Stock Market and Political Commentary

Lower and Middle Class Suckers

Hey, all you lower and middle class suckers out there...... hear this.

You Obama supporters bought the lie about how only the "rich" were going to pay for everything while you got a free ride, didn't you?

Well if the health care bill comes through as the democrats want it you are going to be forced to pay hefty premiums for health care insurance whether you like it or not.

And if Cap and Trade gets passed, which the democrats are also pushing, look for your utility bills to double in the next few years from extra taxes alone, not even counting inflation.  

I guess the old saying, "There's a sucker born every minute", is true for at least 52% of the US population.

....a fundamental conclusion is becoming evident: The Obama plan is a giant tax increase for much of the American people (not just the rich).

Having spent the entire campaign speaking about “affordable” coverage, it turns out the program is not at all affordable, but a massive new tax on the average uninsured American.

http://thehill.com/opinion/columnists/dick-morris/59853-obamacare-taxes-for-everyone

J. Cogburn

Watch Fools Scoff and Laugh

I've been researching some of the old YouTube videos the last few days on various economic and market predictions that were made over the last few years.

This guy Peter Schiff was exactly right about what was going to occur with our economy, but watch how he was dismissed by others as they laughed at him.  And the funny thing is, no pun intended, but some of these same people are still dismissing him today even though he was exactly right on most everything he said was coming in the 2007 to 2008 timeframe.

I still believe the stock market rally was a bull move in a bear market and that it is nearing the end of its run.  If so, the next leg down will be brutal and devastate 401Ks.

Schiff also believes this storm that began in 2008 is not over so we will see if he is right once again.

Various clips over the last 3 years

 http://www.youtube.com/watch?v=zz_yw0kq3MM&feature=related

Schiff vs Laffer on August 26, 2008 

http://www.youtube.com/watch?v=IU6PamCQ6zw

My recent YouTube video on the market

http://www.youtube.com/watch?v=gfClTH6crB4

J. Cogburn

Cracks in the Dam?

Does the poor demand at recent treasury auctions indicate the dam holding back this flood of deficit spending is developing cracks that will lead to catastrophic failure in the future? 

http://www.cnbc.com/id/32201716

J. Cogburn

Earnings Reality for US Companies

To hear the mainstream news media tell it US companies are earning so much money now they don't know what to do with it all... most of the companies "beat expectations" they say.  Well whoopty doo.

Let's now look at the reality:

The composite second-quarter earnings for companies in the Standard & Poor's 500 Index are expected to drop 31% from a year earlier, compared with a decline of 35% predicted last week. The composite is calculated from actual results as well as estimates for companies that have not yet reported.

Declines are expected in nine of the 10 sectors in the S&P 500 Index from a year earlier. The health-care sector is the only one expecting an increase in earnings, of 2%.

Nine is the highest number of sectors with lower earnings since Thomson Reuters began tracking sector growth rates in 1998.

The biggest decline, 72%, is expected in the materials sector, which includes chemicals and steel, followed by energy, down 66%, and industrials, down 37%.

http://online.wsj.com/article/BT-CO-20090724-714776.html

Let's get real folks.  Even with this stock rally since March most people in the US are still down 30 to 40 percent from 2 years ago on their 401Ks and investments.  Their homes have also lost a tremendous amount of value.  And worst of all, many have lost their job or are afraid they are going to lose their job before this recession ends.

The stimulus money is simply sucking oxygen out of the financial system and is doing nothing to create any type of productive economic activity that leads to actual wealth creation tied to increased goods and services.

Add to that the fact that taxes will be going higher and interest rates will likely do the same as the reality of this 2 trillion in extra government debt in a single year with more on the way starts to take hold down the road.

Most earnings of these companies have been better than expected because companies are cutting costs like crazy in an effort to stay in business.  But their revenues have fallen, not increased.  And who exactly is supposed to do all this spending to create a new boom when half the net worth of most Americans have been wiped out over the last 2 years, the baby boomers are nearing retirement, and now many have lost their job, are afraid of losing their job, or are now working part time instead of full time if they still have a job?

I hope I'm wrong, but I simply do not see the type of conditions that would lead this economy back into any type of strong recovery anytime soon.  Maybe we will bottom out before long, but I'm not even sure of that if this Cap and Trade and/or health care bill is passed.  

The biggest thing we have going for us is that recessions are normally over by now and if the capitalistic structure of our society is not totally demolished by the community organizer then perhaps the American people will find a way to keep us from sliding into a depression.  Most everyone believes that is all off the table now, and I sure hope it is, but to me you still cannot rule it out.  Why?  

Because this massive debt in our society that caused a lot of the problems we saw last year has not been erased.  On the contrary... the government is piling up even more debt at an unprecedented and unsustainable rate.  Somewhere down the line the music will stop and so will the economic merry-go-round.  It may be stopped by higher interest rates, inflation, or a currency collapse.  But unless this fiscal madness is stopped soon I predict our trip to the circus will not have a happy ending.

J. Cogburn

Wall Street's New Bull Market?

A friend writes...

Jim, what are your feelings about this article?

Wall Street's New Bull Market

My response...

See my recent post on this at:
http://stocks-politics.typepad.com/stock_market_and_politica/2009/04/stock-markets-and-pirates.html
 
Here is another way to look at it....
 
a.  1/2 the wealth of most everyones 401K and investment accounts have been wiped out.
 
b.  Anyone who was a homeowner has taken a big loss in their networth.
 
c.  The debt of every family has skyrocketed as measured by their share of the federal debt.
 
d.  Unemployment is still rising, not falling.
 
With this in mind, and the technical aspects of the charts, I don't see any runaway bull market beginning here ala 1982 for example. And keep in mind this market was at 14,110 on the DJIA 18 months ago.  After this big rally it is at around 8,000.
 
