Introduction

I saw this headline (or something to the effect) somewhere: “Number of Bullish Newsletter Writers Highest Since 2007 Top”.

Ahhh….run for the hills!

To see more proprietary market data, visit TacticalBeta; it is absolutely,100% FREE!!  Go to TacticalBeta Now!

The percentage of bullish newsletter writers in the Investors Intelligence sentiment poll now sits at 61.2. This is the highest value since October, 2007, which is exactly 1 week after the SP500 peaked and then went on to drop over 50% in the next 18 months. There must be some meaning to this number. Right?

However, as I showed in the article, “Weekly Sentiment Report: A Noteworthy Extreme (This Is Not What You Think)”, such extremes in the sentiment data are just that– extremes in the data. So while greater than 60% bullish newsletter writers was seen at the 2007 top, this number was also seen throughout the history of the data series and the market did not fall apart or find itself in a bear market over the next year. See figure 1 of examples over the past 15 years. In fact, having lots of bulls, like having extremes in the number of bears, generally does not imply what you think. Certainly, I would not run for the hills based upon 1 number.

Figure 1. % Bullish Newsletter Writers/ weekly

But this should not imply a green light or an “all clear” signal either. From our perspective, I would rather be a buyer (as the data supports) when investors are bearish, and I would rather be a seller when they are bullish. At this point in the price cycle, the trend of prices should begin to flatten out. Rather than being a seller at some extreme point, we typically wait until investor sentiment unwinds. More specifically, we will sell our equity positions 1 week after the “dumb money” indicator crosses below the upper trading band. See figure 4 (below) for details.

The extremes in bullish sentiment that we are currently seeing really suggest that we are late in the current price move. Furthermore, I can certainly state that there are issues under the surface. One issue is the willingness of investors to buy the dip on shorter and shorter time frames. In essence, a market that doesn’t periodically clear itself of the weak hands (i.e., a big, nasty sell off) is a market built on a weak foundation. A second issue is the negative divergence that we are seeing between the $VIX and the SP500. As prices go higher, we should expect the $VIX to move lower, but the $VIX has been unable to break below a level of 12 over the past 12 months despite the near 30% gain in the SP500. As figure 2 below shows, selling has occurred when the $VIX tags the 12 level, but from a big picture perspective, the $VIX has failed to confirm the price move in the SP500. Furthermore, a weekly close above 14.64 on the $VIX would highly suggest a deeper and prolonged sell off in prices. I discussed the implications of support and resistance in the $VIX in this video back in September, 2013.

Figure 2. $VIX/ weekly

Our equity model, which is built around the “dumb money” indicator (see figure 4 below), remains bullish, and will likely remain so for another 2 weeks or more. This current trade has gone on for 17 weeks now when we became bullish during a period of extreme investor bearishness, and it is our expectation that this trade should last on average 15 weeks. The best, most accelerated gains typically occur in the beginning of the trade. Just when investors typically get the all clear, the trend will flatten out. Our plan is to become sellers of equities when investor sentiment unwinds, but we are not at that point. As a reminder, we have moved our stop loss up to SP500 1706.92.

In the final analysis, there are reasons for concern as investors have become and remain extremely bullish. Would I run for the hills? Not yet, but with every passing week, we are getting closer to that point. That’s the conundrum investors must face if they want in to this market now.

The Sentimeter

Figure 3 is our composite sentiment indicator. This is the data behind the “Sentimeter”. This is our most comprehensive equity market sentiment indicator, and it is constructed from 10 different variables that assess investor sentiment and behavior. It utilizes opinion data (i.e., Investors Intelligence) as well as asset data and money flows (i.e., Rydex and insider buying). The indicator goes back to 2004. (Editor’s note: Subscribers to the TacticalBeta Gold Service have this data available for download.) This composite sentiment indicator moved to its most extreme position 10 weeks ago, and prior extremes since the 2009 are noted with the pink vertical bars. The March, 2010, February, 2011, and February, 2012 signals were spot on — warning of a market top. The November, 2010 and December, 2012 signals were failures in the sense that prices continued significantly higher. The current reading is neutral but heading towards bearish (as in too many bullish investors).

