September 2008 - Phase of collapse

Just for fun, I posted the first link in an email to the LPL morning call guys…I’ll let you know what they have to say about it tomorrow morning.

  For the record, it looks like a lot of goofy conspiracy theory stuff to me.

I already know what LPL’s response will be for it’s salesforce, that is the danger of being a saleman in times like this…we might ruin yourself and your clients. 

  "Due to budgetary constraints, the Economic Indicators service (http://www.economicindicators.gov) will be discontinued effective March 1, 2008. "   Now that is an big Bear indicator..it is not budgetary..it is just the numbers are so so negative, they could no longer publish them.   What do you make of noRock???  I see a global bank run right now.  No money is available to originate debt. It is a $500 trillion dollar problem.  HISTORY IS BEING MADE. 

NEWnew...its a euro page..decoded news just means translated news (as in from one language ie. french to another ie. English...im not pro/con the page..it just has some   info that my technical and market analysis confirms. 

NowIndy, nutjobs?..fox business and cnbs are full of nutjobs with a biased market analysis...Maria been asking if we've hit bottom since october.   New world order of 1945...Im sure you can guess that all it is saying is the change in world power after WW2..has nothing to do with religion  or predicting the apocalypse on a certain date..nothing weird or mysterious about it.  GEAB is not into market pumping (like CNBS or your company's sales desk).  It just reports global economic conditions with articles from bloomberg, reuters, cnn and many others.

Well, apparently the powers at LPL are intimidated by GEAB, but I’m assured that they will respond either offline or on tomorrow’s conference call.  Apparently my email was not received in time due to the holiday…but I think they’re really just afraid to tackle the question…

  When they address it, I promise to post a full report about our new world order...

Nutjob or not..they peg alot of the issues that mainstream media does not, the things that marco-economists and fundamental analysts see...throw in the technicals for icing on the cake.  Brokers, it is time to think or sink.

  The GEAB nutjobs made these predictions last year.....   1. Acceleration of the pace and size of bankruptcies among US financial organizations…
     Since late 2006 > 220 major lending operations have ‘imploded’

2. Spectacular rise of US home foreclosures…
    Up by ~75%

3. Accelerating collapse of housing prices in the US…   
    Yes

4. Entry into recession of the US economy…
    Recession has now arrived or will very shortly" (Jan Hatzius, the chief U.S. economist for Goldman Sachs)

5. Precipitous rate cut by the US Federal Reserve…
    Yes, biggest rate cut in 18 years

6. Growing importance of China-USA trade conflicts…
    The G7 has repeatedly called for an adjustment in global trade imbalances, including a rise in the renminbi

7. China's shift out of US dollars / Yen carry trade reversal…
    China indicated it could begin to diversify reserves away from the US dollar and government bonds

8. Sudden drop of US dollar value against Euro, Yuan and Yen…
    $/Euro from 0.76 to 0.66, a fall of >13%

9. Tumble of Sterling Pound…
    £/Euro from 1.50 to 1.35, a fall of >12%
______________________________________________________________________________

…that’s some of the same old tired one-sided rhetoric you’ve been posting from some time now.

  220 MAJOR lending operations havd "imploded" - several problems here...not in context (out of how many?  What are MAJOR?  What is meant by IMPLODED (I haven't heard of bank failure rates even close to that number)).   75% increase in foreclosures is spectacular?!!  Please tell me you are kidding.  Be honest and give us the start and end numbers and let us judge if the increase is "spectacular" or not.   Accelerating housing price collapse - again, the language of fear-mongering.  I see nothing of the sort.  Some pockets which were overpriced returning to normal levels is hardly a collapse.  Frankly, such reversion to the mean is needed from time to time.  In our area, agricultural land prices are just off the charts stupid as I write.  Many here would welcome such a "collapse".   We're in a recession?  Also a matter of opinion.  Just because someone at GS says it's so doesn't make it so.  There is plenty of evidence to the contrary as not one of the classic indicators is currently showing recession.   Biggest rate cut in 18 years?  Big deal...the fed cut 75 bps instead of 50 bps.  That still puts us far from historic lows.   US-China trade conflicts...this is news?  It's been going on for years and years.   China's shift away from treasuries?  Again, that would be fine by me.  Treasury yields are absurdly low and a little reversion to the mean would be healthy in my opinion.   8&9 - "sudden drops" and "tumbles" - 12 & 13% hardly qualify for that.  Such fluctuations happen on a regular basis and can reverse with little notice or advance warning.   It's a real stretch to say that GEAB accurately predicted the vast majority of what you've asserted, since almost all of it depends on how the information is filtered.  I happen to see the majority of it in a different light than that of the GEAB loons and I haven't seen much to change my opinion.  What I see is typical cyclical changes in housing, oil prices and the economy in general.  To argue that "it's different this time" is to ignore the fact that there's pretty much ALWAYS something different about each economic cycle. I see nothing that suggests armageddon is just around the corner.  Instead I see typical challenges that will cycle through and have more or less normal end results.  The economy will go up and the economy will go down...followed by the economy going up...and coming down again.  You are a long way from proving to me that the economis cycle has been repealed and posting ridiculous crap like the GEAB website with it's "new world order" isn't helping your case.   I'm doing my best to remain civil, but posting opinion and numbers manipulated to support a cause as fact is beginning to get mildly annoying...you need to find a new mentor.

