Month: June 2012

Plus, your FREE opportunity to test-drive our intraday S&P forecasts for 1 full week — starting now

By Elliott Wave International

Here’s what Elliott wave analysis is all about: You study charts to find non-overlapping 5-wave moves (trend-defining) from overlapping 3-wave ones (corrective, countertrend).

With that in mind, please take a look at this chart of the S&P 500, which our U.S. Intraday Stocks Specialty Service (FreeWeek is on now) posted for subscribers at 9:37 AM today (June 14):

Immediately, you can see that the S&P 500 has been moving sideways in a choppy, overlapping manner. That’s the definition of a correction — i.e., that is NOT the trend. The trend, as the U.S. Intraday Stocks Specialty Service editor Tom Prindaville said in the morning market overview, was higher — at least in the short-term:

…sideways-to-up over the very near term will be expected. Simply put, overall higher near-term remains the intraday call — to complete a corrective second wave.

And here’s a chart of the S&P 500 at the close of the market that the Service posted at 3:34 PM on the same day:

To make this bullish forecast, the Service editor Tom Prindaville was simply following the Elliott wave model of market progression. The model called for a completion of the developing wave 2 — in this case, “higher near-term.”

Market corrections — the sideways, choppy moves you see in both charts above — are notoriously hard to forecast. And not every Elliott wave forecast works out. But you do get a real, practical roadmap of the expected market action.

WANT TO TRY ELLIOTT WAVE FORECASTS — FREE? You can — now thru 12 noon on June 21 Try our U.S. Intraday Stocks Specialty Service forecasts of the S&P 500, DJIA and NASDAQ free for a week. No strings attached, no credit card required. Get the details and instant, FREE online access now >>

Article by Investment U

Now the average, intelligent investor is probably about as familiar with niche retailer Zumiez, Inc. (Nasdaq: ZUMZ) as they are with the hoity toity Hermes Birkin…

Clint Eastwood’s daughter, Francesca Eastwood, recently hit the headlines when she took to Twitter and Facebook with an unusual “artistic” ploy. Accompanied by her photographer boyfriend, the reality TV star took a $100,000 Hermes Birkin handbag and completely trashed it.

Photographs are now circulating the web of Ms. Eastwood biting the bag, right before taking a chainsaw to the extremely expensive accessory and ultimately setting it on fire. All in the name of art. And publicity.

Fortunately, we here at Investment U have a much better way to combine money and fashion. And it has absolutely nothing to do with blowing $100,000 in the space of a minute.

Quite the opposite, actually.

Now the average, intelligent investor is probably about as familiar with niche retailer Zumiez, Inc. (Nasdaq: ZUMZ) as they are with the hoity toity Hermes Birkin, which Eastwood apparently thought so little of. And any average, intelligent investor who is might wonder how a company with as grungy a face as Zumiez could make enough money to stay afloat – much less reap any decent investment rewards.

But judging by Zumiez’s most recent quarterly results, grungy, head-scratching and downright dangerous can be an extremely profitable combination when managed properly.

“Hang Ten” With Zumiez and Make Some “Sick” Profits Along the Way

If Zumiez sounds like a crazy name, it’s largely because it appeals to an oftentimes irrational base: Adolescents who want to express themselves as individuals… just like all the rest of their peers.

A leading specialty retailer, it sells just about everything a teenager could want towards achieving that goal, from apparel to footwear to accessories. According to its company profile, Zumiez caters “to young men and women between the ages of 12 and 24 who seek popular brands representing a lifestyle centered on activities that include skateboarding, surfing, snowboarding, BMX and motocross.”

Or, translated into teenage speak: It attracts the skater-punk/extreme-sports crowd.

That faction of adolescent expression seems to be doing quite well for itself these days, even in the middle of a tough economy. Either that or mommy and daddy are doing quite well and don’t mind throwing some serious cash at their kids.

One way or the other though, Zumiez concluded an excellent first quarter on April 28.

