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Markets

Markets

[NOTE; This information does not constitute investment advice whatsoever. It is intended for education and entertainment only. Investment decisions should be made with the personalized attention of a professional] Stock markets follow patterns because people in groups follow patterns. One very reliable such pattern is that during major market corrections, the indexes tend to drop and then correct (bounce back) 50% before they resume the downward trend. That’s where we are now. Note the bounce is almost exactly half the distance back to the highs . The market dropped and just completed a 50% retracement or bounce. If a larger correction is coming, this would be the time to step aside. But you don’t get to know in advance. Today’s action is pretty weak and

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Markets

[NOTE: The following does NOT constitute investment advice of any kind. It is for education or entertainment only]  ‘There are known knowns. There are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know.” Donald Rumsfeld 2002                  That the stock market fell does not surprise me: I have wondered how the rally could continue before the long list of threats to the global economy would reduce share prices. But I was surprised that it happened so abruptly.  I should not be surprised at that, however, because markets generally fall much faster than they rise: investors often “get in” in increments and “get out” in a cataclysm.  And while stocks only

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Markets

[Disclaimer: The chart and the following content do not constitute investment advice of any kind. This material  is for educational or entertainment purposes only. ]   (SPX Chart from www.bigcharts.com retrieved Nov.20, 2018)   THE OCTOBER WIND BLEW all the leaves off the Wisconsin trees last month and did it over the course of only a few very windy days. Stock prices drifted ten percent lower, too, in recent weeks and everyone wants to know what chill wind sent them lower. I can explain the “why” because there are only two  reasons stocks fall. The details are harder to derive. I have never been able to talk about the investing environment without providing some background. No forecasters (I do not act as a forecaster here) worth

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Markets

[Author’s Note: This is not investment advice but merely educational content. Consult a professional for investment policy recommendations] DURING the whole of a dull, dark, and soundless day in the autumn of the year, when the clouds hung oppressively low in the heavens, I had been passing alone, on horseback, through a singularly dreary tract of country; and at length found myself, as the shades of the evening drew on, within view of the melancholy House of Usher. . . Perhaps the eye of a scrutinising observer might have discovered a barely perceptible fissure, which, extending from the roof of the building in front, made its way down the wall in a zigzag direction, until it became lost in the sullen waters of the tarn.                                                                                    

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Markets

[Author’s Note: This information is meant to be entertaining and educational and does not represent a recommendation to make or change investments of any kind.] The Standard & Poor’s 500 index (a.k.a ‘The Market’) may be on the verge of a precipitous decline of 10% or more – that according to technical analysis which in layman’s terms means  “looking at the chart.” In the most recent chart from big charts.com, you can see the support level at just under 2600. If it should break down through that level the implication is that it would drop at least 10% from here. – this is because the line acts as a fulcrum and the first stop would be a level below the line equal to the distance from

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Markets

I was a financial professional during two prior stock-market bubbles, the ones that ended in 2000 and 2008 respectively. This market acts and looks (on a chart) very much like those bubbles.  The key is the exponential curve common to each of them. As you can see with the example below, the slope gets steeper until it appears to be in “vertical climb,” going almost straight up. That’s the phase we are in now–the vertical climb phase.   In the vertical climb phase–EVERONE is buying: the last retail investors joined in, foreigners are strong marginal buyers, and short-sellers are buying to cover their shorts.   But  as stocks go higher in price, it takes more money to accelerate prices higher. Gravity always wins. The way it

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Markets

            Well, it’s only fair. After all, Ben Bernanke got to help blow the biggest-ever bubble (real estate bubble), and of course Alan Greenspan could rightfully be called the Lawrence Welk of Central Banking because he was a bubble-blowing machine (technology stock bubble, LBO, commodities, real estate). Now it’s Janet Yellen’s turn. We understand that she might already have “bubble envy,” but just what kind of bubble she will be known for is not yet clear. She has a good start on several potential good ones, though. On her watch, we have 1) a bond bubble that features the highest prices for government bonds in history (which implies that interest rates are at record lows), and she has 2) a

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Most people want to talk about Brexit as a rogue event—like the appearance of a comet or a solar eclipse. It should be viewed, though, as an important point on a continuum that marks a transition point in a decades-long global swing toward economic and political integration. Since Reagan and Thatcher and the collapse of communism, we have seen nearly thirty years of increasingly free-market policies with regard to trade, regulation and taxes—this on a global scale. The effects have been to promote economic integration and the financialization of the world.  The financialization is important in that it promotes debt-fueled feudalism—again, on an individual and a national level: the Greeks are an example of how debt leaves a country in servitude to the paymasters; the

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In the Economics and Finance classes I teach, the most stimulating class session covers the topic of money. Students express a curious confusion when I introduce a specific riddle, a koan for them to mediate upon. I ask them to explain the statement: “The prices of food, oil, gold, and property often don’t rise at all.” [pullquote align=”full” cite=”” link=”” color=”” class=”” size=””]”One year, for example, the price of gold is 1200 dollars per ounce,” I suggest. “And one year later gold is 1300 dollars per ounce.  If I tell you that gold did not go up, what else could possibly have happened?”[/pullquote] They wonder if I am joking and prepare to rebut my assertion with evidence of consistent increases in the prices of just about

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Markets

About four months ago, it became clear that very low oil prices and much cheaper gasoline were not a good thing for the stock market. Now, the world’s largest commodity and the global indexes are trading in a near lock-step with correlations over 90%. This is close to cats and dogs living together—until you look at it a little closer; then it only seems slightly bizarre. [pullquote align=”full” cite=”” link=”” color=”” class=”” size=””]The most important concept is that of oil as collateral. Borrowing (and lending) for energy has exploded in the last couple decades[/pullquote] For most individuals and many economists, a higher oil price appears as a tax on the consumer because transportation, heating and energy-sensitive food costs represent a meaningful part of the monthly

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