Financial topics

[John]

> Xers and Millies do not want boomers to carry out mass
> suicide. They Merely want boomers leaders to share power with the
> young, pave the way for the passing of the torch to young people
> and give up the usual boomer policy of "full-steam ahead" whenever
> the proverbial Titanic Sees an Iceberg and instead try to go
> around the "Icebergs".

What about all the benefits we suck up? You can't eat your cake and
have it too.

[John]

> The futures didn't gap down tonight and go, so I will likely be
> standing aside for the next few weeks or possibly even months and
> go back to my collapse preparation plan. I'll be getting ready to
> produce my first post-collapse product (but it should also be
> appropriate as a pre-collapse product).

The Dow is currently down 640 points.

As I wrote last week, IF we're about to have
a panic in the next two or three weeks,
THEN this is exactly the pattern that I
would expect, following the 1929 pattern.

A lot will depend on the earnings reports coming out in the next two
weeks.

[Higgenbotham]

> The futures didn't gap down tonight and go, so I will likely be
> standing aside for the next few weeks or possibly even months and
> go back to my collapse preparation plan. I'll be getting ready to
> produce my first post-collapse product (but it should also be
> appropriate as a pre-collapse product).

The Dow is currently down 640 points.

As I wrote last week, IF we're about to have
a panic in the next two or three weeks,
THEN this is exactly the pattern that I
would expect, following the 1929 pattern.

A lot will depend on the earnings reports coming out in the next two
weeks.

I wired all the money out of my futures account this morning except for a token amount ($4,600). And almost all the rest of my money is in short term t-bills. So I have very little to no ability to take an "oh gosh I might have missed the crash" trade.

I did that on purpose after a cold, hard look this weekend. I expect any move under the key levels to be a false move consistent with "Door Number 2".

"Door Number 2"

2. The market is manipulated. The "gnomes" employed by the Fed make sure the market falls through these key levels so as to cause a mini panic, then step in (together with their fellow "Deep State" operatives like Goldman Sachs) to buy panicked investors holdings and quickly drive the market to a new all time high, making a tidy profit for the US government and the big banks and investment houses.

[John]

> The Dow is currently down 640 points.

> As I wrote last week, IF we're about to
> have a panic in the next two or three weeks,
> THEN this is exactly the pattern that I
> would expect, following the 1929 pattern.

> A lot will depend on the earnings reports coming out in the next
> two weeks.

> S&P 500 companies are expected to post an 18 percent increase in
> earnings for fiscal 2018, according to analysts surveyed by
> FactSet. That would mark its strongest annual earnings growth
> since 2010.

> "If earnings hit these numbers we expect they can as the economy
> continues to really be on firm footing, we think the fact that
> we're flat for the year, down slightly here, this could really be
> a buying opportunity and we'll have significant, potentially
> double-digit, gains before the year is over," said Detrick.

> The first-quarter earnings season unofficially kicks off when the
> major banks report on April 13.

> https://www.cnbc.com/2018/03/30/stocks- ... trick.html

[Higgenbotham]

Over the past 3 months, I've noticed a lot of companies have reported stellar earnings, only to get beat up after a little bit of euphoria post report. I'm not saying that will continue to be the case. I think the question is at what point, if earnings remain stellar, do investors stop beating up companies that issue good earnings reports.

[John]

> Over the past 3 months, I've noticed a lot of companies have
> reported stellar earnings, only to get beat up after a little bit
> of euphoria post report. I'm not saying that will continue to be
> the case. I think the question is at what point, if earnings
> remain stellar, do investors stop beating up companies that issue
> good earnings reports.

If stock shares are overpriced by 200%, and then earnings are stellar
so that they're only overpriced by 198%, then they're still
astronomically priced. Analysts on CNBC this afternoon have been
saying that investors are now questioning whether they should continue
to buy stocks with such high P/E ratios.

The S&P 500 P/E ratio on Friday was 24.51.

http://www.wsj.com/mdc/public/page/2_30 ... dc_h_usshl

Since the historical average is 14, that means that stocks were
overpriced by (24.51/14*100%)=175%.