Total net sales during the 13-week period increased 22.7% over the same time in 2011, jumping from $105.9 million to $129.9 million. But that’s nothing compared to the 140% leap its net income made over the same time…

For its first quarter in 2011, Zumiez recorded a net income of $1.9 million. This year, that number is up to $4.5 million.

With that said, CEO Rich Brooks clearly had every right to brag that he is “pleased to start the year off wish such strong performance.” Going forward, he says his “teams are energized and focused on carrying our current momentum into summer and position the company for a successful back half of the year.”

Zumiez Looks “Clean” Going Forward

There’s a reason that Zumiez has seen such positive growth over time, raking in a gross profit of $133 million from 2009 to 2010, over $167 million the following fiscal year, and $201-plus million this past cycle. Net income has, incidentally, seen similarly impressive advances.

So what’s the key to success?

Zumiez sets itself apart from the competition by not only selling what teenagers want, but offering an atmosphere that makes them literally feel at home.

Most of its 455 stores across the U.S. and Canada are equipped with couches and video game stations meant to lure youngsters in and keep them there, interacting with the staff, their friends and – obviously – the merchandise. And they’re easy to find considering the prime mall locations Zumiez actively seeks out: Right next to the food courts, movie theaters, and entertainment shops.

Set up so specifically, it’s difficult for the company’s targeted demographic not to take notice… exactly as planned.

That’s why it seems extremely probable that Zumiez has a lot more to offer in the future… Unlike Francesca Eastwood’s $100,000 bag.

Good Investing,

Jeannette Di Louie

Article by Investment U

Article by Investment U

A little-discussed metal called tungsten is set to become one of the most sought-after commodities on Wall Street.

At Investment U, we’re not in the business of showing people how to make a quick buck.

Actually, I’d say we’re on the opposite end of the spectrum, as we relentlessly advise growing and protecting your wealth at a steady and safe rate. (For more see here, here, here, here and here.)

But that doesn’t mean you shouldn’t take advantage of a hot opportunity when you see one.

In fact, a little-discussed metal called tungsten is set to become one of the most sought-after commodities on Wall Street.

And a handful of junior mining stocks are poised to skyrocket as a result. This is because, as demand for tungsten is ramping higher around the world, supplies are dwindling even faster.

Warren Buffet is Leading the Charge

Now before we go any further, you should fully understand that junior mining stocks are risky investments.

Legendary investor Doug Casey calls them “the most volatile stocks on earth.”

But where there’s risk, there’s also potential reward. And junior miners can return some of the biggest profits known to man.

For example, since 2009, Detour Gold Corporation (TSX: DGC) has soared as much as 1,025%. And some companies, like ATAC Resources (TSX: ATC), have exploded well over 10,000% in the past.

Junior miners that mine and process tungsten may very well find themselves in a similar situation today.

And Warren Buffett agrees.

In February, Woulfe Mining (TSX: WOF) inked a deal with International Metalworking Companies, a Berkshire Hathaway (NYSE: BRK-A) owned holding company for metalworking products.

For a total of about $80 million, IMC agreed to buy a 25% stake in Woulfe’s Sandong mining project in South Korea, which was once the biggest tungsten-producing mine worldwide. By early 2013, once again, the mine is set to become the biggest producer when it reopens.

It’s estimated Sandong will account for 7% to 10% of total tungsten production at that time.

Buffett is seeing an enormous opportunity here.

As Woulfe Mining’s Nick Smith told Tungsten Investing News, “Without tungsten, Western manufacturing comes to an end.”

Today the metal is used in anything from light bulbs, to drill bits for oil and gas exploration, to solar panels, to smartphones, tablets and much more.

And what makes it unique is that it’s practically immune from corrosion and can withstand unbelievably high temperatures.

Nick Smith adds, “You are not working with steel without tungsten. There’s no global mining unless you have tungsten-tipped drills.”