Figure 3. The Sentimeter

Dumb Money/ Smart Money

 The “Dumb Money” indicator (see figure 4) looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investors Intelligence; 2) MarketVane; 3) American Association of Individual Investors; and 4) the put call ratio. The indicator shows that investors are extremely bullish.

Figure 4. The “Dumb Money”

Figure 5 is a weekly chart of the SP500 with the InsiderScore “entire market” value in the lower panel. From the InsiderScore weekly report: “Market-wide sentiment continues to move further into Neutral territory, away from a Sell Bias, as transactional volume begins a seasonal decline. With earnings season beginning in two weeks, most companies have closed trading windows, limiting the ability of insiders to transact non-10b5-1 purchases and sales. “

Figure 5. InsiderScore “Entire Market” value/ weekly

To see more proprietary market data, visit TacticalBeta; it is absolutely,100% FREE!!  Go to TacticalBeta Now!

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PPstYmrmkSA/story01.htm thetechnicaltake

Introduction

I saw this headline (or something to the effect) somewhere: “Number of Bullish Newsletter Writers Highest Since 2007 Top”.

Ahhh….run for the hills!

To see more proprietary market data, visit TacticalBeta; it is absolutely,100% FREE!!  Go to TacticalBeta Now!

The percentage of bullish newsletter writers in the Investors Intelligence sentiment poll now sits at 61.2. This is the highest value since October, 2007, which is exactly 1 week after the SP500 peaked and then went on to drop over 50% in the next 18 months. There must be some meaning to this number. Right?

However, as I showed in the article, “Weekly Sentiment Report: A Noteworthy Extreme (This Is Not What You Think)”, such extremes in the sentiment data are just that– extremes in the data. So while greater than 60% bullish newsletter writers was seen at the 2007 top, this number was also seen throughout the history of the data series and the market did not fall apart or find itself in a bear market over the next year. See figure 1 of examples over the past 15 years. In fact, having lots of bulls, like having extremes in the number of bears, generally does not imply what you think. Certainly, I would not run for the hills based upon 1 number.

Figure 1. % Bullish Newsletter Writers/ weekly

But this should not imply a green light or an “all clear” signal either. From our perspective, I would rather be a buyer (as the data supports) when investors are bearish, and I would rather be a seller when they are bullish. At this point in the price cycle, the trend of prices should begin to flatten out. Rather than being a seller at some extreme point, we typically wait until investor sentiment unwinds. More specifically, we will sell our equity positions 1 week after the “dumb money” indicator crosses below the upper trading band. See figure 4 (below) for details.

The extremes in bullish sentiment that we are currently seeing really suggest that we are late in the current price move. Furthermore, I can certainly state that there are issues under the surface. One issue is the willingness of investors to buy the dip on shorter and shorter time frames. In essence, a market that doesn’t periodically clear itself of the weak hands (i.e., a big, nasty sell off) is a market built on a weak foundation. A second issue is the negative divergence that we are seeing between the $VIX and the SP500. As prices go higher, we should expect the $VIX to move lower, but the $VIX has been unable to break below a level of 12 over the past 12 months despite the near 30% gain in the SP500. As figure 2 below shows, selling has occurred when the $VIX tags the 12 level, but from a big picture perspective, the $VIX has failed to confirm the price move in the SP500. Furthermore, a weekly close above 14.64 on the $VIX would highly suggest a deeper and prolonged sell off in prices. I discussed the implications of support and resistance in the $VIX in this video back in September, 2013.

Figure 2. $VIX/ weekly

Our equity model, which is built around the “dumb money” indicator (see figure 4 below), remains bullish, and will likely remain so for another 2 weeks or more. This current trade has gone on for 17 weeks now when we became bullish during a period of extreme investor bearishness, and it is our expectation that this trade should last on average 15 weeks. The best, most accelerated gains typically occur in the beginning of the trade. Just when investors typically get the all clear, the trend will flatten out. Our plan is to become sellers of equities when investor sentiment unwinds, but we are not at that point. As a reminder, we have moved our stop loss up to SP500 1706.92.