Only time will tell as nobody knows for sure what will happen, but I think another big leg down from here is more likely than another big leg up.  However, the current rally could go a bit further before it runs out of steam I think.
 
If you follow the links from my link above you will see that during the 1929 to 1932 period the market had 6 rallies greater than 21%.  But over that period it dropped a total of almost 90% from top to bottom even though there were some nice rallies along the way.
 
So as the blind man says... we shall see!
 
J. Cogburn

--
Making Money Fast is Fun
http://www.QuickProfitStockTips.com/

Stock Markets and Pirates

Many folks are excited about the recent rally in the stock market and believe a new bull market is underway and a new era of prosperity for the American people will begin in the next quarter...and if not then certainly by the end of the year.
 
Only time will tell, but let's just say I have great doubts about the idea that the bear market that began on October 10, 2007 is now over.  Even though enough time has passed for the normal bear market to be over and the market crashed all the way to around 650 on the S&P 500 index a few weeks ago and is now a couple hundred points above that, a 25% rally, I still believe the ultimate low for the S&P 500 index will be below 500.  If accurate this means another leg down which will probably occur later this year.
 
Of course nobody knows for sure, but to see why this might just be another bear market rally, take a look at the commentary I wrote on December 02, 2008 entitled "Stock Rallies During the 1929 Crash" at: http://stocks-politics.typepad.com/stock_market_and_politica/2008/12/stock-rallies-during-the-1929-crash.html
 
As to pirates, we had problems with them a couple of hundred years ago and Thomas Jefferson finally got fed up and sent the marines in to wipe them out in a war that lasted several years.  The pirates were mostly muslims then and they are mostly muslims now.  Surprised?  Since then they've not been taking ships with American flags flying until this week. 
 
Why is this happening now?  See the explanation for all this and the way to prevent it from happening in the future in the commentaries I wrote last year on pirates.
 
08/25/08 Pirates on the High Seas
http://stocks-politics.typepad.com/stock_market_and_politica/2008/10/pirates-on-the.html
 
12/02/08 Pirates Now Attacking Cruise Ships
http://stocks-politics.typepad.com/stock_market_and_politica/2008/12/pirates-now-attacking-cruise-ships.html
 
J. Cogburn
 
 
--
Making Money Fast is Fun
http://www.QuickProfitStockTips.com/

Stock Market Warning and 401K Alert

The market is continuing to draw the ugly chart pattern we warned about on October 3, 2008 (Long Term Stock Market Chart - Ominous Double Top Pattern) and is threatning to start the second downleg which we predict will occur sometime in 2009.  This drop will take the S&P 500 to a low in the 450 to 500 area. For the last 3 months it has been trading in the 800 to 900 range for the most part.

It would not be surprising to see another big selloff this week after the new Treasury Secretary Geithner outlines some more plans.  But the market will have to make a decision in this area soon; is it going to rally for a while or collapse now? 

Sharp rallies occur in bear markets, but make no mistake we are still in a serious bear market.  So even if the market rallies here I don't think it will last long and in the end will go lower still before the end of 2009.

The charts are starting to look like the market may take the next downleg sooner rather than later this year, but only time will tell.  If my theory is right the people who saw their 401Ks go to a 201K in 2008 will see their 201K go to a 101K in 2009. 

Folks it is ugly and with the actions the Obama administration is taking it is going to get uglier.  If you don't believe me just listen to the AIC (Airhead in Charge).  He tells you over and over in his speeches that this is a "crisis" and we must act.

Well in an emergency situation on the highway you must act too, but if you make the wrong move a potential minor fender bender can be turned into cliff diving or some other serious accident. I'm afraid that is what is happening now; he is actively acting to steer the economy off the edge of a cliff...and nobody can stop him.

Notice on the chart below the 20 day moving average is below the 50 day moving average and the 50 is below the 200 day moving average.  In addition the S&P 500 is trading below all of them.

Nobody can ever say for sure what the future holds, but this chart pattern most likely means more pain ahead for investors.

S&P 500 Chart

J. Cogburn

Warren Buffet vs. QP Stock Tips

A friend writes...

 I still think I can still handle my portfolio.
  Mr Buffet will have to take a pay cut.
  BRK $87,020.00 how low can this go?
  This was a $140,000.00+ stock. Scary.

My response.....

Yes he is taking a bath on GE now too.  He got in around $20 and now in less than 6 months it is about half that amount closing today at $10.85.

 

Of course he is a long term investor.  Still I believe the odds favor another leg down in this market sometime this year.  If so his shares will go lower still. 

 

When the market is in a severe downtrend few stocks escape the tide.  You have to be very nimble to beat it.

 

During the last 2 years my record is about 159 winners, 40 losers, and around 30 trades still open.  Some of those were beat up pretty bad (should have cut losses earlier) during the collapse last fall, but eventually I think probably 10 or 12 of those will become winners and at some point I will take the loss on the others.

 

So that would give me a record of 170 winners and 60 losers during this very difficult period.  In fact, January of this year was the worst January in the history of the stock market here in the US with about an 8% decline for the month.  Yet QP Stock Tips offered subscribers a chance to do well by following the tips issued.

 

See the details at:

 

http://www.quickprofitstocktips.com/closed_tips.php

 

J. Cogburn

Profit of 16.03% - Sell This Stock Now?

Based on technicals, fundmentals, market conditions, and other opportunities in the stock market we think it might be wise to take profit in the stock shown below now and to look for the next trade in the coming days and weeks ahead. 

See the details of this trade.

Gain of 8.7% in 11 Days - Sell Stock Now?

This stock has gained 8.7% since we released a BUY tip 11 days ago.

See the stock symbol and details of this trade at the Quick Profit Stock Tips website.