Thread: The Humpty Dumpty Stock Market

The Humpty Dumpty Stock Market

David Frazier
Wednesday, Jan. 9, 2008

The party has now begun — for those of you who have heeded my warnings about a big slowdown in the U.S. economy, persistent (and rising) inflationary pressures and a potential looming bear market.
On Oct. 25, I wrote an article entitled ‘Checkmate' in which I told our readers that the Federal Reserve was stuck between a rock and a hard place — that any interest rate move by the Fed would likely have negative economic and financial consequences.

The situation has recently gotten worse, as oil prices rose to an all-time high last Wednesday, the exchange value of the U.S. dollar has resumed its descent against other major world currencies, and more and more economists are now expecting the economy to enter a recession by the end of the first quarter of 2008.
Merrill Lynch's Chief North America Economist David Rosenberg, claimed in a research note to the firm's clients on Monday that the U.S. economy is actually already in a recession.

So, while the Wall Street Cheerleaders begin using the term "market correction" — one of their favorite terms to excuse their poor investment advice — I urge you to remember what you learned as a toddler:

Humpty Dumpty sat on a wall.

Humpty Dumpty had a great fall.

All the king's horses and all the king's men couldn't put Humpty together again.

In other words, stock prices are headed for further losses in the months ahead.

Even if the Fed tries to come to the rescue by continuing to lower short-term interest rates, stock prices will likely continue to trend lower, after perhaps rebounding for a couple of days.

The reason? Any additional interest rate cuts will kill the U.S. dollar and lead to more inflationary pressures. Gold investors are keenly aware of this predicament, pushing the price of gold to another all-time high.

So, I urge you once again to ignore the so-called Wall Street "experts" and to avoid investing in stocks at this time.

However, if you're interested in profiting from the continuing decline in stock prices, you may want to try our new investment service, The ETF Strategist. Our top-three ETF recommendations are now up 16.2 percent, 25.6 percent, and 33.6 percent since the inception of this service on September 18, 2007.

http://moneynews.newsmax.com/money/arch ... ode=42A3-1

I've been reading this view for about four years now. In that time gold prices have nearly tripled. What's ahead? Bernanke is going to keep trying to stimulate the US economy with rate cuts. All the while we've got twenty million uncounted "workers," attached like leeches, hoping that business keeps going full blast in the US.

Again, I'm trying to get a handle on this gold thing.

I understand if you buy gold when it is cheaper and it goes up, you make money. Also, almost undertstand how it might be preferable to paper money at times.

What's to keep our government, as they did during the depression, from making it illegal to own gold except for a small amount - and force you to sell it to the government? I don't know if the price they paid for the gold was a good price or not - but I'm assuming if they did that now, it would be up to the government to decide what they would pay.

If times were really bad, would people trade their food for gold?
That's survivalist scenario, though, not just rough times.