In other words, even though supply of tungsten is tightening worldwide, there’s no material that can currently replace demand for it no matter how high prices go.

China currently hoards 80% of the world’s tungsten supply and expects to use all of it to support its own manufacturing industry.

This leaves little options for any company that’s dependent on tungsten for their own goods and services.

How to Play the Trend

While there’s really no “safe” pure play on tungsten right now, there are a number of junior mining stocks that could skyrocket as supplies continue constricting.

Among the top five I’m interested in are Playfair Mining (TSX: PLV), Malaga Inc. (TSX: MLG), Woulfe Mining (TSX: WOF), Happy Creek Minerals (TSX: HPY), and Largo Resources (TSX: LGV).

Just keep in mind, these companies are very small and subject to big price swings. So be sure to give your trailing stops enough room to handle a bumpy, yet potentially lucrative, ride.

Good Investing,

Mike Kapsch

Article by Investment U

Article by Investment U

The headlines these days are filled with gloom…

The economy is sputtering. Consumer confidence is down. Unemployment is up. The Eurozone is coming apart at the seams. To top it off, federal, state and local government spending are sending us down the road to ruin. Who can buy stocks in this type of environment?

You can. And you’d be unwise to let anyone counsel you otherwise, even if stocks go lower before they go higher.

Here’s why…

Owning great companies is a smart move. (Notice I said great companies not small, unproven, or unprofitable companies.)

Most wealthy Americans achieved their affluence not by inheritance or real estate speculation but by starting and owning profitable businesses. And these folks can be thankful they weren’t deterred at the outset by naysayers and know-it-alls who tried to convince them the economy wasn’t right or their timing was wrong or whatever.

Of course, most of us don’t have the time, the investment capital, or the experience necessary to found and run a successful business. But we can buy shares of the greatest businesses in the world through the stock market.

And it’s easy. A click of the mouse – and a seven-dollar commission – and you’re in.

Another click – and another seven bucks – and you’re out. (Compare that to your typical real estate closing.) And if you buy publicly traded companies, as opposed to running your own private one, you don’t have to apply for loans, hire employees, grapple with an avalanche of federal regulations, pay expensive accountants and attorneys, or even show up for work. What’s not to like?

Of course, businesses can experience tough times. But they are adaptable. When sales take a downturn, they’ll cut expenses to the bone and lay off unnecessary personnel. They’ll refinance their debt at lower rates. They’ll tighten up the ship any and every way they can to make the business as lean as possible. And then when even slightly higher sales start to materialize, it will translate into a big jump in earnings. Those who are still trying to understand how the companies that make up the S&P 500 reported all-time record profits in each of the last 11 quarters might want to read this paragraph again.

Once you start thinking in terms of owning businesses – as opposed to predicting elections, economies, interest rates, currencies, commodities and equity markets – it’s clear how you should grow and protect your wealth. In fact, it’s more than a little ironic that the very people I hear telling investors not to buy stocks are – overwhelmingly – business owners themselves. Their business is advising other people not to buy businesses.

Seems odd, but I guess there’s good money in it.

Of course, even if you follow the basic principles of stock market investment – sticking to quality, diversifying widely and buying at reasonable prices – you can still experience losses. That’s normal. It shouldn’t come as a surprise and it shouldn’t deter you from investing in stocks.

Indeed, there are three ironclad strategies that every investor should follow to maximize his stock market profits while keeping any losses strictly limited. And those are exactly the subject of Monday’s column…

Good Investing,

Alexander Green

Editor’s Note: One of Alex’s favorite shortcuts to finding great businesses is finding CEOs and directors who are investing their own money back into the company in the form of stock purchases. And that’s exactly what’s been happening with today’s Investment U Plus pick.

And since we first mentioned the company back on May 14, its stock has steadily ticked higher – not to mention it sports a robust 8% yield.  For more information on how you can receive this and our other daily recommendations along with your Investment U issues for pennies a day, click here.