If earnings are good in the next month, then the P/E ratio might
fall to, say, 20 -- which would mean that stocks would be
overpriced by "only" (20/14*100%)=142%.

That's still astronomically overpriced. This doesn't make any
rational sense, unless you view the stock market as a Ponzi scheme.

So the question is NOT "When will stocks be fairly priced?", because
that's never going to happen.

The question is: "What event will trigger a panic that will lead to a
crash?" This is not a question about rational thinking, because there
is no rational thinking. It's a question about sticking a balloon
with a pin. And we still don't know what triggered the 1929 panic.

By the way, the P/E ratio was around 20 when the October 1929 panic
occurred. It had come up from 17 earlier in the year, which suggests
that Q3 1929 earnings reports were not as good as expected. That
might have been the thing that triggered the panic.

[Higgenbotham]

I'm not going to bet real money that the Ponzi stops here (at, in my opinion, infinite overvaluation because the stock market is worth exactly zero) because the authorities will, in my opinion, have the ability to manipulate the Ponzi higher for awhile longer, having gotten through an extremely dangerous period quite intact. It's often said that valuation has nothing to do with where a Ponzi stops; that it's all about sentiment (Bitcoin has always been worth exactly zero). Even Buffett has a variation of that theme, saying short term the market is a voting machine and long term it's a weighing machine. I don't think it's that simple; valuation is always a factor but it ebbs and flows. And, as used here, what valuation is would have to be parsed in detail for what I'm saying to make any sense.

But let me go back to something I said recently. Studies show 1 person in 160 (roughly) can beat the stock market averages. Buffett said last year he has met 10 people in his entire career that could do so. I'm not the 1 in 160 who can.

[John]

> I'm not going to bet real money that the Ponzi stops here (at, in
> my opinion, infinite overvaluation because the stock market is
> worth exactly zero) because the authorities will, in my opinion,
> have the ability to manipulate the Ponzi higher for awhile longer,
> having gotten through an extremely dangerous period quite intact.
> It's often said that valuation has nothing to do with where a
> Ponzi stops; that it's all about sentiment (Bitcoin has always
> been worth exactly zero). Even Buffett has a variation of that
> theme, saying short term the market is a voting machine and long
> term it's a weighing machine. I don't think it's that simple;
> valuation is always a factor but it ebbs and flows. And, as used
> here, what valuation is would have to be parsed in detail for what
> I'm saying make any sense.

> But let me go back to something I said recently. Studies show 1
> person in 160 (roughly) can beat the stock market averages.
> Buffett said last year he has met 10 people in his entire career
> that could do so. I'm not the 1 in 160 who can.

Well, just to be clear, I'm not advocating that you bet real money on
anything, if I gave that impression. I'm just "thinking out loud"
about what I think might happen in the next few weeks, and I do
believe that this is a particularly dangerous time -- although I've
been wrong about that several times in the past. Fortunately, I never
bet real money on any of these predictions. Sooner or later I'll be
right, if only by luck.

[Higgenbotham]

My themes are pretty consistent. One of them is that when this bubble pops, it has to collapse faster and harder than any bubble in history because it's the biggest bubble in history. I stand by that 100%, so if it collapses from here, I was totally wrong even though I was short from both the high and the secondary high.

To clarify that a bit as to why that is, everything is in a bubble - stocks, bonds, even the dollar and gold. When this bubble collapses, there will be nothing to slow the impact of the collapse to create any ebb and flow. At the same time stocks are collapsing, bonds will be too, so as bond yields go higher, that will make stocks even more overvalued and cause them to collapse faster.

[Higgenbotham]

Well, just to be clear, I'm not advocating that you bet real money on
anything, if I gave that impression.

What I mean by that is when I pop up and say I'm short that is a lot more meaningful than being out of the market and giving an opinion. If I'm out of the market, particularly if I've put myself in a position that I can't be in the market (which I have), that means I consider my opinions or maybe more accurately, impulses, to be potentially dangerous to myself and my future survival.