Stocks up, gold down - time for a change in thesis?

[Guest]

Re: Stocks up, gold down - time for a change in thesis?

Stockman - I've been waiting for months for someone to make that mention in the middle of this bear market. This bears noting - we are in a global meltdown, and at it's center are the stock markets - not just the US, but the world - everyone looking increasingly urgently around for a tool to arrest this trend. Well, there is one tool available to the owner of the senior currency which can act as a powerful fulcrum for sparking a "recovery" - whether a fake recovery or not - and how long these stock runs last once underway may be a little bit counterintuitive also - 1970's are a good study. The "tool" available here obviously are the equity indexes.

Obviously it's a provisional tool, but stock markets are not just a discounting mechanism - as you point out, they also alter the level of economic activity in return. And they need to only loosely follow their fundamentals. Evidence for these effects is scattered everywhere.

When bystanders who put all their trust for actionable signals in the "fundamentals" are forced to watch a four or five year frenetic bull market engineered by trillions in sideline money which is cooked off in a controlled burn, like some kind of propellant fuel, and they do meanwhile consciously resist getting "herded back in", it can be a demoralizing experience. You wind up being both right and wrong at the same time and sometimes for years. Meanwhile whoever suggests market prices are ever entirely rational is dreaming. That's why I don't much like owning stocks even in the good times.

I figure you are the first person here to even mention this point - a lot of others viewing this think of it more as being more a matter "lousy fundamentals". Not to belittle fundamentals here, but I figure waiting for "fundamentals" to arrive in stock investing, half the time will put you out of synch with market turns anyway. Come to think of it, I don't even like stock investing, but I am interested by the unanimity showing up on this poll, that a bull market idea is dead as far out as the eye can see.

Your comment below is correct IMO, and astute.

In addition most underestimate the ability of the market to precipitate improvement in fundamentals. Often discussed as a magical 'discounting' mechanism but that misses the point that rising (or falling) stock prices themselves will alter the fundamentals (a fact NOT lost on the FED). The more psychology has shifted in the extreme the greater the possibility of a reversal in markets and sentiment.

[FRED]

Re: Stocks up, gold down - time for a change in thesis?

This poll is so odd that I can't help but think it is some kind of "bull trap" to call out the die hard bulls. Are some people just not reading around here. What wasn't clear about setting the life boats on fire. "Everyone in, the water is fine." This place isn't bearish. This place is like the sunglasses in "They Live."

But I'll be fair to the "Mad Money" crowd and ask for an opposing thesis that isn't based on chart voodoo.

Ej writes in:

iTulipers are as exposed as everyone else to the relentless influence of the Bullhorn and are not immune from its power to reprogram even the most aware and self-aware if they are exposed to it. Watch TV, read the financial press, or listen to the radio and the message conveyed is that the current financial and economic crisis is temporary, much like previous crises, and will soon be remedied by treatments that worked in the past, such as interest rate cuts, tax cuts, liquidity injections, and bailouts.

As a rule, few people embrace change, either good or bad. Most people want the world to remain the same. A predictable world, even if it produces occasional hardships, is at least manageable if the hardships can be anticipated and planned for. But we are facing permanent change to our economies and the structures of our societies and few are up to facing this fact at an emotional level, never mind try to figure it into their investment decisions. Most people are desperate to hear comforting lies about their future.

iTulipers are different. They are brave. They don't want lies, they want to know where they stand. So I will put this as simply and as clearly as I can.

The system under which the U.S. and global economy have operated for over 20 years is systemically corrupt. The current systemic financial crisis ultimately arises only indirectly from systemic risk. The root cause of the systemic risk is systemic corruption of the financial system and the private and public institutions that comprise it. Leadership within private and public financial institutions took the license given them to cooperate too far and the system collapsed; systemic corruption in turn led to the excesses that then led to the institutional failures, of the banks, regulators, ratings agencies, and others.