Indyone, I agree completely with your post.

  That website is a crock.  According to them, everthing is "Imploding" and "Collapsed"!  What's left?  If they're correct, soon everthing will have 'imploded' and 'collapsed' to the point where there's no more Web or global infrastructure for kooks to print their crackpot prophecies and distribute them to other crackpots.    And after the Big Collapse and Implosion, then what?  GEAB will have to locally hand out calligraphied papyrus scrolls about their predicted turnip crop blight and the surely impending global devaluation of beaver pelts in our crumbling feudal society.   Fear mongers will always find a way to take idiots' money.  Broker7, did you already pay them $200 Euros for a subscription?

Indy...dont take it so personally..time will tell..right??  The GEAB isn't me...it is just news available on the web.    "I'm doing my best to remain civil, but posting opinion and numbers manipulated to support a cause as fact is beginning to get mildly annoying...you need to find a new mentor."   I do not have a bear mentor, I was a tech analyst, things didnt add up, recently I added fundamentals to my research..then things REALLY do not add up.  If you listen to the FED..or your sales desk..it is time to find a new mentor...their numbers, stats and rationale are warped to hell.   Agree to disagree...     NEWNEW..have you ever thought you are the one stoning galileo...

[quote=Broker7]

The GEAB isn't me...it is just news available on the web.    As someone else already pointed out, they're using fear-monger language.  It saps any credibility, IMO.  I imagine citing GEAB isn't going to help you push your bearish position onto the bulls.   I do not have a bear mentor, I was a tech analyst, things didnt add up, recently I added fundamentals to my research..then things REALLY do not add up.  If you listen to the FED..or your sales desk..it is time to find a new mentor...their numbers, stats and rationale are warped to hell.   Agree to disagree...   For example?  If given a choice, I'd rather see what you have researched (hopefully with credible and diverse support) than the Nostradamus' Quattrains crazy-streetcorner-preacher Chicken Little garbage from the GEAB website. [/quote]

Taco,

Technicals speak for themselves, trendline down.  Fundamentals: consumer confidence down, energy up, commodities up, real estate down, unemployment up, bankruptcies up, money supply down, credit availability down, consumer spending down, dollar down, fed rate down, fed spending up, all that BUT.....inflation up...add up those things up and read my previous posts.    newnew, I specialize in 6-7 figure bear clients. Send them my way.

[quote=Broker7]Taco,

Technicals speak for themselves, trendline down.  Fundamentals: consumer confidence down, energy up, commodities up, real estate down, unemployment up, bankruptcies up, money supply down, credit availability down, consumer spending down, dollar down, fed rate down, fed spending up, all that BUT.....inflation up...add up those things up and read my previous posts.    I get it, this is the same information that is on my computer screen all day long, then it's on Nightly Business Report, the 6 oClock news, the newspaper, the weekly news magazines, client's minds and hearts and agendae...  but I keep telling them that recessions happen every 6 years or more on average, the ones that are accumulating have an excellent buying opportunity right now, and the ones that are spending are invested in a broadly diversified portfolio that we will strategically rebalance throughout our semi-annual or quarterly meetings, and whether this downturn lasts 6mos, 12mos, 18mos, or whether stocks go down even more before things get better are anyone's guess.  But things will be okay, and we have planned for the long term, and planned for economic downturns.  Then I let go of the client's hand, wish them well until the next time I see them or talk to them.  That's part of my job, to make sure they don't buy high and sell low.   newnew, I specialize in 6-7 figure bear clients. Send them my way.   Do you invest 100% of their money in Prudent Bear funds?  [/quote]

Whats wrong with going to cash, commodities, oil, BRK, and shorts instead of holding a G and I fund that has been loosing since July 07??  Financials/ credit are a mess..it will be a longwhile and a long ways down till they "reset". Then we have the supply/demand resource/commodities crisis that is not being discussed due to current issues.  A small reminder..oil closed at $100.74 today.  $60 oil was the recessionary target 2 years ago....    I'm a long term BRK and USO bull..Buffet and co are 5 steps ahead of  fundmanagers and oil is a finite resource, mexico (our #2 supplier) is drying up and we have big problems with Venezuela and Nigeria (and most of opec for that matter).   Prudent bear....no...but I'll be glad to sell you some...if you cannot broker noloads.  