Article by Investment U

Article by Investment U

Gather some patience and begin following the legendary Templeton strategy full circle back to Japan by adding some DXJ and SCJ to your global portfolio.

Sir John Templeton’s strategy was simple and forward-looking. He searched for deep value worldwide, particularly in markets that were greatly out of favor.

“It’s not easy,” Templeton stated, “but if you’re going to buy the best bargains, look in more than one industry, and look in more than one nation.”

Templeton was way ahead of his time. For example, he plunged into the Japanese market just as it was emerging from the rubble of World War II. He bought just about every share he could get his hands on, and at one point 60% of his flagship fund was in Japanese equities. He did the same thing in Peru in the early 1980s, buying across the board when the country was going through political upheaval.

Though simple, Templeton’s strategy requires two attributes in short supply amongst investors: nerve and patience.

You need a bit of nerve to take action at a time when a company, industry, or country is despised. You also need patience to search for bargains, and then wait for markets to recognize the value and growth prospects.

Where would Templeton be looking right now? He might well have gone full circle back to Japan.

During the last five years, Merrill Lynch reports that global investors have underweighted Japan to a significant degree. Reflecting this skepticism, the Japanese Nikkei 225 stock Index has lagged world markets by more than a third during this period with a cumulative return of negative 5%.

Apathy by both Japanese and international investors, weakness in key European and Chinese export markets, and an overvalued yen have combined to push Japan’s stock market to rock bottom prices.

About 75% of the stocks in its broad TOPIX Index are now trading below break up (book) value and, until last week, the market was down eight weeks in a row.

This is despite signs that Japan’s economy is showing some vitality. Corporate profits are expected to be up 60% in 2012, and GDP growth in the first quarter topped 4%.

And in the first five months of 2012 alone, according to Dealogic, Japanese companies were on the march, spending $35.4 billion on foreign acquisitions. Last year, a record $83.7 billion in deals was inked, including $25 billion on Chinese companies. A lot of these deals were significant but quietly executed. Earlier this month, Marubeni’s $5.6-billion bid for Gavilon, a large U.S. grain trading company, was typical.

This flurry of deals is being fueled by a super strong yen that has put foreign companies on sale. But this window is closing, since the Japanese yen is significantly overvalued. And a weaker yen is the catalyst to drive stock prices higher in the face of Japan’s well-known debt and demographic headwinds.

Any weakening of its currency will spark a rally in Japan’s export-heavy market. But a weaker yen will also unfortunately cut into the performance of just about every Japanese ETF with one exception. The WisdomTree Japan Hedged ETF (NYSE: DXJ) takes currency completely out of the equation.

Next, let’s turn to Japanese small-cap stocks, which are even cheaper than Japan’s leading multinationals. Japanese small caps are trading at only one third of their total sales compared to 1.2 times sales for Nasdaq. The dividend yield for Japanese small caps is also 2.6%, while it’s less than 1% for Nasdaq.

What an opportunity.

Smaller Japanese stocks also have scant research coverage, cash-rich balance sheets and are growing fast by targeting Asian markets outside of Japan.

Unfortunately, very view of these small caps trade on U.S. exchanges, so your best bet is the Small-Cap Japan ETF (NYSE: SCJ).

I understand that making a lot of money in a short time is the goal of many investors but history makes clear that this attitude is unlikely to build wealth. Gather some patience and begin following the legendary Templeton strategy full circle back to Japan by adding some DXJ and SCJ to your global portfolio.

Good Investing,

Carl Delfeld

Article by Investment U

By Central Bank News

By Central Bank News

By Central Bank News

By MoneyMorning.com.au

Allen Stanford is a bad man.

A US court this week sentenced him to 110 years in prison for running a USD$7 billion Ponzi scheme.

Just how bad is he?