It is a mistake to think that the system can recover so long as the men and women who run these institutions that created the crisis are still in control, and it is a mistake to expect that they will leave quietly or soon. They will not negotiate away their power or wealth or standing. They must be confronted and so far there is no one currently in a position to confront them. Those who have quickly find themselves discredited and marginalized. This is how all corporatist political systems operate. There are rewards for cooperation and punishments for objectors.

This explains the instance of "CEOs" of financial institutions who are rewarded for failure with large bonuses and allowed to continue to run companies that they have effectively destroyed. An actual CEO is fired for failure, and receives a bonus only for increasing shareholder value according to an employment contract drafted by a compensation committee of the board that is bound by rules of corporate governance.

These financial institution leaders are CEOs in title only. More accurately they are appointees of the financial oligarchy, not CEOs bound by rules of corporate governance. To acknowledge this fact, from here on we refer to the CEOs of financial institutions as FOAs, financial oligarchy appointees, and to their leader Tim Geithner as the American Finance Minister, according to the model of government used by Russia and other oligarchical political systems.

We got out of the stock market in 1998 once we become aware of the situation. We will re-enter the markets once we see clear evidence that the private institutions of finance and the public institutions that regulate them are no longer corrupt. We will know that the corruption has ended when the following has occurred.

One, there are hearings, trials, convictions, and perpetrators serving jail time. So far, there is not even discussion of hearings.

Two, the national financial press becomes independent of the money that finances the content, with a clear delineation between advertising and editorial content. We see no evidence of that occurring either. Our realism, misunderstood as pessimism by some readers at the time, about the ultimate impact of Jon Stewart's calling out of Jim Cramer has been born out--after a couple of weeks, Cramer is back to business as usual.

Three, the private financial and non-financial sector debt built up during the FIRE Economy era is reduced by at least half through either debt forgiveness or inflation.

It is quite impossible to do business with unethical people, and just as impossible to invest in financial system controlled by unethical people. Until the above events occur, we do not see how we can invest in the U.S. stock market.

See also:

Honest Man Emerges From Muck of Banking Crisis: Jonathan Weil

The Best Way to Rob a Bank Is to Own One

[Guest]

Re: Stocks up, gold down - time for a change in thesis?

I was really trying more to point out where the DOW / GOLD and the S&P / GOLD appear to be at this juncture - which is pretty far along apparently. Or are you wise permabears of the opinion that the above charts signal large potential for the DOW and the S&P to plunge a lot further against gold? I don't think Nero3 was talking about any "trading" here - looking at this juncture as a trader you are going to have different conclusions that would someone planning to make buys here to hold for a good deal longer.

But of course right now, the idea of looking at this market as an investor apparently seems absurd to most people here.

You guys really want to bet on a deflationary result in US markets with this scale of monetary distortion going on? The markets much more plausibly need to rise in response, not fall - over a five year time frame. And whether that is to be in nominal or real terms right now is potentially irrelevant to the short term as it's likely to be quite a large move if we go by the scale of the money distortion. Those DOW / GOLD and S&P / GOLD charts are hinting the excesses of the past 30 years don't get unwound in a single market collapse leg down.

The fifteen year long bear market from 1966-1980 was very fragmented. Suggesting our current bear market needs to be one long bear market run to it's conclusion without long interruptions is out of sync with that historic precedent - we are much more likely to resemble the 1966-1980 progression that way with big interruptions.

I think Nero3 was just suggesting this looks like a good candidate for an interval of stock outperformance over gold - you have to dial your time frame out past the "noise" of violent short term up and down to get why we could see the same multi-year rallies as the 1970's. Sure we may get a few more legs up and down, even large ones - prompting skeptical guys like C1ue to step quickly out of their short term trades.

So while Santafe2 and GRG55 are evaluating this with for might constitute slightly longer trades, Nero3 was asking why exactly people imagined this market should not be sharply net up from here in five years. I think most people are too shellshocked by the horrific recent market action to even entertain this idea right now. It's evidently regarded as absurd here. Meanwhile we've got this DOW / GOLD chart that is so far along in correcting down, that continuing down this way for too much longer is starting to more than a little complicated.

