Stock Market Crash Imminent?

[JDH]

For the first time in four years we have gone days with no posts here on the Forum.  I realize that it was a long holiday weekend in the summer, so naturally most of us would be spending time with family, so the markets would not be our priority, but even so I take the drop off in activity as a leading indicator that a crash is imminent.  None of us have anything to say, and that's a bad omen.

As I have been reporting in my weekly commentaries over on the main site (http://www.buy-high-sell-higher.com/category/weekly-commentary/) I am getting increasingly nervous, so yesterday, on Monday, I liquidated half of my portfolio (fortunately the Canadian markets were open).  I am now over 60% in cash, and I plan to increase my cash over the coming days.

Why am I so worried?

First, the BP Oil Gusher is getting worse, with no end in sight.  Economic activity in a quarter of the U.S. will be grinding to a halt over the next month or two, and that's very bad news.  (Here's a scary view of the situation: http://www.rickackerman.com/2010/07/a-dire-view-of-the-oil-gusher-in-the-gulf/#more-23911 ).  I'm in Canada, so I have no idea if these reports are accurate, but it sure sounds bad.

Equally bad the normal end of quarter window dressing didn't happen this year (where mutual funds buy stocks to make their numbers look better), and the traditional pre-holiday rally also didn't happen.

I see no point in holding stocks in this environment.  As we saw in 2008, even the good stocks fall when a crash happens, so even gold and silver stocks are under pressure.

I will maintain a small core holding, just in case I'm wrong, and I will hold some puts, purely for gambling purposes, and if we do get a crash I'll return and play the bounce.

If not, in these deflationary times, there is no down-side to holding cash.

[sidewinder]

Just thinking the same thing.   It's the "great minds" thing I guess. 

Frankly, I have just been so fascinated with the abundance of idiots in the general population of late I just don't want to contribute to the madness.  Pretty much turned off the news and cut way back on everything but food.  Figured it was a good time to learn baking skills since I have a truck load of flour and rice  lol.

Getting pretty good at it too. This is about the 3rd time in my life I have ever attempted to bake bread.  These loaves were just delicious.  I modified a recipe for Italian bread to get this. 



These baguettes were simply some of the best baguettes I have ever eaten. 



I have a stand mixer I used but only for the initial mix.  Found there is no replacement for the "French" method for getting the dough to come together just right.  Then it is just a matter of time. 

Spent the last three weeks studying and reading on all the techniques before wetting the first flour but it paid off.  The baguettes have nothing but flour, salt, water and yeast.  Thin crunchy skin and soft crumb bursting with flavor I have not had in a while.  Made a poolish and let it work for about 14 hours before putting the percentages together for final mix.  I use only percentages for proper mix. 

The loaf bread also made some nice French loaves and was a little more complicated containing some sugar, dried milk powder and olive oil.  I am using that recipe and making like kaiser rolls like no other.  Just a diff in shaping and cutting makes a world of difference in the finished product. 

So, while the world goes to hell in a hand basket I am available as head baker on Patric Geryl's unsinkable boat.

[onlooker]

JDH’s quote:

For the first time in four years we have gone days with no posts here on the Forum.  I realize that it was a long holiday weekend in the summer, so naturally most of us would be spending time with family, so the markets would not be our priority, but even so I take the drop off in activity as a leading indicator that a crash is imminent.  None of us have anything to say, and that's a bad omen.

Recently, I have lost interest in scanning the internet like mad for articles on what happening with the world’s economies and then posting them at this website.

Why?

I think that many regular posters have already given so many credible fact-based “doom and gloom” postings on countries’ failing economies that there appears to be nothing revolutionary new to add, only more variations to the existing negative news postings (this is my explanation on why some of us may have stop posting).

General conclusion is that stock markets will eventually tank, again.

Future articles worth posting are fact-based ones showing that there are sustainable economic recoveries going on in America and Europe due to a continual increase rise in employment of people and abundance of newly formed companies.

But, will such articles exist in the future?  Not very likely.   

Today, the DOW zoomed up from about 9767 to 10,018.  But, I remain not impressed.  I still believe that the above mentioned general conclusion will eventually come true.

So, for now, I am more interested in Sidewinder’s newly found baking skills.  Sidewinder’s baguettes look like baked perfection.  Their insides have the expected holey crumb structure while their outsides have a nice golden crispy crust.  Yum, Yum.   

[MetalMeister]

When you see things like this in the news just today, you know something very bad is about to happen:

http://money.cnn.com/2010/07/08/news/economy/california_pay_cuts/index.htm

California to workers: It's minimum wage for you

These cuts will not even remotely get California close to a balanced budget or to a point of paying down their debt.

Can't wait to see what happens in Illinois! 

[MetalMeister]

That was a very good, insightful article even though it is written by someone seemingly hopeless in nature about what is unfolding in the Gulf.

Thanks for the tip on Ackerman.  I am putting his website on my radar.

