19 months ago in his 2010 State of the Union Barak Obama made perhaps his biggest mistake.

He did not focus on  the clear and present danger of jobs growth (which would have lowered the deficit) instead he focused on deficit recuction through cutting programs and raising taxes.

Perhaps he thought the other side would compromise in good faith. Perhaps, as some believe, he’s just a tool for the corporate oligarchy and in the end would make sure the folks who finance elections would get what they want.

On the battlefield General Petraeus in Iraq compromised with the terrorist who had fought Americans and brought them over to the other side = a compromise. But is the USA compromise to conservatives is an abortion – Tea Party Patriots – Don’t compromise.

Thanks to Jim J (for finding) and Erin Clouse (editor of the Brookline TAB for posting) this editorial from which the following points are drawn. The Tea Party and all the Republican candidates have take taken oaths NOT to compromise. The Tea Party -

  • - It badmouthed the economy and the government at every opportunity, undermining the confidence of consumers, businesses and investors both here and abroad. And yes, the confidence of credit rating agencies.
  • - When President Barack Obama and House Speaker John Boehner got close to making a deal for $4 trillion over 10 years, the tea party caucus yanked Boehner’s chain, and he pulled out of the talks. The grand bargain was dead.
  • - Tea partiers spread the myth that a default wouldn’t be so bad, further feeding the perception that a powerful political bloc couldn’t be trusted to be responsible with the nation’s finances.
  • - The tea party drove the debate — its leaders say so with pride and most pundits agree — to an unsatisfactory and unpopular conclusion: the debt ceiling reluctantly lifted, a last-minute deal nobody likes, a scant $1 trillion in deficit reduction, no reforms to taxes or entitlements, a disgraced and dysfunctional Congress, and a December date for another battle over the same turf.

As most of you realize, progressive are almost always willing to compromise – to look for a win win situation, but a conservative shoots first and asks questions later. Their world is black and white, heaven and hell, you’re either with us or against us and best your either a patriot or the enemy.

Click on picture below for enlargement  of latest (no compromise) brown shirted Republican to enter race


KISS & Stocks

(Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary



Index Percentage Volume
Dow +1.13% down
NASDQ +0.61% down
S&P 500 +0.53% down
Russell 2000 +0.23% -


Technicals, Fundamentals & Analysis

Shorter Term Outlook.


Gert Frobe from James Bond movie Goldfinger

Over the last two weeks almost every serious investor learned about gold or GLD. Two of the three legged stool that hold up the world economy wobbled over the last two weeks and investors rushed in fear to the shiny sparkle of gold.

The Three Legs

  • China/ Emerging markets – chugging right along. They have some moderate problems with inflation and an over supply of housing, but as long as they charge a 25% tariff on all imported goods and the USA charges a 2.5% tariff, plus they discount their currency as 50% of the dollars, they should keep chugging with 9%+ GDP growth. LINK or LINK Example – China doubling the use of solar power this year.
  • Europe – France, Italy & Spain have banned short selling to avoid a run on banks for next 15 days. This was done in defiance of EU regulators LINK Banning short selling did NOt work  in 2008 meltdown. This has put a damper on the rising bond rates which actually fell the last two trading days. Most European Banks are as much over leverage as US banks (perhaps more) Perhaps a little less volatility for the next week in USA & Europe LINK
  • USA – Total incompetence in congress. The far rights  strident refusal to compromise has set off warning bells from the stock market to Standard and Poors. Every European solution has included a tax cut on the wealthy, but NOT the USA which is dominated by Tea party Ideologues. Consumer confidence in the USA is near an all time low while retail sales is still blissfully chugging along. See chart below show a massive disconnect.

  • Never forger our mantra – High Frequency Traders Rule US Equities – These entities make their decision in microseconds and not on long term trends.
  • The McClellan Oscillator (MO) fell to-8.20 (-30 somewhat oversold, -60 oversold, -90 OMG oversold). Chart shows we are almost dead center in the middle of oversold and overbought territory. There’s wiggle room for stocks to move either way = Neutral
  • Reading The Tea LeavesStocks are moving on headlines and that move is exaggerated by all the HFT trading.

From Friday’s Bottom Line - Technically because of the retest of the low and strong momentum higher HFT’s will take markets higher.  Headlines still rule and HFT traders can react instantly and with great volume to headlines.

Investors411 has been on a hot streak with daily calls and let’s see if we can make it 4 in a row  - Momentum carries markets higher today. It’s been relatively easy to get out of massively oversold territory, as we get more and more overbought the going for the HFT’s will get tougher and tougher.

Longer Term Outlook

weeks, month, months

  • Repeat May 20th forecast still stands. The recent Washington debt crisis debacle has focused everyone on cutting the money supply.  Simple math – The less money that’s out there = less jobs = greater chance the “Great Recession” returns. European debt and emerging market’s inflation fears add to this. As predicted the 15+ % drop has come to pass this summer Best read of tea leaves is a 1 in 3 chance for a bear market (20% drop from highs)
  • Long Term Outlook Listed Below. Major long term trend (monthly) lines that have been brokenLINK. However, we are close to climbing back to NEUTRAL (see 50 day moving average on monthly chart), The Fed has promised long term low long term interest fates till 2013, and that’s significant for US economy. If the Fed does some type of QE #3 – this could also get us back to CAUTIOUSLY BULLISH LINK


Look for Paul’s Corner every Tuesday and Thursday


Current Positions

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

YOUR Stock List #5 is done and except for some last minute tweaking and waiting for an earnings report. It will be published on Thursday in Paul’s Corner.

NB – With the exception of NLY & GLD (both profitable and remember NLY’s 3 to 4% dividend) Investors411 held no long positions for most of the summer and especially August.

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. NLY is the only position in Investors411 hypothetical 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) Obviously a MAJOR mistake to sell and take meager +3% profits. Like a millions of other people who see worldwide economic problems ahead – waiting to buy another diptobuy. Also sure looks like GLD had its climax run and could be settling. We’ve had a two day dip and will buy if day 3 of a dip occurs.

DisclaimerPersonally I own  a group of dividend stocks including NLY, SNH, KMP, MO, HTD, T, ABV & AGNC and a few other smaller positions I have puts on most of dividend stocks I own. I buy everything in the hypothetical Investors411 portfolio. I also own some (about 80% of thisposition has been sold) SDS & TZA (ETF’s that double and triple short the market) as hedges.


Long Term Outlook (for US Economy)



Long Term Outlook (for US stocks)


*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day



  • Share/Save/Bookmark