According to the US District Court, Southern District of Texas, Houston Division, it recommended an even heavier sentence:

‘Robert Allen Stanford is a ruthless predator responsible for one of the most egregious frauds in history, and he should be sentenced to the statutory maximum sentence of 230 years’ imprisonment.’

But what did he do that was so bad?

We’ll get to that in a moment. Before we do, in yesterday’s Money Morning we missed out a key part of a quote that renders the quote meaningless. The missing piece was in a quote from Bank of England governor, Mervyn King’s speech in 2007.

To read the full article again, including the missing section, click here…

Back to Stanford. Where do we start…? Put simply, Stanford operated a bank that, like most banks, sought to attract savers. Savers deposited cash and were told they would get a 3-4% return on their money.

This return was higher than other banks ‘supposedly because of low taxes and the bank’s low overhead.’

According to court files, Stanford claimed his bank ‘invested in highly liquid, safe, conservative stocks, bonds and precious metals; made no loans unless they were secured by an equal amount in cash, and therefore incurred no credit risk.’

But what actually happened to investor money is completely different. And it led the US District Court to call him a ‘ruthless predator’.

According to the court files…

‘Prior to 1990, Stanford began diverting depositor funds into various speculative real estate ventures he personally owned. By late 1990, at least half the bank’s reported assets did not exist…

‘By February 2009, Stanford had sunk over $2 billion in depositor funds into various failing businesses he owned, including, among other things: restaurants, regional airlines, a newspaper, and a host of companies which were not even actual businesses but which existed solely to hold title for tax purposes to Standford’s fleet of jets and boats.’

The files continue…

‘By 2008, Stanford was stealing $1 million a day from the bank to keep his failing personal businesses open.’

And…

‘When a potential depositor wanted to confirm the existence of the purported issuer of the insurance policy, Stanford admitted to Davis that the policy was fake and had Davis fly to London for a day to fax a false confirmation of the insurance company’s existence from a cubicle which Stanford rented.’

What else did Stanford do with the money he stole? The court files state…

‘He purchased suits from Bijan, a private Beverly Hills clothier that advertised itself as the world’s “most expensive” mens clothing store…He used his planes to fly a tailor from Bergdorf Goodman to his Miami and Antigua homes for measurements, regularly flew bottled artesian water to his home in St. Croix, flew fish for his koi pond…

‘In Antigua, he became a one-man stimulus package, eventually becoming the largest employer after the government. He developed a massive complex adjacent to the airport, constructing large, impressive buildings to headquarter his various businesses, complete with their own water treatment facility. Stanford also became a leading patron of cricket, building an enormous stadium and sponsoring the Stanford 20/20 cricket tournament with a $20 million prize.’

The list goes on. And you get the idea.

The thing is, like Bernie Madoff, if it wasn’t for the 2008 financial meltdown and investors redeeming investments for the safety of cash, Stanford’s Ponzi scheme wouldn’t have unravelled.

And they would probably still be taking investor money now.

If the court files are right, Stanford started swiping money from investors in 1990. So he had gotten away with it for 18 years before he was rumbled.

But this is more than just a crook taking savings from innocent people. It’s an extreme example of how any large deposit-taking institution works.

Look, we’re not saying the banks take your savings and use it to line their own pockets. That they buy private jets, boats and $10,000 suits with your savings.

But at the heart of the Stanford Ponzi scheme is one incontestable fact: investors couldn’t get their hands on their money when they asked for it.

And that’s no different to any large bank anywhere in the world. If too many customers try to withdraw their savings, the bank will run out of cash, simply because the money won’t be there…

Banks take deposits, create new money and then lend it out so borrowers can buy a house, car, boat or expensive suit.

But when it comes down to it, a typical bank holds less than 5% of its depositors’ obligations in the form of cash or cash-like instruments. In other words, if savers try to withdraw in cash 6% of the total savings held by a bank, the bank would have to close its doors.

The bank wouldn’t have the cash to cover its obligations.

