by Alex Panameno
With the Dow holding above 10,000, investors are beginning to feel more comfortable.
The question is… Is it real or smoke and mirrors?
Let’s take a look at the facts:
Stocks Are Mathematically Over Bought, now trading at approximately 24 times adjusted earnings. The fair value ratio is 16; a clear indication the enter Dow Index is too high.
Inflation and Deflation, indicators are pointing to a deep recession. We are seeing lower prices, better known as deflation in all the wrong sectors. Such as, investment and saving accounts, luxury goods, company revenues and wages. While inflation is rising in food-based commodities, food prices are rising at an alarming rate.
Neck Deep in Debt: The Federal Reserve, Obama and the Treasury Department are creating more debt, all in the effort to keep the U.S. economy from crashing. The scary point that must be made is, China and other overseas buyers of our debt… Just don’t want it any more. We’re having to buy back our own T-Bonds, that go unsold at every auction.
Real Unemployment continues to rise, we all know government reported data leaves out key sectors, such as people who exhaust their claims, part time workers in search of full time work, independent contractors etc. Unfortunately, the trend is not going to stop; U. S. manufacturers simply can’t compete with china’s cost of manufacturing. Every day more and more companies are forced to outsource to stay competitive in the market place.
Housing Market continues to drop; prices are falling due to excess inventories of foreclosures. Tight credit and restrictions by lenders are squeezing the life out of any recovery. What’s rarely talked about, is the “shadow” inventory; banks are holding on to properties, because releasing them would drown the housing market. Homeowners are now able to stay in their home for over 2 years, without an actual foreclosure and without making a single payment. Auction dates are simply pushed forward.
Failing Banking System, the FDIC website reveals an alarming trend, 2-7 banks fail every week. Mainstream media refuses to report the data.
Americans are suffering, wages are dropping along with quality of life. Personal bankruptcies are 29% higher than last year. Its gets worse… over 36 million American’s, that’s 1 in 8 American’s, now receive food stamps.
Yet, Obama and his wife spend our Tax money on lavish vacations. We’ve even paid for “Bo” (the Obama family dog) to fly in his own private plane to meet the Obama’s in their Maine vacation.
Print more money and create more debt, seems to be the answer to all of our troubles.
With all of the above said, why is the stock market holding above 10,000?
Smoke and Mirrors… It simply won’t hold for too long.
You see, companies’ forecasted “less than positive” earnings. Coincidently, earnings came in better than expected and stocks rallied.
If life was that simple!
Companies were able to squeeze out a profit, because they cut jobs, wages, spending and employee hours.
The recovery and the Dow above 10,000 is not real; it won’t last too long.
We’re walking into Sept, October and November, historically the worst time of the year for the stock market.
It’s not a coincidence that the collapse of 1987, 2008, and 1929 happened the same time every year. The key month being OCTOBER.
Ever heard of the term BLACK OCTOBER?
There’s a lengthy detailed reason, as to why and how this down trend takes place at the same time of the year.
It all has to do with the financial industry’s fiscal year end and the balancing of “books” by money, pension and fund managers.
With all of the “financial reform”,… This year will be the year of all years!
Major financial institutions like J.P. Morgan, Goldman Sachs and Deutsche Bank will have to unwind options they hold, on open stock positions.
It’s going to get really ugly, real fast.
It’s still time to rethink what your holding and look for investment vehicles that profit in economic turmoil.
Not to mention, voice your opinion about “too big to fail” institutions all the handouts/ bailouts Obama gives away.
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