In the final analysis, there are reasons for concern as investors have become and remain extremely bullish. Would I run for the hills? Not yet, but with every passing week, we are getting closer to that point. That’s the conundrum investors must face if they want in to this market now.

The Sentimeter

Figure 3 is our composite sentiment indicator. This is the data behind the “Sentimeter”. This is our most comprehensive equity market sentiment indicator, and it is constructed from 10 different variables that assess investor sentiment and behavior. It utilizes opinion data (i.e., Investors Intelligence) as well as asset data and money flows (i.e., Rydex and insider buying). The indicator goes back to 2004. (Editor’s note: Subscribers to the TacticalBeta Gold Service have this data available for download.) This composite sentiment indicator moved to its most extreme position 10 weeks ago, and prior extremes since the 2009 are noted with the pink vertical bars. The March, 2010, February, 2011, and February, 2012 signals were spot on — warning of a market top. The November, 2010 and December, 2012 signals were failures in the sense that prices continued significantly higher. The current reading is neutral but heading towards bearish (as in too many bullish investors).

Figure 3. The Sentimeter

Dumb Money/ Smart Money

 The “Dumb Money” indicator (see figure 4) looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investors Intelligence; 2) MarketVane; 3) American Association of Individual Investors; and 4) the put call ratio. The indicator shows that investors are extremely bullish.

Figure 4. The “Dumb Money”

F
igure 5 is a weekly chart of the SP500 with the InsiderScore “entire market” value in the lower panel. From the InsiderScore weekly report: “Market-wide sentiment continues to move further into Neutral territory, away from a Sell Bias, as transactional volume begins a seasonal decline. With earnings season beginning in two weeks, most companies have closed trading windows, limiting the ability of insiders to transact non-10b5-1 purchases and sales. “

Figure 5. InsiderScore “Entire Market” value/ weekly

To see more proprietary market data, visit TacticalBeta; it is absolutely,100% FREE!!  Go to TacticalBeta Now!

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PPstYmrmkSA/story01.htm thetechnicaltake

Submitted by Adam Taggart via Peak Prosperity,

If you would have told me that we would be in this set of circumstances today ten years ago, I would have told you you were out of your mind.

~ Brian Pretti

This week Chris speaks with Brian Pretti, managing editor of ContraryInvestor.com, a financial commentary site published by institutional buy-side portfolio managers. In their discussion, they focus on the global movement of capital since quantitative easing (QE) became the policy of the world's major central banks.

The ensuing excellent discussion is wide ranging, but the key takeaway is that capital is being herded into fewer and fewer asset classes. With such huge volumes of money at play, very crowded trades in assets like stocks and housing have resulted — bringing us back to familiar bubble territory in record time.

The key for the individual, Pretti emphasizes, is risk management. The safety many investors believe they are buying in today's markets is not real.

The Housing Market Is a One-Sided Investment Cycle

I think what we have got going on here in housing is we have got an investment cycle, not an economically-driven housing cycle, from the standpoint that really, never before have 40 to 50% of all residential real estate transactions been for cash. We have never seen that in prior cycles, absolutely not. You know, what is driving that? Well, in one sense – and it is not a point of blame, but more a look at the unintended consequences of what the actions of QE are – when you lower these interest rates and you take away safe rate of return in alternative assets. Five years ago you could have got 5% in a CD, a Treasury bond, even a money market fund. Well, for a lot of those people who had been savers and investors in safe assets, they do not have rate of return any more. What do they do? They take their $300-$400 thousand nest egg out of the bank, and they turn around and buy a rental property where they can theoretical get the 6%, 7% cash on cash rate of return. And all of a sudden that becomes their rate of return.