So, just how much overshoot on the DOW / GOLD are you permabears counting on here?

[analog2000]

Re: Stocks up, gold down - time for a change in thesis?

Hi All,
Attached is the semiconductor book to bill ratio data.
As someone who works in this industry, most of the customers are canceling orders and scaling back. Hiring is frozen, and layoff are moving more and more into the design side from manufacturing side.
Most of the customers are focusing on building their products with off the shelf parts. Custom designs are starting to die.
Best Regards
analog2000



http://www.semi.org/cms/groups/publi...nt/p033815.pdf

[Guest]

Re: Stocks up, gold down - time for a change in thesis?

Just a clarification in case I'm to be painted as the Pied Piper of fraudulent asset recommendations here - I'm not suggesting that any sustained resurgence in the stock market is based on well accounted assets or indeed on perfect "fundamentals" - but that does not preclude it soaring another five years IMO. So let's look at the iTulip stance in response and at this juncture - iTulip was out of stocks in 1998-1999 and then out for a full decade - successfully resisted the temptation to dabble in equities all through 2003-2007.

Then a horrific bear market ensued, vindicating this position, from 2007-2009? What if you are then treated to another highly anomalous stock bull stretching out another five years? In effect I fully approve and admire iTulip's discipline. My objection was not necessarily to say everyone "must" pile into stocks here to avoid getting sidelined for another five years.

I am curious only about the unanimity here - everyone thinking that sound or unsound "fundamentals", this market cannot soar from here. I think that component - what this market "can or cannot do based on the blasted out state of the economy is based on some assumptions that are not assured. I would like to distance myself from idea here, that concludes because GAAP good accounting and transparency is out the window, and the market is now totally corrupted, that it "cannot" rise for an extended period of time anyway after this large washout.

May I suggest that claiming equities can only rise in the presence of healthy fundamentals ignores many instances when they've done just the opposite? Markets can, and have previously engaged in very sustained, even sharp rises, that have on some occasions (massive inflation?) not a whole lot to do with fundamentals - and if this present monetary backdrop is not considered a prime candidate I don't know what other would.

Another four years of depression trend in this DOW / GOLD chart would create an event that shot right off that DOW / GOLD chart page. We have just had a massive crash. To suggest another massive crash creates another move down vs. gold of the same magnitude again is what is actually the more audacious assertion. 1914, 1929, 1932, 1980. We expect the DOW / GOLD here to exceed those lows by how many standard deviations?

Just how adventurous do we choose to be here on that expectation? There is a certain audaciousness in a collective expectation that this chart now "must" accomodate equities collapseing against gold much further, because it waves a hand at the 1932 low or the 1980 low for instance, and wants us to believe that was "nothing" compared to this time. They wren't "nothing" - they were very large DOW / GOLD extremes in their own right, and they are very close to where we are now in this same ratio. Arm wave dismissals of this point are inadequate.

This comment is not an endorsement that people run out and load up on stocks. It is a questioning of the very popular idea here that the stocks won't go up. The chart below is rendering that opinion a little more "exposed" every day now.

[cobben]

Re: Stocks up, gold down - time for a change in thesis?

Looking at that DJIA/gold chart, with that momentum it might just manage a weak dead cat imitation at 0 before going negative. Eyeballing it, I might be a buyer of equities around -10 or so, for a trade that is.

Thnx for the charts Luke, but I didn't find them at the runtogold.com site. Is there some secret area there?

[jandkmeyer]

Re: Stocks up, gold down - time for a change in thesis?

Would you gamble in a casino you knew to be corrupt? Maybe so.

I've generally been out of the market for a long time (with the exception of playing enegy moves short-term) for the same reason EJ states: corruption. However, I manage a couple trusts for other family members and so I am compelled to make an effort to make money/increase value any way I can. Most recently (amazingly I seem to have caught the short-term low) I went about 20% into the market with oil and utilities. They were paying a nice dividend yield at that price. My mother gets the "income" from the trust and with just the paltry interest on MM funds the reduction on income would be noticed. I bought with the idea of holding long-term, but with the profit I've made i the last month I could consider selling for capital gains and being completely on the sidelines again and waiting for another low I believe will come, although maybe not the low for oil.

