE aka quantitative easing is not over, some argue that it might have just begun. The purpose of QE was to provide liquidity to the markets or to prop the markets up with “hot money”.
By forcing savers to speculate, the US Fed has created the equivalent of several QE’s.
There are billions if not trillions of dollars sitting on the sidelines in money market accounts, savings accounts, Treasuries.
We can expect that at some point a large portion of these funds will find their way into the stock markets. Also, a significant number of pension funds will be forced to speculate as the yield on Treasuries is so small that management will soon not be able to justify the fees they charge to manage this money.
When negative rates hit the US a flood of money will make its way into the markets as investors chase higher yields.
My gut instinct has been telling me since October 2015 that this Bull market is destined to crash and the civilians should avoid this market at all cost.
But, the Bull has only paused from time to time to refresh, as it keep on moving North.
Remember, the markets take no prisoners, it does not consider any individuals, what matter sis what side of it the masses are on.
Mass Psychology clearly states that a market will not crash if the crowd is anxious and the crowd has been decidedly anxious or fearful for going on 8 years.
Participants need to understand is that the negative rate experiment has just begun. There is no turning back, and this operation will continue until central bankers are forced to Stop.
In the interim, the markets are set up to run higher until the central bankers know that the masses are in, have “Embraced the Bull”. And then when that happens the market will reverse destroy everyone that stands in its path as it did in the dot.com reversal on 14 January 2000, and the housing crisis of Y’s 2007 and 2008 that coupled with the market correction wiped out trillions and destroyed millions of businesses and good paying jobs.
At these high stock valuations a good strategy might be to pick out 4 or 5 dividend paying Aristocrat stocks you would love to own forever, and then wait for corrections ranging from say 9 to 12% before committing new funds to them. Examples: AT&T (NYSE:T), Coca Cola (NYSE:KO), Procter & Gamble (NYSE:PG), and 3M (NYSE:MMM).
Remember, no matter what is happening there is always a trend, identify and follow the trend, the trend is your friend; everything else is your enemy. Always take what the market gives.
Have a terrific weekend.