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Created on: 9/18/2020 11:56:13 PM   Last Update: 9/19/2020 1:00:06 AM Posted by: RTT
1 POST Stocks are not done yet - Update
stocks-are-not-done-yet--updateThere are a few times in history when a third party said this US paper (stocks, funds or bonds) is worthless.

Here is two.

1) 1965 Nixon Shock - The French said to US we do not want your paper dollars please pay us in gold. This of course led to the US going off the gold standard.

2) 2007 Bear Stern Fund Collapse - Investors said their funds collateral was worth much less than stated. This of course was the beginning of the great america housing bust of 2008.


In both cases it was stated .."look the Emperor is naked!"... (The Emperor's New Clothes - Hans Christian Andersen)

The plot ..

Two swindlers arrive at the capital city of an emperor who spends lavishly on clothing at the expense of state matters. Posing as weavers, they offer to supply him with magnificent clothes that are invisible to those who are stupid or incompetent. 


The emperor hires them, and they set up looms and go to work. A succession of officials, and then the emperor himself, visit them to check their progress. Each sees that the looms are empty but pretends otherwise to avoid being thought a fool. 


Finally, the weavers report that the emperor's suit is finished. They mime dressing him and he sets off in a procession before the whole city. The townsfolk uncomfortably go along with the pretense, not wanting to appear inept or stupid, until a child blurts out that the emperor is wearing nothing at all.


The people then realize that everyone has been fooled. 


Although startled, the emperor continues the procession, walking more proudly than ever. [Blog point - This is the stage where we are in 2020, full 100% stupidity.]



No Clothes




The points is, when a child (i.e the lower and middle class mass) can see the truth, the swindle is up!

Post a financial swindle the avoidance of loss is overcome by investors with huge financial resource and little sense. Buyers of last resort. To buy worthless paper at 100 cents in the dollar to extinguish all investor loss. The US Federal reserve has been executing this task since 2007. Their balance is now near $7 trillion, maybe add on currency swaps, treasury general accounts and it may be closer to $12 trillion.  

The point is, when some one calls US financial paper (either stocks or bonds) worthless and that someone is most likely to be the masses, or the lower and middle class, this is the modern day equivalent saying the 'Emperor is naked', and either one of these will follow at a much faster pace than ever seen before.

(1) Paper assets (stocks and bonds) suffer a massive negative price adjustment to true fundamentals valuations. 

(2) Paper assets (stocks and bonds) are supported by the buyer of last resort (the US Fed) and massive money supply creation results in a lower currency price. 

Of course the US central bank has being executing (2) above for 10 years, but now the masses are catching on as they ask why is gold and silver the best performing assets.

Note, The bitcoin rally of 2017 was also an alert.  

Gold per once over $2,000 USD is church bells ringing!

Maybe when gold is over $3,000 USD the 'Emperor' also realises he is naked. Well to conclude, until this happens risk on assets should continue to rally (subject to central planners policy mistake or act of god or act of gold!).


The US FED is now at this stage.


FED





And when the music stops, you will not be first to know.


FEd1





And you will tell your grand kids this valuable lesson on the day before the venture into the world.


Quote




Divider




Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of Gann Angles, Cycles, Wyckoff and Ney logic is the best way to ride the change, after all these methods have been used successfully for 70+ years. This post is a delayed and small sample of what is avaliable to members. Sign up to enjoy the full service.

NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net

Investing Quote...

..“It is foolhardy to make a second trade, if your first trade shows you a loss.  Never average losses.  Let this thought be written indelibly upon your mind.”..

Jesse Livermore


My experience has been that in successful businesses and fund management companies, which performed well over the long-term, some courageous decisions were taken. Courageous fund managers reduce their positions when markets become frothy and accumulate equities when economic and social conditions are dire. They avoid the most popular sectors, which are therefore over-valued, and invest in neglected sectors because being neglected by investors they are by definition inexpensive. The point is that it is very hard and that it takes a lot of courage for a fund manager to avoid the most popular sectors and stocks and to invest in unloved assets. Finally, every investor understands the principle ‘buy low and sell high’, but when prices are low nobody wants to buy.

Marc Faber




.."The stock market is filled with individuals who know the price of everything, but the value of nothing"..

Philip Fisher


.."October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February."..

Mark Twain


...“To me, the 'tape' is the final arbiter of any investment decision. I have a cardinal rule: Never fight the tape!”...

Martin Zweig




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