 

So, I think we are clearly seeing this, where assets are being lifted out of other investments – whether it is Treasurys or CDs or bank accounts – and being used to buy residential real estate. Of course, the issue becomes one of risk, meaning a Treasury bond never really needs a replacement roof, and the water heater does not break, and there are no vacancies. So, we are increasing risk in these asset class choices and investment choices, but it is a forced choice, because there is no other rate of return. And for people who need that to live, that is why I think we are seeing the big cash transaction levels that we have never really seen before.

 

Second part of the equation, foreign money is absolutely on the move. I mean, we are talking on the first business day of the new year, and one of the things that is in the news this morning and being talked about is, Is there going to be some type of an IMF-driven 10% deposit tax in the Euro banking system? Well, this has been being talked about now for probably two, three, four months. The trial balloons go up in the air. The Euro banking crowd has also talked about potentially negative interest rates. So may be a very simple question, Chris. If you are a Euro citizen and your net worth is caught up in euros and/or you have assets in the Euro banking system, what do you do? You get them out before something like this happens.

 

And really, maybe we can draw the parallels, too, with Japan, where we have seen monetary debasement and true currency debasement in very violent form over the last year since Abe’s been elected. If you are a Japanese citizen and your net worth is caught up in yen, you have lost 20% of your global purchasing power. What do you do? Capital begins to move globally.

 

And I think part of what we are seeing – well, maybe one last piece here, too, is, the current leadership in China is cracking down on corruption. So, I know you know full well, moving capital out of China is illegal. There is only one way to get it out. You have got to have serious capital. So, what is it doing? It is hiding in alternative assets globally. It is coming to what it perceives, for now, the perception of safety that maybe includes the U. S. dollar, and if you are coming to the U. S. dollar, what do you do? Well, you can buy bonds, you can buy stocks, you can buy a business, you can buy real estate, and because safe rate of return has been basically taken away, real estate and perhaps stocks, too, are a repository for that foreign capital.

 

And then, maybe lastly more than not, that global capital being on the move is concentrating in some of these geographic areas that we are seeing. I mean, prices in the New Yorks, prices in the Londons, prices in the San Francisco Bay Areas are just really off the charts here. So this is very much unlike prior cycles where we saw – and I know this sounds a little simplistic and Pollyannaish – but we see younger families getting jobs, making a little bit more money. All of a sudden, they can afford a home; they take on a mortgage purchase application. Maybe they buy your or my house and the food chain moves up. That is not happening this time. So, this is really an investment cycle, as opposed to a true economically-driven housing cycle.

 

And I just ask myself, is the lynch pin in all of this the dividing line of alternative rates of return, meaning interest rates? And as we saw rates pick up really since May of last year, we saw things like mortgage purchase apps and refi apps just drop like a rock. So as we move forward, these big metrics that are the interest rates that are Treasury rates are very, very meaningful. And will they be the catalyst of change, ultimately, in the housing cycle, as opposed to the economy being that catalyst? We are just seeing something very different this time.

The Box Global Capital Is Now In

The minute the Fed started talking about tapering – I mean, if we roll the clock back to 2009 when the Fed started their QE extravaganza, that money absolutely got into U.S. equities and got into U. S. bonds. But as the money kept being printed, it rolled across Planet Earth. It got into the emerging markets, it got into their bonds, their currencies, their equities. It got into global real estate, it got into gold, it got into commodities. The minute the 'taper' keyword was starting to be used by the Fed, all of a sudden, global investors were anticipating the recission of that tidal wave of liquidity. And all of a sudden, these asset classes started to contract to the point where it is really U.S. equities, the very large blue-chip global equities here that continue to perform well. They offer yields higher than safe bonds, for now, and are also the only place we are seeing rate of return.

 

But within this, we are herding capital into a very, very small sector of asset classes. And then lastly, fortunately or unfortunately, when we have the global central bankers and the global politicians doing what they are doing – Europe, we may take 10% of your assets in the European banking system. Europe, we may invoke negative interest rates; you bring a dollar into a bank, we will give you back 99 ½ cents. You cause capital to move, potentially, and to me this is a big issue. I think 2013 was driven as much by momentum, and there is no place else to go, and all those other wonderful things, as it was driven by the weight and movement of global capital. Global capital coming out of China, because it was scared of – if we are going to crack down on corruption and you have got corrupt capital, you get it out right away. Japan, the drop in the yen, you have got to move some of your capital to an alternative venue in an alternative currency. Europe, the threat of confiscation, and maybe just the basic question of, What the heck is the euro going to look like in three years? I know if my net worth was caught up in euros, I sure as heck would not be 100% vested in the euro.