[quote=Broker7]Indy…dont take it so personally…time will tell…right??  The GEAB isn’t me…it is just news available on the web. 

  "I'm doing my best to remain civil, but posting opinion and numbers manipulated to support a cause as fact is beginning to get mildly annoying...you need to find a new mentor."   I do not have a bear mentor, I was a tech analyst, things didnt add up, recently I added fundamentals to my research..then things REALLY do not add up.  If you listen to the FED..or your sales desk..it is time to find a new mentor...their numbers, stats and rationale are warped to hell.   Agree to disagree...     NEWNEW..have you ever thought you are the one stoning galileo...[/quote]   7, my mistake...I crossed you with someone who referenced a mentor who had correctly predicted our current calamity.  I tend to discount those who bray about being able to correctly and consistently predict the direction of the market.   OK...I shouldn't take it personally and I try not to.  My biggest objection is the forceful nature of your arguments almost to the point of labeling position and opinion as fact.  My fear is that young impressionable minds come here, take your posts to heart and decide that the sky is indeed falling.  I don't agree with that call in the slightest and I think that readers deserve a dissenting opinion.  Frankly, there will most assuredly come a period of time where things don't go particularly well, but I am a long way from believing that our global financial system is on the brink of collapse.   As a student of history, I've observed our financial system take many a blow that make the current "crisis" look benign by comparison.  Based on how our system has been able to react to a variety of completely unexpected financial catastrophes, I fully expect that we will again adapt and evolve beyond such catastrophic events in the future.  We've survived the great depression, world wars, catastrophic terrorist events, double digit inflation, oil embargos, tech bubbles, the brink of nuclear war and presidential assassinations.  Short of the end of the world (where financial matters will be the least of our concerns), I don't see anything we can't ultimately deal with.   As far as listening to the fed or my sales desk, I approach much of what I'm told and what I read with a healthy degree of skepticism.  I am an independent in nearly every sense of the word.  I was buying on 9/17/2001 and continued buying through 2002 when the sky was falling and our government and economy was in crisis mode.  I shunned tech stocks in the late 90's because I didn't agree that "it's different this time - P/E ratios no longer matter...only sales growth".  When P/E ratios averaged 31X and the bubble broke, my clients survived because we'd taken a more conservative approach.  I didn't shun the market, mind you, but I did avoid heavy exposure in the fastest growth areas.  Sure, clients lost money, but not enough to push them out of the market.  Those clients that were patient made strong returns in 2003-2007.  I pride myself in being able to operate between the extremes...extreme greed, exuberance and fear.   My fundamentals show average forward P/E's of 13-14X...well below average.  With bond yields as low as they are, and trending lower, I can't help but feel pretty positive about the direction of our market.  Add a stable to strengthening dollar and falling oil prices, and I think we have a recipe for some very positive returns.  You can argue about how the dollar is going to continue to decline and oil is going to continue going to the moon...to me, it sounds eerily similar to those who argued there was no end to how high tech shares could go in early 2000.  Markets rarely stay at either extreme for long and it's a matter of opinion who's numbers, stats and rationale are "warped to hell".  I'll agree to disagree, but don't be surprised to see me continue to attempt to balance the view around here...

[quote=iceco1d][quote=Broker7]

    The GEAB isn't me...it is just news available on the web.   [/quote]   So is www.theonion.com ...   By the way Indy, awesome post.[/quote]   Thanks...and by the way, I love The Onion...ever since I first picked up a copy on the UWisconsin campus back in the early 90's at a banking school.   ...and as promised, GEAB and it's ilk was briefly referenced today in the morning call with Lincoln Anderson more or less dismissing that kind of stuff as crazy talk when things get tough or something to that effect.  Without giving away trade secrets and/or putting too many words in their mouth, it's my impression that the LPL research team has consistently  acknowledged some economic softness, but feels that there are some excellent opportunities here and that on balance, this should be a pretty good year.   ...as 7 says...only time will tell.  I'm looking forward to getting the debate answered one way or the other.