So, even though we agree that Stanford is a crook for swiping $7 billion of savers money to fritter away on trinkets, we still can’t help think that Stanford’s business model isn’t a million miles away from most banks’ business models…

Luring investors with higher interest rates and then divvying the cash out to those who would like to spend it. In Stanford’s case, he divvied it out to himself…in the case of banks, the cash goes to the millions of borrowers, with no guarantee the loans will ever be repaid.

Madoff and Stanford were caught out because investors wanted more safety for their money. As the markets remain volatile and the solvency of financial institutions is questioned worldwide, it’s only a matter of time before more mainstream banks go to the wall.

You’re seeing that happen in Europe right now. And if there are a string of bank collapses there, it could have a knock-on effect and put a question mark over the entire global banking system.

Don’t assume your money is safe in any bank when that happens. So make sure you hold assets outside the banking system if you want to avoid a complete wipe-out when the global financial system breaks down.

Cheers,
Kris.

The Most Important Story This Week…

Money Morning editor Dr. Alex Cowie has written recently about the market for the strategic metal graphite. This is in short supply. Investors who took positions in graphite stocks have made lucrative returns recently as the market scrambled to buy into the latest hot sector. A similar shortage exists in the tungsten market. Tungsten is a vital metal but China produces 80% of the world’s supply.

The Chinese officials have imposed strict export quotas to shut out most foreign buyers. The crunch in supply is sending the tungsten price higher and higher. It’s another signal that the bull market in tungsten is set to get very hot in the near future. That means the hunt is on for explorers to find resources elsewhere. Get the full story in Why Warren Buffett is Loading Up on Tungsten

Other Recent Highlights…

Kris Sayce on Australian Housing – How to Avoid This Pauper’s Retirement Trap: “In fact, if The Australian and Fitch Ratings are right, Aussie sub-prime lending was or is only slightly lower than US sub-prime lending levels. So rather than the banks being more prudent with borrowing standards, they were knee deep in dodgy loan applications.”

John Stepek on The Hidden Cost of the Spanish Bailout: “By bailing out the banks this way… private sector lenders have been pushed down the line for payback. In other words, lending to Spain has just become even more risky. And by extension, so has every other European sovereign that might potentially need a bailout.”

Dr. Alex Cowie on Why Graphite is One of the Few Places For Savvy Investors to Make Money: “People are being very quick to brush graphite off as a bubble. The quick assumption is that it is ‘the new rare earths’. Some similarities are there: both are obscure strategic minerals, both are controlled by China, and both sectors went off like a rocket. There is one very important difference.”

Greg Canavan on Why You Should Wish For a Falling Market: “This obviously matters for Australians. Every time Europe flashes red, global markets swoon. Our market and economy – perched on the edge of the world, open and exposed – seem to cop the brunt of the fallout. That won’t change anytime soon.”

The Financial Tale of a Ruthless Predator

By MoneyMorning.com.au

On Monday, I warned Money Morning readers how the ‘…Spanish Bank ‘Bankia’ is the poster child for this banking sickness. Formed in December 2010 from the consolidation of seven regional ‘cajas’, the Spanish government initially injected €4.5 billion into the bank. That amount predictably evaporated and Bankia is now subject to a massive recapitalisation plan.’

Let’s look at the Bankia deal in more detail. The government’s initial rescue plan was to take a €19 billion equity stake in the company by issuing its own debt to itself and giving it to the bank. Bankia would then use the debt as collateral to borrow cash from the European Central Bank (ECB) for a term of three years. The cash would count as equity and help recapitalise the bank.

In this way the Spanish government tried to create tangible equity by conjuring up debt from nothing. Thankfully, even for the ECB that was a step too far, and they knocked it on the head.

Before I go any further, I want to explain what bank equity is.

Every company, including banks, has a ‘capital structure’. The capital structure is really just a way of explaining how companies finance their assets. Assets are the things that generate a company’s revenue and profits, but they don’t just magically appear. The assets must be purchased (financed) with either debt or equity (combined, debt and equity represent a company’s liabilities on the balance sheet).