 

Economic activity in a quarter of the U.S. will be grinding to a halt over the next month or two, and that's very bad news.  (Here's a scary view of the situation: http://www.rickackerman.com/2010/07/a-dire-view-of-the-oil-gusher-in-the-gulf/#more-23911 ).  I'm in Canada, so I have no idea if these reports are accurate, but it sure sounds bad.

[MetalMeister]

Here is one article worthy of posting:

http://money.cnn.com/galleries/2010/fortune/1006/gallery.Good_Econ.fortune/index.html

There are some good pictures worth admiring out there, somewhere.  Just that we are not looking at them.  Remember a few months ago I made the comment that the best money made would be in shorting various things as the market tumbles?

Well, it's a tumbling...  and a crumbling...

And we should be talking about how to make money off the tumbles, as well as discussing and keeping everyone informed on what is happening in economics and world events around the globe.  Just remember this, that for every person that loses money there are people who make money.

 

General conclusion is that stock markets will eventually tank, again.

Future articles worth posting are fact-based ones showing that there are sustainable economic recoveries going on in America and Europe due to a continual increase rise in employment of people and abundance of newly formed companies.

[onlooker]

YC:

Here is one article worthy of posting:

http://money.cnn.com/galleries/2010/fortune/1006/gallery.Good_Econ.fortune/index.html

There are some good pictures worth admiring out there, somewhere.  Just that we are not looking at them.

According to the article “Where in the world is a good economy?”, Singapore, Australia, Uganda, and Peru are doing well and it could be due to their trading activities with China.

See:  http://afp.google.com/article/ALeqM5iOvLw9vmN24g2I5gX85IZKPB3jIw

See:  http://ipsnews.net/news.asp?idnews=50206

See:  http://www.aercafrica.org/documents/china_africa_relations/Uganda.pdf

See:  http://en.ce.cn/Business/Macro-economic/200705/05/t20070505_11258151.shtml

So far, China is also reported to be doing well.  Because the kick-ass Chinese government does not give out momentary handouts, its citizens were forced to become self sufficient.  It appears that the lay-off factory workers of 2008 have become just that.  See article and video at:  http://www.oregonlive.com/business/index.ssf/2010/03/chinese_factory_workers_cash_i.html

Of the countries in North American and Europe combined, Canada is so far doing well.

But, despite the article “Where in the world is a good economy?” claiming that Canada, Singapore, Australia, Uganda, Peru and Columbia are doing well, I think their thriving or recovering economies could still suddenly come to a halt. 

IMO, if the economy of powerhouse, America or one of the European countries finally goes under; then other countries’ economies will be affected.   Remember, what happened in November 2009, when out of the blue, there was news that Dubai had a debt crisis?  Global stock markets dropped, and global economic turmoil reignited.

So, for now, I am sitting out of the "rigged game" (as called by Sidewinder), looking the S&P 500 INDEX like Pinetree and content with waiting for the market dips.

[MetalMeister]

I guess I was just trying to cheer everybody onward and upward.

Easier to do then say buy gold and silver all of the time.

You are right with those articles.

I think there are untold investors out there just following China around and investing in who they do business with...

We on this forum have known for a long time that China is buying up natural resources all over the world.  Not that hard to follow them around when you know what they are looking to buy, who has it, and who produces it...

IMO, if the economy of powerhouse, America or one of the European countries finally goes under; then other countries’ economies will be affected.   Remember, what happened in November 2009, when out of the blue, there was news that Dubai had a debt crisis?  Global stock markets dropped, and global economic turmoil reignited.

So, for now, I am sitting out of the "rigged game" (as called by Sidewinder), looking the S&P 500 INDEX like Pinetree and content with waiting for the market dips.

[MetalMeister]

Here's another tiny tidbit.

I know 1% is not that big but it is a tremendous shift when you look at the rhetoric of the naysaying countries and the hint that they are following through on their threats.

http://wallstreet.blogs.fortune.cnn.com/2010/07/09/central-banks-start-to-abandon-the-u-s-dollar/

The USS United States ship is going to sink and sooner than anyone thinks.

There is no political will to cut spending in this country.

There is no political will to bring manufacturing lost back to this country because everyone has gotten used to getting more for less rather than accepting less and living with it.

There is no political will to do anything that would tamper with what someone has been promised for decades for fear of not getting elected again.

It is not possible that the November elections is going to change any of this because Republicans are not going to get a super majority in the House or the Senate and it will be gridlock as usual.

There are very few patriots in Washington and I can name them on 1-2 hands.

So what if they are going to minimum wage in California?

When they start slashing unfunded liabilities like pensions then I will become a believer.

When they end welfare, I will become a believer.

When they end these two outrageous wars in the Middle East, I will become a believer.

When they cut out all the fat, pass a balanced budget amendment that includes wartime spending limits (just like the old Constitution did as far as having to vote on the issue of war every two years in Congress adn that part of the Constitution has almost always been violated), and put an end to giving anyone but the disabled anything and severely cut back that giving, then I will become a believer.

But it is clear that ain't gonna happen.