Posted on 05/08/2009 6:33:17 PM PDT by sickoflibs
I'm still saying to expect a bond dislocation in the short term (3-4 months)
Stock indexes do very poorly vs inflation. There are always individual companies/industries that may thrive in any kind of conditions, but broad-based indexes like Dow Jones & S&P500 do not react well to inflation. See this paper:
Inflation Hedging for the Short-Term & Long-Term
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1394810
When there is a sudden outburst of prolonged inflation:
* Commodities outperform all other investment classes for 6-18 months, all other asset classes lose value or are flat.
* During the 2-5 year range (after the beginning of an inflation shock) commodity prices start to level off or decline after a big run-up, long-term & short-term bonds start doing better due to high interst rates. But stocks tend to still stay flat.
* After 5 years, stocks, bonds and short-term bonds (cash) start to perform better & regain their historical risk-return tradeoff.
Congress had the key last. Ask them what happened to the money.
What lockbox?... If there is one its a shoebox full of IOUs signed by congress.
Thank you very much for the tip and info. :-)
Yup! Pay no attention to that man behind the curtain Dorothy.
Note what is worse - theu keep tagging and as national park or grabbing it as uncle sam’s. A lot of it has minerals and energy (oil, coal, shale oil, etc). Clinton locked up the clean coal in Utah for the Riaddy Group because they have huge amounst of clean coal.
We need 10th Amendment.
One or more people bashed me about bitching about RINOs like Juan McCain. Cjarlie Crist is another. The FL House passed a bill for offshore drilling between 3 to 10 miles. I guess the state controls that. Crist said he would no support it and veto it - another Saudi bought & paid for stooge.
Perfectly timed for the 2010 and 2012 elections. We may be watching the last gasps of liberalism in the USA. Once the peasant class figures out how their quality of life has eroded to support government workers, unions and bums, the Democrats will not hold power for decades (or so I hope)...
That's the whole Quantum Easing thing. The Fed announced this spring that it would step up open market purchases to assure the US Treasury that it could sell all of the bonds it needed to fund the $4 trillion in deficit spending. In effect, the Fed is manipulating the interest rate market by artificially suppressing the long term rates by creating bogus demand for these bonds. Without Fed purchases, the interest rates would be significantly higher now than they currently are today. Seems like market manipulation to me, as this is mostly done in secret. Someone should wake up the SEC Enforcement Division!
Schiff is losing his marbles; the market is hanging on spider webs, and when they break there’ll be no warning. (actually the warning has already sounded)
This worked in the late 1970s, sort of... The trick was to find companies with assets that would benefit from the hyperinflation. Oil, coal, minerals. These all increase in value during inflation so the common stock acts as an inflation hedge. I suppose stocks could be rising these days as cash moves to equities. But, beware. Picking stocks in companies that are hurt by inflation will cost you plenty in capital losses. You need to chose wisely if you want the stock market to protect you from inflation. I BOT Alcoa recently because they control lots of Aluminum and the emerging world, according to those Coca Cola commercials from the 1970s, will be drinking lots of pop in cans! I'll be rich!!!!!!!!!!!
The Euro is in far worse shape than the Dollar.
As an active trader, I suggest that given the extreme volatility in the markets today, and the worsening economic conditions, it is damn risky to play long term “buy and hold” at this time. Time and time again, I’ve seen stocks get hammered overnight because some talking head idiot ran off at the mouth in front of a camera. At this point, I rarely hold overnight, preferring to be in cash at days end. No one knows when the bottom will drop out of this current bear rally — if you’re holding when (not if) the freefall happens, you’re dead meat. If trading’s not your thing, than physical gold and maybe silver is where it’s at for the time being. Look at the gold charts over the last 5 years and you’ll see why.
Trouble is getting delivery on physical metal for anything near London spot -- so much downward manipulation out there that, last fall, people like Blanchard were getting $100 over spot for timely deliveries of gold. The pecking order is physical (not quoted), then spot, then ETF "paper gold" (badly manipulated by the Fed, don't touch it).
Another possibility is closed-ends like CEF (Central Fund of Canada), but closed-end managers like to dilute you with "rights offerings". You have to step up and participate 100% in the offering, in order to avoid getting diluted. Last summer CEF suddenly announced a huge rights offering which would be done in tranches. The shares dropped by a third overnight. It's management's way of squeezing shareholders. Robert Scott used to follow closed-ends, wrote a book and a newsletter, but eventually the endless rounds of rights offerings spoiled investor interest in the funds, and he went off and started doing discount brokering.
Mining shares got crushed last July when Bernanke and Hank the Shank walked into the commodities space at the President's behest and cut the elevator cable. (They did a "long squeeze" similar to what the Fed and CFTC did on the Hunt brothers back in 1980, to crush commodities prices and punish the dollar bears.) That started a deluge of margin calls that the hedgies had to meet, and they wound up throwing even their best mining shares out the window to meet their calls .... then after Lehman Brothers finally went broke (partly as a result of the squeeze), everybody got an extra dose, and most mining shares and mutual funds ended up down 70% from the previous May -- an absolute disaster. Punishment for disobeying Ben and Hank's preference that everyone stay in dollars as future bagholders. And the President's preference for lower gasoline prices.
They may be corrupt and evil, but stupid they are not.
‘I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.' - Thomas Jefferson
What warning is that? Higher energy prices?
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