I have most of my own money in cash waiting for the right time to buy high quality income property (I have had good luck with property I currently own) or I am potentially waiting for my daughter and her cousins to become the energy and inpetus for a new family business that I or the Trust could finance.

[Guest]

Re: Stocks up, gold down - time for a change in thesis?

Fine.

But if you want to be consistent, throw all those casual references to hyperinflation out the window while you are at it. Ditto all the other iTulipers here who swear hyperinflation and the disintegration of the USD is "just around the corner". You want to forecast a crashing stock market going forwards? Then dump your expectations of hyperinflation exploding flashily upon the scene "tomorrow morning". You guys want your bearish cake and have the luxury of eating it too. Hyperinflation, so your gold soars, and a brutally crashing stock market "ACT II" so you can continue feeling snug in your permabear bunkers.

You can't have these together. You can't have hyperinflation and a crashing stock market both together guy. When your gold really takes off, likely your stockmarket will have been blasting up for a while already.

Just a couple months ago it was "Gold up, stocks down"

Late last year it was "Gold down, stocks up"

And now it's "gold down, stocks up"

Did the underlying situation flip flop every 3 months? Nope.

Trillions in deficit spending and tens of Trillions in unfunded govn't obligations say gold will go up. Not much out there looks good for most stocks. Is Target going to have a rush of recently unemployed shoppers? Is BofA going to rake in huge profits while their credit card business starts suffering huge defaults from unemployed cardholders and commercial real estate is collapsing?

What's hilarious is that when we have these big run ups in the markets the headline is huge and trumpets it. But all the small type headlines beneath are nothing but bad news. The best they can say is "unemployment numbers not as bad as expected" or something like that.

Who said markets were rational in the short run? Never underestimate the power of wishful thinking.

[FRED]

Re: Stocks up, gold down - time for a change in thesis?

Just a clarification in case I'm to be painted as the Pied Piper of fraudulent asset recommendations here - I'm not remotely suggesting that any sustained resurgence in the stock market is based on soundly accounted assets - but that by no means needs to impair it from soaring another five years IMO. Then add it up - iTulip out of stocks in 1998-1999 for a decade - successfully resisted the temptation to dabble in equities all through 2003-2007.

Then a horrific bear market ensued, vindicating this position, from 2007-2009? What if you are then treated to another highly anomalous stock bull stretching out another five years? In effect I fully approve and admire iTulip's discipline. My objection was not necessarily to say everyone "must" clamber into stocks here to avoid getting sidelined for another five years.

2001 to 2007 was our "New New Deal" that prevented another Great Depression following the collapse of the stock market bubble in 2000. The New New Deal was based on real estate asset price inflation created by a combination of low interest rates, non-enforcement of lending regulations, and open fraud.

iTulip Forecast of Period X, January 2008

I am curious only about the unanimity here which presumes (and it is indeed a presumption in my view) that, sound or unsound, this market cannot soar from here. That is what I object to. I think that component - the forecast as to what this market will do (forget whether it's sound or not) is based on some assumptions that are distinctly open to challenge.

Debt Deflation Bear Markets can bounce (see Debt Deflation Bear Market: First Bounce).

Anyone claiming that equities markets can only rise upon healthy fundamentals has a tough claim to prove. Demonstrably, markets can, do and have previously engaged in very sustained, even very sharp rises, that have on some occasions (massive inflation is a very reliable candidate?) very little to do with fundamentals - and if this present monetary backdrop is not considered a prime candidate for one of those occasions, I cannot think of a more promising example.

We claim that no one can time these rallies, and that the risk of getting caught long in the next cash is greater than the risk of losing out on the next rally. We expect the next crash will take the market down 30% or more over a period of a few days.

Never once has the world witnessed a massive inflation with a long drawn out crash in the equities as a corrolary in that same currency. Why is this point being ignored here?