As you probably know, debt is borrowed money, usually with a fixed cost and a fixed term. The cost of equity is indeterminate, as is its term. You, as an investor in the ‘equity’ market, always invest in a company’s equity.

The other thing to remember is that in the ‘capital structure’ equity sits below debt…it is less secure. So if a company’s assets shrink for whatever reason (like a property downturn), so must the liabilities. Equity takes the first hit, followed by the different levels of debt holders.

The Difference With Banks

Banks differ from ordinary companies in that they are highly leveraged. That is, they have a lot of debt and not much equity financing their assets. So it doesn’t take much of a fall in asset values to wipe out the equity holders, i.e. a share price going to zero. When that happens the bank would go into bankruptcy and restructuring.

Debt holders would take a hit to absorb any further losses. These debt holders may only get back 50 cents in the dollar in a bankruptcy. With the balance sheet cleaned up, the bank could then relist and get on with business…presumably with a new, more risk-averse management team and board.

But in the modern world, where banks are Too Big To Fail (TBTF), that doesn’t happen. And it’s why this market continues to be so fragile…and why economies are not, and won’t recover from this crisis.

Let me explain…

The Spanish government wanted to inject €19 billion of equity into Bankia. That is, it wanted to protect bondholders and put taxpayer funds at risk from further writedowns. If the bank is in such bad shape, why not just wipe out existing equity holders, let the bondholders absorb other losses, and inject taxpayer funds after a restructure?

So why doesn’t this happen?

In my view, it’s because the global banking system is interconnected via a web of deceit. Banks issue pieces of paper (debt, to fund their assets) and other banks, insurance companies, and money market funds buy that paper. Many banks then bet on the TBTF/bailout theme by buying derivatives of that paper.

It sounds confusing, I know. That’s because it is. Global financial markets have turned into a massive casino where the banking system is the house. Governments are just the croupiers.

Why You Should Be Worried

The problem with this cosy little arrangement is that as more and more bad debt piles up in the banking system, it clogs up activity in the real economy. Economic growth grinds to a halt. The growth that authorities crave to pull nations out of the debt-dynamic hole becomes impossible to achieve. You can mask something all you like on the books, but in reality the situation deteriorates.

This failure to clean up the banks – which encourages even more speculation in the derivatives market – is going to eventually lead to a huge bust.

Share prices will plummet and the derivatives market will be in disarray. If you were at our After America conference in March you might recall the title of Satyajit Das’ presentation – ‘The Great Re-set’.

Perhaps that is what we will see…a re-setting of the system…the forces of Mother Nature to be denied no longer. When that happens, THAT will be the signal to buy with your ears pinned back. Falling share prices really are a good thing, because it increases the future return from long-term investments.

Or perhaps the spivs and charlatans who pass for leaders these days may have a few more rabbits left in the hat, to be conjured when things seem at their most bleak.

No one knows how this will play out. But I feel very uneasy about this market action. I know there are many who are sanguine, based on the promise of more bailouts and more money printing. But that just seems too easy… the default, hopeful belief.

Some things are bigger than central bankers, politicians and Jamie Dimon. The global credit market and the mountain of derivatives rising behind it certainly are.

Greg Canavan
Editor, Sound Money. Sound Investments.

From the Archives…

Why You Should Wish For a Falling Market
2012-06-08 – Greg Canavan

Why the U.S. Dollar is Really Rising
2012-06-07 – Keith Fitz-Gerald

How This Bear Market Could Last Another 18 Years… Just Like Japan’s
2012-06-06 – Kris Sayce

The Banking Plan That Could Be A Game-Changer for Gold
2012-06-05 – Dr. Alex Cowie

Best Investment Strategies For the Times Ahead
2012-06-04 – Nick Hubble

Understanding Banking Alchemy