What Do You Think Is Going To Happen Next?

With all the mechanical trading going on these days, I don't see how anyone can keep track of the ups and downs. Not to mention all the 'experts' and their various opinions of what's going on. "It's a correction, it's a crash, it will go down to $1500, it will go up to $2000". It's dizzying!

A wise decision in any case. Diversification is one of the few ways to protect our assets from sudden market corrections. In most cases, there will be some ups and some downs that help moderate what is happening. Only in some very rare cases, such as in 2008, do we see everything go up or down at the same time.



No doubt... but the interesting part would be the conniving, bribery, and outright back-stabbery that would be going on at the same time!



That's just it, Jack... we can't. The best analogy I've heard on this lately is that "the small investor is like a boxer who has been punched in the head too many times". We're still on our feet but are dizzy and sick. We've been hit so many times and from so many different directions that we do not know where the next blow is coming from. Many of us have left the market in the hope that it will settle down at some point and become at least semi-understandable. No luck so far, though.

A lot will hinge on the Jackson Hole commentary this week. Much is expected from Bernanke and the recent stock rally shows that many of the traders and speculators are thinking that QE3, in one form or another, is coming and will be announced on Friday. If it is, there will be a big rally in the soon-to-be-inflated paper products markets and PMs will take a big hit. If not, then the reverse will occur. I have no idea which way it will go. Pessimists see QE3 coming and optimists see an improving economy that does not need any additional boost from the Fed. I must be somewhere in between those but am perhaps leaning slightly towards pessimism.

The economy is much like a game of chess or painting yourself into a corner. A series of bad moves mean severe cutbacks like haven't been seen by at least two generations (losing the queen and a rook), or finding yourself in a series of checks and eventual mate.

Yes, they did... and so did a lot of stocks. The problem with this is that the paper assets responded to an artificial stimulus by rising to absorb the huge amount of money injected into the economy. Once that stimulus ended, so did the market gains. In fact, the market could not sustain the level to which it had risen and fell back nearly 2000 points.



Yes, it is. But it also has elements of roulette and poker.

Interesting times, indeed, Hock. Say, isn't that an ancient Chinese curse? Something like, "May you live in interesting times", or some such.

My thought is that Fed-induced inflation caused the stock market to rise. When the Fed stopped inflating, the market could not hold the level that it had achieved via inflation and fell back about 1600 or so points. Maybe that taught the bean counters at the Fed something? I am sure that they have not given up on their Keynesian voodoo economics but I suspect that they will be much more reticent about commenting on it in public. I think it likely that there will be Fed support for the economy and that it will be similar to the QE programs. Because of that, stocks will inflate and the market will rise to a higher level.

I will be buying back into the market in select areas in an attempt to capture profits from this inflation. Commodities, especially energy and agriculture, resource exporting country currencies, stocks, and bonds, and good mutual funds that invest in Latin America and Asia (excluding Japan) look good to me about now. I also like the big cap US dividend-paying stocks and the mutual funds that focus on dividends.

I'm long GLD, SLV, SDS, XLE, DBA, DBC, EWA, EWC, USL, SCHE, oil & nat gas in the ground, real estate (home), and physical PMs. GLD and SLV are currently hedged with Sept put options. No debt, enough in cash to pay the bills.

Finally, what happens next is anybody's call...but hoarding at specific numbers seems somewhat foolish.

Nobody can predict if we are going to go back to $6 silver and $600 gold (unlikely) or if it's going to keep skyrocketing...but my weekly PM spending has been the same regardless. I get whatever I can, if it's an eagle and a few dimes, it's an eagle and a few tims...if it's all dimes, it's all dimes. Regardless, it goes in to a box that I don't open unless I need to put more in.

I am personally not a favor of electronic gold...simply because it doesn't take much for records to get lost, or communications systems to go down. What I have in my posession, is always in my posession. What I have in an account, is just that, in an account, where I can't access it without infrastructure.