There is a valid argument that stocks will be one of the places where investors will hide out from inflation as they exit bonds, and we made that point in No such thing as a Treasury bond bubble.

And then there is this chart below. Just how adventurous do we choose to be, regarding this trends ability to now overshoot hugely? Indeed, there is a certain audaciousness implicit in our collective expectation that this chart now "must" accomodate our fundamental read of why equities must collapse further. This comment is not an endorsement that people run out and load up on stocks. It is a questioning of the very popular idea here that the stocks won't go up. The chart below is rendering that opinion a little more "exposed" every day now.

The relative value of stocks and gold does indicate that a re-allocation of some Treasury bond positions is needed.

[vanvaley1]

Re: Stocks up, gold down - time for a change in thesis?

Ej writes in:

iTulipers are as exposed as everyone else to the relentless influence of the Bullhorn and are not immune from its power to reprogram even the most aware and self-aware if they are exposed to it. Watch TV, read the financial press, or listen to the radio and the message conveyed is that the current financial and economic crisis is temporary, much like previous crises, and will soon be remedied by treatments that worked in the past, such as interest rate cuts, tax cuts, liquidity injections, and bailouts.

As a rule, few people embrace change, either good or bad. Most people want the world to remain the same. A predictable world, even if it produces occasional hardships, is at least manageable if the hardships can be anticipated and planned for. But we are facing permanent change to our economies and the structures of our societies and few are up to facing this fact at an emotional level, never mind try to figure it into their investment decisions. Most people are desperate to hear comforting lies about their future.

iTulipers are different. They are brave. They don't want lies, they want to know where they stand. So I will put this as simply and as clearly as I can.

The system under which the U.S. and global economy have operated for over 20 years is systemically corrupt. The current systemic financial crisis ultimately arises only indirectly from systemic risk. The root cause of the systemic risk is systemic corruption of the financial system and the private and public institutions that comprise it. Leadership within private and public financial institutions took the license given them to cooperate too far and the system collapsed; systemic corruption in turn led to the excesses that then led to the institutional failures, of the banks, regulators, ratings agencies, and others.

It is a mistake to think that the system can recover so long as the men and women who run these institutions that created the crisis are still in control, and it is a mistake to expect that they will leave quietly or soon. They will not negotiate away their power or wealth or standing. They must be confronted and so far there is no one currently in a position to confront them. Those who have quickly find themselves discredited and marginalized. This is how all corporatist political systems operate. There are rewards for cooperation and punishments for objectors.

This explains the instance of "CEOs" of financial institutions who are rewarded for failure with large bonuses and allowed to continue to run companies that they have effectively destroyed. An actual CEO is fired for failure, and receives a bonus only for increasing shareholder value according to an employment contract drafted by a compensation committee of the board that is bound by rules of corporate governance.

These financial institution leaders are CEOs in title only. More accurately they are appointees of the financial oligarchy, not CEOs bound by rules of corporate governance. To acknowledge this fact, from here on we refer to the CEOs of financial institutions as FOAs, financial oligarchy appointees, and to their leader Tim Geithner as the American Finance Minister, according to the model of government used by Russia and other oligarchical political systems.

We got out of the stock market in 1998 once we become aware of the situation. We will re-enter the markets once we see clear evidence that the private institutions of finance and the public institutions that regulate them are no longer corrupt. We will know that the corruption has ended when the following has occurred.

One, there are hearings, trials, convictions, and perpetrators serving jail time. So far, there is not even discussion of hearings.

Two, the national financial press becomes independent of the money that finances the content, with a clear delineation between advertising and editorial content. We see no evidence of that occurring either. Our realism, misunderstood as pessimism by some readers at the time, about the ultimate impact of Jon Stewart's calling out of Jim Cramer has been born out--after a couple of weeks, Cramer is back to business as usual.

Three, the private financial and non-financial sector debt built up during the FIRE Economy era is reduced by at least half through either debt forgiveness or inflation.

It is quite impossible to do business with unethical people, and just as impossible to invest in financial system controlled by unethical people. Until the above events occur, we do not see how we can invest in the U.S. stock market.