 

So, a lot of this, I think, too, is global capital is hiding in an asset class that it considers to be relatively safe, because all these other asset classes have proven to be unsafe. And for right or for wrong, in U.S. and really large blue-chip globals, they have been very, very good stewards of capital over time. Their balance sheets are relatively clean, and if you are looking for safety, then this is just a very simple question. Would you rather lever your family’s balance sheet to one of the global governments, or would you rather lever it to Johnson & Johnson? Which one do you trust more? Which one is going to take better care of your capital over time?

 

So I think there are so many different factors that have been forcing capital into these narrow asset classes that basically are equities and real estate. The key issue to me, going forward, is risk management. For people who sat this one out, for people who have said, Hey, wait a minute; I am looking at the Bob Shiller CAPE ratio here, and we are at levels that we have only seen four times in the last 100 years.You have got to be kidding me. I am not getting into this thing. The only way to participate in these markets, in my mind, is to make sure that you have a plan for managing risk, period. This is not throw your money into the equity market and hope for a great 2014, because every year that the market was up like it was last year was followed by a year that blah, blah, blah. It does not matter. It is about making sure that we manage risk. And we need to draw hard lines underneath certain levels of capital.

 

Very easy to say, but for your listeners, too, I think this comes down to individual families and making an assessment of how much risk they can afford to take. Below that line, they do not allow it to happen. I know it may sound trite:You have every day of your life to get back into the market, but sometimes you do not have a second chance to get out. 

Click the play button below to listen to Chris' interview with Brian Pretti (101m:31s):

Click here to read the full transcript

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_bL7yKXfbhc/story01.htm Tyler Durden

Submitted by Adam Taggart via Peak Prosperity,

If you would have told me that we would be in this set of circumstances today ten years ago, I would have told you you were out of your mind.

~ Brian Pretti

This week Chris speaks with Brian Pretti, managing editor of ContraryInvestor.com, a financial commentary site published by institutional buy-side portfolio managers. In their discussion, they focus on the global movement of capital since quantitative easing (QE) became the policy of the world's major central banks.

The ensuing excellent discussion is wide ranging, but the key takeaway is that capital is being herded into fewer and fewer asset classes. With such huge volumes of money at play, very crowded trades in assets like stocks and housing have resulted — bringing us back to familiar bubble territory in record time.

The key for the individual, Pretti emphasizes, is risk management. The safety many investors believe they are buying in today's markets is not real.

The Housing Market Is a One-Sided Investment Cycle

I think what we have got going on here in housing is we have got an investment cycle, not an economically-driven housing cycle, from the standpoint that really, never before have 40 to 50% of all residential real estate transactions been for cash. We have never seen that in prior cycles, absolutely not. You know, what is driving that? Well, in one sense – and it is not a point of blame, but more a look at the unintended consequences of what the actions of QE are – when you lower these interest rates and you take away safe rate of return in alternative assets. Five years ago you could have got 5% in a CD, a Treasury bond, even a money market fund. Well, for a lot of those people who had been savers and investors in safe assets, they do not have rate of return any more. What do they do? They take their $300-$400 thousand nest egg out of the bank, and they turn around and buy a rental property where they can theoretical get the 6%, 7% cash on cash rate of return. And all of a sudden that becomes their rate of return.

 

So, I think we are clearly seeing this, where assets are being lifted out of other investments – whether it is Treasurys or CDs or bank accounts – and being used to buy residential real estate. Of course, the issue becomes one of risk, meaning a Treasury bond never really needs a replacement roof, and the water heater does not break, and there are no vacancies. So, we are increasing risk in these asset class choices and investment choices, but it is a forced choice, because there is no other rate of return. And for people who need that to live, that is why I think we are seeing the big cash transaction levels that we have never really seen before.

