Investors411 has a 6  year record of beating the S&P 500

Fat so called “Free Markets” and the public

Investors411 2008 prediction – The problem in the financial sector is far far far far far bigger than first imagined. Impact of this mess is going to take years to resolve.”

Each year in the POSITION section of the blog the above statement has been repeated. The so called “free market” capitalism that is sinking the US economy now looks like it will now take at least a DECADE before any resolution is is forthcoming and that’s if we are lucky. For a more detailed outlook as to what’s happening see OVERVIEW

Unfortunately The MAY 20 downgrade of the US economy and stocks has come to pass (we’re still a couple % short of the predicted amount, but that should happen today)

Like the two guys on the seesaw above –

A list of the economic imbalances in the future for the USA.

  • Loss of focus on jobs – Without jobs the economy doesn’t grow and the deficit does not shrink
  • Stimulus runs out – You can argue its effectiveness, but bottom line it added to GDP
  • QE2 ends – The FED liquidity supply that propped up both stocks and the US economy is over
  • Constriction of money supply begins – Government programs that helped create a vibrant and united America will be cut and jobs get cut with them. Simple math less money supply = less GDP growth= Great Recession Part 2
  • Japan and Europe are in trouble, Emerging markets have inflation problems. (see Great Recession/Roubini link above)
  • A “Misguided” S&P downgrade that is going to further decimate the state budgets/jobs and consumer confidence

Blame - What’s needed is short term stimulus and medium and long term austerity measures. (paraphrase from Roubini link above)

Tea Party/Republicans = Only one presidential candidate, Jon Huntsman, has dared take an opposing view to Tea Party orthodoxy.

  • No compromise attitude.
  • Free markets or nothing at all.
  • No government regulations on markets.
  • Abolish the Fed.
  • Return to the gold standard.
  • It’s the fault of the teachers, cops, firefighters, union workers, blacks, foreigners, foreigners and every low wage earner in America that we are in this crisis.

Democrats

  • The Democrats started caving in under Clinton when Greenspan and others deregulated investment banks leading to over leveraging and the 2008 meltdown.
  • Obama has caved in to big business/”free market” at almost every turn (see past blogs). From his health plan, to trade treaties to caving in on taxes for the wealthy. He’s NO Teddy Roosevelt.

US (you and me)The reality is we have no one to blame but ourselves for letting greed triumph over common sense and caring about our fellow partners on the planet

Investors/YOU

Its sad to see so many Americans who have made out financially because of our economic system now turn on the system that gave them their wealth.

QE #3 may stabilize the meltdown, but  the Tea Party will do everything possible to block it.

Cash is a better position than equities, but as explained before it too has its drawbacks.  I hate having a negative position on American companies but in reality the major corporations are globalized entities and care far more about profits than you.

These globalized entities or corporate oligarchy care far more about profits than where they hire workers or find consumers. The less governance they have the more they will exploit workers and working conditions.

Current Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

NLY - Annaly Capital Mgt. Ultra high dividend stock – It’s been shaky, but so far NLY has held up reasonably well through current stock market slide.

In  my personal portfolio I still have a Put position to protect NLY. (strike price $17.00 for 3rd Friday in Sept) Also puts on other dividend stocks.

GLD – (Long Gold ETF) Bought at 157.1 last week. (see last weeks blogs and comments section) –  Sold at 162.4 last Wednesday for over +3% gain,  Will buy back in on dip.

Disclaimer - Personally I own  a group of dividend stocks including NLY. I have placed puts most  of of dividend stocks I own. I buy everything in the hypothetical Investors411 portfolio. I also own some SDS & TZA (ETF’s that double and triple short the market) as hedges.

My overall positions in stocks is to be short the US markets

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#1 Technical forecasting tool – The McClellan Oscillator (MO) chart fell to to -111.38 (-30 somewhat oversold, -60 oversold, -90 OMG oversold).

So we are at clearly OMG oversold levels.

Context -  last summer after QE 1 ended and before QE2 started we reached -135 However, he situation now looks worse than last year, but not as bad as 2008.  It’s reasonable to expect a -135 or lower on the MO

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Long Term Outlook (for US Economy)

BEARISH

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Look for an enlightened Paul’s Corner every Tuesday & Thursday and the always informative Comments Section every day.

The Long Term Outlook has been downgraded because technical support has fallen and above.

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Long Term Outlook (for US stocks)

CAUTIOUSLY BEARISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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