See also:

Honest Man Emerges From Muck of Banking Crisis: Jonathan Weil

The Best Way to Rob a Bank Is to Own One

Thanks. Sums it nicely. May I chant "Me too". So...it there any nascent political party out there in its infancy that looks appetizing with a chance to catch a break with the public? Or is the public pain not sufficient yet to damand some 'meaningful and honest change'? Any party look scrupuiously honest? Be nice if they also made sense.

[vanvaley1]

Re: Stocks up, gold down - time for a change in thesis?

Ej writes in:

iTulipers are as exposed as everyone else to the relentless influence of the Bullhorn and are not immune from its power to reprogram even the most aware and self-aware if they are exposed to it. Watch TV, read the financial press, or listen to the radio and the message conveyed is that the current financial and economic crisis is temporary, much like previous crises, and will soon be remedied by treatments that worked in the past, such as interest rate cuts, tax cuts, liquidity injections, and bailouts.

As a rule, few people embrace change, either good or bad. Most people want the world to remain the same. A predictable world, even if it produces occasional hardships, is at least manageable if the hardships can be anticipated and planned for. But we are facing permanent change to our economies and the structures of our societies and few are up to facing this fact at an emotional level, never mind try to figure it into their investment decisions. Most people are desperate to hear comforting lies about their future.

iTulipers are different. They are brave. They don't want lies, they want to know where they stand. So I will put this as simply and as clearly as I can.

The system under which the U.S. and global economy have operated for over 20 years is systemically corrupt. The current systemic financial crisis ultimately arises only indirectly from systemic risk. The root cause of the systemic risk is systemic corruption of the financial system and the private and public institutions that comprise it. Leadership within private and public financial institutions took the license given them to cooperate too far and the system collapsed; systemic corruption in turn led to the excesses that then led to the institutional failures, of the banks, regulators, ratings agencies, and others.

It is a mistake to think that the system can recover so long as the men and women who run these institutions that created the crisis are still in control, and it is a mistake to expect that they will leave quietly or soon. They will not negotiate away their power or wealth or standing. They must be confronted and so far there is no one currently in a position to confront them. Those who have quickly find themselves discredited and marginalized. This is how all corporatist political systems operate. There are rewards for cooperation and punishments for objectors.

This explains the instance of "CEOs" of financial institutions who are rewarded for failure with large bonuses and allowed to continue to run companies that they have effectively destroyed. An actual CEO is fired for failure, and receives a bonus only for increasing shareholder value according to an employment contract drafted by a compensation committee of the board that is bound by rules of corporate governance.

These financial institution leaders are CEOs in title only. More accurately they are appointees of the financial oligarchy, not CEOs bound by rules of corporate governance. To acknowledge this fact, from here on we refer to the CEOs of financial institutions as FOAs, financial oligarchy appointees, and to their leader Tim Geithner as the American Finance Minister, according to the model of government used by Russia and other oligarchical political systems.

We got out of the stock market in 1998 once we become aware of the situation. We will re-enter the markets once we see clear evidence that the private institutions of finance and the public institutions that regulate them are no longer corrupt. We will know that the corruption has ended when the following has occurred.

One, there are hearings, trials, convictions, and perpetrators serving jail time. So far, there is not even discussion of hearings.

Two, the national financial press becomes independent of the money that finances the content, with a clear delineation between advertising and editorial content. We see no evidence of that occurring either. Our realism, misunderstood as pessimism by some readers at the time, about the ultimate impact of Jon Stewart's calling out of Jim Cramer has been born out--after a couple of weeks, Cramer is back to business as usual.

Three, the private financial and non-financial sector debt built up during the FIRE Economy era is reduced by at least half through either debt forgiveness or inflation.

It is quite impossible to do business with unethical people, and just as impossible to invest in financial system controlled by unethical people. Until the above events occur, we do not see how we can invest in the U.S. stock market.

