We received this email from a Quebec resident who resides in the Montreal area. We did not edit or add anything to his email. It certainly makes sense and we welcome comments. He is French Canadian but he recognizes that the majority of the readers are Anglophones and he politely has written it in English. He requested that his name not be given.
Qu’est-ce que tu en penses? La Fed sera-t-elle assez orgueilleuse et incompétente pour relever les taux le 17 septembre? ou annoncera-t-elle QE4? Ce qui serait équivalent à perdre la face? Imagine ce qui arrivera aux emprunts sur marge pour l’achat d’actions et d’obligations au lendemain du relèvement des taux. Avec un marché fragile comme c’est le cas actuellement, j’aime mieux ne pas y penser. Je crois, selon ce que je lis, que tous les investisseurs ont maintenant peur d’une hausse de taux et qu’il y a de fortes chances que la Fed les hausse quand même. Nous sommes à la merci d’une bande de fonctionnaires. Ray
We have avoided what would have been normal 20% or so corrections which would have been followed by the market returning up after each down move allowing funds and institutions the opportunity to invest at reasonable prices. We are now at historical valuation levels that have ALWAYS BEEN FOLLOWED BY HARSH BEAR MARKETS. We have no change in our outlook. Off the 2014-2015 stock market high we can still see a downside move risk for the overall stock market of 25% to 30% based upon technical and cyclical analysis. However, right from the start we want to point out that there numerous stocks that are incredibly undervalued that offer the opportunity for exceptional capital gains. For example, Gold, Silver and Commodities in our view are extremely undervalued.
About China’s Currency Devaluation: The Renminbi (also called the Yuan) is very different today than it was a generation ago. Twenty years ago, foreigners used special exchange certificates rather than local currency and only in selected stores, hotels and restaurants. Today, foreigners can use local currency at anytime and anywhere. Moreover, some 20% of China’s merchandise trade is settled with the Renminbi.
For some of us, cycles are more important than fundamentals for forecasting the direction of the markets, particularly for long term forecasts. And when cycles have a strong similarity and are concurrent with economic and business fundamentals, the cycles are even more effective in their ability to forecast. Many cycles occur often on or near to schedule.
With the bubble bursting in China as we speak…….(remember China is the world’s SECOND LARGEST ECONOMY)..Their markets are down over 30% (THAT’S THIRTY PERCENT) in spite of the Chinese government throwing everything INCLUDING the kitchen sink against this slide.
While our analysis suggests a decline possibility of 25% to 30%, there are some points that should be emphasized. Keep in mind that for a bull market in commodities that many of you readers anxiously await, we would need a bear market to occur in industrial stocks. Recently, the stock market is sending some strong technical warnings; the Dow Jones Transportation Average and the Dow Jones Utilities Average, both lead indicators have been quite weak for the last there months. As well, the last six weeks have seen some of the largest total dollar value of officers and directors selling in decades with little buying; their sales totaled over $2,500,000,000. ($2.5 billion) The negative evidence keeps building. Note well that officers and directors are the most informed of all investors. But for three years we have projected a 20% to 25% correction which did not happen! What we had wanted to see was a normal cyclical correction which allows the funds and institutions that must invest the opportunities to buy at cheaper price levels followed by rallies back up. As you know many funds are not allowed to hold large cash positions. It is a “must invest” requirement, despite overvaluation in many companies’ shares. This has created, as in all major market tops a “vacuum.” A vacuum is a way of describing the fact that far too many shares have been bought at the high end of their valuation levels and often at the high end […]
We have a “podcast” interview coming up with David Morgan who is in our view the most accurate silver analyst today. We find it compelling that we are totally in accord with David’s forecasts and valuations for silver. We take no pleasure in having a negative outlook for the economy and the stock market but we are realists. We feel that we are about to commence very difficult times and do believe that silver bullion and many silver stocks will provide investors with outstanding returns. While our analysis is negative for the economy and the stock market in general, we still find that there are numerous stocks and investments that offer exceptional opportunities for substantial capital gains. What too few investors recognize is the fact that the stock market has been supported by artificially low interest rates and central bank intervention in the stock markets. The markets in general have exceeded historically reasonable gauges of proper value so the markets and many stocks excesses’ will soon be “modified.” In our opinion, time listening to the podcast interview will prove to be time well spent. Do not look to Wall Street or the major brokerage houses for timely advice on commodities such as silver and gold.
Many investors are not paying attention to insider sales, they should! Last week we saw one of the largest amounts of insider (officers and directors) weekly sales of their very own personally owned shares; shares in the very companies where they work. In the past, the selling in itself is not always a timely signal. However, from these very elevated selling levels, brutal bear markets have commenced in the past. We never have advised selling short, however our analysis suggests taking some profits off the table. The total insider purchases last week totalled approximately $21,000,000 million in US Dollar value…….with insider selling totalling $567,000,000 in US dollar value last week, taking money off the table is something to consider.
Most of us know the story of Colonel George Custer’s 7th Cavalry and how they were crushed by the alliance of Lakota Sioux, Cheyenne and Arapaho tribes led by Crazy Horse and Sitting Bull. Historians have said that Colonel Custer was warned several times of the size of the Indian alliance. He had six Crow scouts, Whiteman Runs Him, Curley, Hairy Moccasin, Goes Ahead, Half Yellow Face and White Swan who warned Colonel Custer, but he paid little attention.