 

Second part of the equation, foreign money is absolutely on the move. I mean, we are talking on the first business day of the new year, and one of the things that is in the news this morning and being talked about is, Is there going to be some type of an IMF-driven 10% deposit tax in the Euro banking system? Well, this has been being talked about now for probably two, three, four months. The trial balloons go up in the air. The Euro banking crowd has also talked about potentially negative interest rates. So may be a very simple question, Chris. If you are a Euro citizen and your net worth is caught up in euros and/or you have assets in the Euro banking system, what do you do? You get them out before something like this happens.

 

And really, maybe we can draw the parallels, too, with Japan, where we have seen monetary debasement and true currency debasement in very violent form over the last year since Abe’s been elected. If you are a Japanese citizen and your net worth is caught up in yen, you have lost 20% of your global purchasing power. What do you do? Capital begins to move globally.

 

And I think part of what we are seeing – well, maybe one last piece here, too, is, the current leadership in China is cracking down on corruption. So, I know you know full well, moving capital out of China is illegal. There is only one way to get it out. You have got to have serious capital. So, what is it doing? It is hiding in alternative assets globally. It is coming to what it perceives, for now, the perception of safety that maybe includes the U. S. dollar, and if you are coming to the U. S. dollar, what do you do? Well, you can buy bonds, you can buy stocks, you can buy a business, you can buy real estate, and because safe rate of return has been basically taken away, real estate and perhaps stocks, too, are a repository for that foreign capital.

 

And then, maybe lastly more than not, that global capital being on the move is concentrating in some of these geographic areas that we are seeing. I mean, prices in the New Yorks, prices in the Londons, prices in the San Francisco Bay Areas are just really off the charts here. So this is very much unlike prior cycles where we saw – and I know this sounds a little simplistic and Pollyannaish – but we see younger families getting jobs, making a little bit more money. All of a sudden, they can afford a home; they take on a mortgage purchase application. Maybe they buy your or my house and the food chain moves up. That is not happening this time. So, this is really an investment cycle, as opposed to a true economically-driven housing cycle.

 

And I just ask myself, is the lynch pin in all of this the dividing line of alternative rates of return, meaning interest rates? And as we saw rates pick up really since May of last year, we saw things like mortgage purchase apps and refi apps just drop like a rock. So as we move forward, these big metrics that are the interest rates that are Treasury rates are very, very meaningful. And will they be the catalyst of change, ultimately, in the housing cycle, as opposed to the economy being that catalyst? We are just seeing something very different this time.

The Box Global Capital Is Now In

The minute the Fed started talking about tapering – I mean, if we roll the clock back to 2009 when the Fed started their QE extravaganza, that money absolutely got into U.S. equities and got into U. S. bonds. But as the money kept being printed, it rolled across Planet Earth. It got into the emerging markets, it got into their bonds, their currencies, their equities. It got into global real estate, it got into gold, it got into commodities. The minute the 'taper' keyword was starting to be used by the Fed, all of a sudden, global investors were anticipating the recission of that tidal wave of liquidity. And all of a sudden, these asset classes started to contract to the point where it is really U.S. equities, the very large blue-chip global equities here that continue to perform well. They offer yields higher than safe bonds, for now, and are also the only place we are seeing rate of return.

 

But within this, we are herding capital into a very, very small sector of asset classes. And then lastly, fortunately or unfortunately, when we have the global central bankers and the global politicians doing what they are doing – Europe, we may take 10% of your assets in the European banking system. Europe, we may invoke negative interest rates; you bring a dollar into a bank, we will give you back 99 ½ cents. You cause capital to move, potentially, and to me th
is is a big issue. I think 2013 was driven as much by momentum, and there is no place else to go, and all those other wonderful things, as it was driven by the weight and movement of global capital. Global capital coming out of China, because it was scared of – if we are going to crack down on corruption and you have got corrupt capital, you get it out right away. Japan, the drop in the yen, you have got to move some of your capital to an alternative venue in an alternative currency. Europe, the threat of confiscation, and maybe just the basic question of, What the heck is the euro going to look like in three years? I know if my net worth was caught up in euros, I sure as heck would not be 100% vested in the euro.