See also:

Honest Man Emerges From Muck of Banking Crisis: Jonathan Weil

The Best Way to Rob a Bank Is to Own One

Thanks. Sums it nicely. May I chant "Me too". So...it there any nascent political party out there in its infancy that looks appetizing with a chance to catch a break with the public? Or is the public pain not sufficient yet to damand some 'meaningful and honest change'? Any party look scrupulously honest? Be nice if they also made sense.

[stockman]

Re: Stocks up, gold down - time for a change in thesis?

Lukester- "Then a horrific bear market ensued, vindicating this position, from 2007-2009? What if you are then treated to another highly anomalous stock bull stretching out another five years? In effect I fully approve and admire iTulip's discipline. My objection was not necessarily to say everyone "must" clamber into stocks here to avoid getting sidelined for another five years."

Showing my ignorance of the public advice/history of itulip here... but how many here ACTUALLY SAT OUT THAT PERIOD 1998-2009? That would take iron will I'd think.

These long periods or secular trends where we experience rising and falling valuations have gone full cycle a number of times. Only that 1929-1932 window went in a straight line- the rest look more like Japan 1990s or the US 1970s.

Shiller 040309.jpg

It has been my assumption that we would eventually get to that 5-7 x earnings number. I just have not been willing to bet that it happens in a straight line. 15-20 years looks normal to get from one extreme to the other. As a trading type I wouldn't even think of sitting out the markets with ANY buy and hold strategy for an extended period like that.

But I wonder of those that consider themselves investors- how many had the conviction to hold only gold and treasuries for the last 10 years?

[Guest]

Re: Stocks up, gold down - time for a change in thesis?

Cobben - They were in a PDF report I was directed to by a subscription - as recommended reading. I can't for the life of me find this morning where I got it referenced. If I find it I will send you the link.

Looking at that DJIA/gold chart, with that momentum it might just manage a weak dead cat imitation at 0 before going negative. Eyeballing it, I might be a buyer of equities around -10 or so, for a trade that is.

Thnx for the charts Luke, but I didn't find them at the runtogold.com site. Is there some secret area there?

[cobben]

Re: Stocks up, gold down - time for a change in thesis?

"It is quite impossible to do business with unethical people, and just as impossible to invest in financial system controlled by unethical people. Until the above events occur, we do not see how we can invest in the U.S. stock market."

Exactly, problem is though, who do you do business with if the whole world is unethical, as if run by competing mafia-style organisations?

You end up having to buy protection / subject yourself to a patron in some fashion, to be able to do anything at all.

[Guest]

Re: Stocks up, gold down - time for a change in thesis?

Stockman - it was iTulip, of course! Nobody plays long range investing golf like EJ. Seems he likes to pick just one gear, to climb the entire hill, and never upshift or downshift. Now that may appear to be almost verging upon the eccentric in the extent to which it is trade averse, but damn if he does not wind up within an inch of the birdie ten years out. Warning - this strategy may not work for everyone, due to restless trader syndrome. Results may vary.

Lukester- "Then a horrific bear market ensued, vindicating this position, from 2007-2009? What if you are then treated to another highly anomalous stock bull stretching out another five years? In effect I fully approve and admire iTulip's discipline. My objection was not necessarily to say everyone "must" clamber into stocks here to avoid getting sidelined for another five years."

Showing my ignorance of the public advice/history of itulip here... but how many here ACTUALLY SAT OUT THAT PERIOD 1998-2009? That would take iron will I'd think.

These long periods or secular trends where we experience rising and falling valuations have gone full cycle a number of times. Only that 1929-1932 window went in a straight line- the rest look more like Japan 1990s or the US 1970s.

[ATTACH]1368[/ATTACH]

It has been my assumption that we would eventually get to that 5-7 x earnings number. I just have not been willing to bet that it happens in a straight line. 15-20 years looks normal to get from one extreme to the other. As a trading type I wouldn't even think of sitting out the markets with ANY buy and hold strategy for an extended period like that.

But I wonder of those that consider themselves investors- how many had the conviction to hold only gold and treasuries for the last 10 years?