 

So, a lot of this, I think, too, is global capital is hiding in an asset class that it considers to be relatively safe, because all these other asset classes have proven to be unsafe. And for right or for wrong, in U.S. and really large blue-chip globals, they have been very, very good stewards of capital over time. Their balance sheets are relatively clean, and if you are looking for safety, then this is just a very simple question. Would you rather lever your family’s balance sheet to one of the global governments, or would you rather lever it to Johnson & Johnson? Which one do you trust more? Which one is going to take better care of your capital over time?

 

So I think there are so many different factors that have been forcing capital into these narrow asset classes that basically are equities and real estate. The key issue to me, going forward, is risk management. For people who sat this one out, for people who have said, Hey, wait a minute; I am looking at the Bob Shiller CAPE ratio here, and we are at levels that we have only seen four times in the last 100 years.You have got to be kidding me. I am not getting into this thing. The only way to participate in these markets, in my mind, is to make sure that you have a plan for managing risk, period. This is not throw your money into the equity market and hope for a great 2014, because every year that the market was up like it was last year was followed by a year that blah, blah, blah. It does not matter. It is about making sure that we manage risk. And we need to draw hard lines underneath certain levels of capital.

 

Very easy to say, but for your listeners, too, I think this comes down to individual families and making an assessment of how much risk they can afford to take. Below that line, they do not allow it to happen. I know it may sound trite:You have every day of your life to get back into the market, but sometimes you do not have a second chance to get out. 

Click the play button below to listen to Chris' interview with Brian Pretti (101m:31s):

Click here to read the full transcript

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_bL7yKXfbhc/story01.htm Tyler Durden

“Hope” And “Change” And This Time It’s Different…again…

 

 

(h/t Sunday Funnies via The Burning Platform blog)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/axUOvrE1pTw/story01.htm Tyler Durden

“Hope” And “Change” And This Time It’s Different…again…

 

 

(h/t Sunday Funnies via The Burning Platform blog)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/axUOvrE1pTw/story01.htm Tyler Durden

Submitted by Alasdair Macleod via GoldMoney.com,

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/AE-j9fAKWqA/story01.htm Tyler Durden

Many analysts today claim that Gold is dead as an investment due to its having fallen from a record high of $1900 per ounce to roughly $1200 per ounce today (a 36% drop).

 

However, this price movement, while dramatic, is quite inline with how commodities trade. Gold has already posted one drop of 28% (in 2008) during its bull market, before more than doubling in price. This latest drop is not much larger.

 

Moreover, a 36% drop in prices is nothing in comparison to what happened during that last great bull market in Gold back in the 1970s. At that time, Gold staged a collapse of nearly 50%. But after this collapse, it began its next leg up, exploding 750% higher from August ’76 to January 1980.

 

With that in mind, I believe the next leg up in Gold could very well be the BIG one. Indeed, based on the US Federal Reserve’s money printing alone Gold should be at $1800 per ounce today.

 

Since the Crash hit in 2008, the price of Gold has been very closely correlated to the Fed’s balance sheet expansion. Put another way, the more money the Fed printed, the higher the price of Gold went.

 

Gold did become overextended relative to the Fed’s balance sheet in 2011 when it entered a bubble with Silver.  However, with the Fed now printing some $85 billion per month, the precious metal is now significantly undervalued relative to the Fed’s balance sheet.

 

Indeed, for Gold to even realign based on the Fed’s actions, it would need to be north of $1,800. That’s a full 30% higher than where it trades today (see below).

 

 

 

Make no mistake, gold is not dead. Not by any means. The day is coming when its price will soar again.

 

For a FREE Special Report on a uniquely profitable inflation hedge, swing by….

http://phoenixcapitalmarketing.com/goldmountain.html

 

Best Regards

Graham Summers

 

 

 

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