Coming Ka Event: Real or Nominal?

[dbarberic]

I want to repeat a question that I posed once before, will the “Ka” be in nominal, or in real dollars and could the “Ka” occur in one segment of the market? It never seemed like we came to a conslusion on the thread.

A fair amount of my current portfolio is sitting in money market waiting for the “Ka” moment to occur to move towards fully invested. But, I’m beginning to become concerned that with the sheer volume of money printing that is occurring in just about all global central banks, that a nominal “Ka” event in the general stock market may not occur because all asset classes are riding a massive wave of liquidity and I don't see the central banks stopping it anytime soon.

Global markets are inflating their currencies, many in double digits.

As of 07/09/07, Country YOY %

• Russian Fed. M2 50.94
• India M3 19.70
• China M2 16.74
• Australia M3 14.05
• United Kingdom M4 13.84
• Mexico M4 12.21
• Brazil M2 11.92
• Denmark M3 10.62
• Korea M3 10.07
• Canada M3 8.08
• OECD Total M3/ EUROZONE 7.86/10.9
• United States M3 reconstructed 13.7
• Germany M3 6.16

As discussed else where, priced in terms of various hard assets, the US market is actually crashing, not rising. If the “Ka’ event is to occur in real dollars and not in nominal dollars, then I should be fully invested now and in hard assets to protect my purchasing power.

I understand the risks in the market place related to the housing/mortgage industry, but are we sure that it will ultimately manifest itself in a Ka event in nominal dollars in the general stock market. Or, with the current massive amount of US money printing, isn’t is possible that the Fed will step in and sweep this thing away using what ever means necessary and the stock market will keep hammering away on wave of liquidity. In that case, the Ka event will manifest itself in a busted housing market and devalued USD in real terms, but in nominal terms, the stock market will be breaking new records.

I bring this up, because your expectations for what exactly will be the Ka event has profound implications for how you want to allocate your portfolio now.

[Jim Nickerson]

Re: Coming Ka Event: Real or Nominal?

I want to repeat a question that I posed once before, will the “Ka” be in nominal, or in real dollars and could the “Ka” occur in one segment of the market? It never seemed like we came to a conslusion on the thread.

A fair amount of my current portfolio is sitting in money market waiting for the “Ka” moment to occur to move towards fully invested. But, I’m beginning to become concerned that with the sheer volume of money printing that is occurring in just about all global central banks, that a nominal “Ka” event in the general stock market may not occur because all asset classes are riding a massive wave of liquidity and I don't see the central banks stopping it anytime soon.

Global markets are inflating their currencies, many in double digits.

as of 07/09/07 Country YOY %

• Russian Fed. M2 50.94
• India M3 19.70
• China M2 16.74
• Australia M3 14.05
• United Kingdom M4 13.84
• Mexico M4 12.21
• Brazil M2 11.92
• Denmark M3 10.62
• Korea M3 10.07
• Canada M3 8.08
• OECD Total M3/ EUROZONE 7.86/10.9
• United States M3 reconstructed 13.7
• Germany M3 6.16

As discussed else where, priced in terms of various hard assets, the US market is actually crashing, not rising. If the “Ka’ event is to occur in real dollars and not in nominal dollars, then I should be fully invested now and in hard assets to protect my purchasing power.

I understand the risks in the market place related to the housing/mortgage industry, but are we sure that it will ultimately manifest itself in a Ka event in nominal dollars in the general stock market. Or, with the current massive amount of US money printing, isn’t is possible that the Fed will step in and sweep this thing away using what ever means necessary and the stock market will keep hammering away on wave of liquidity. In that case, the Ka event will manifest itself in a busted housing market and devalued USD in real terms, but in nominal terms, the stock market will be breaking new records.

I bring this up, because your expectations for what exactly will be the Ka event has profound implications for how you want to allocate your portfolio now.

If one didn't read iTukip, Ka-Poom probably would not be in one's vocabulary. I, too, am in a lot of cash and have the same concern you do.

I could kick my ass from here to sundown for not having gone long last June/July using index ETFs. But I still believe markets do not go up unendingly without some significant corrections along the way. By any standard of percentages, it has been a long time since the major equity indices corrected, but technically there have been some good entry points along the way if one saw them and acted--which I saw last summer, but rejected unfortunately for my portfolio.

I don't think the markets, US or international markets, are going to keep going up and up and up without something approaching a 15% correction. I don't know if I am as dumb as a rock or only a bit smarter, but now is feeling reminiscent of 1987 and 1999, when it seemed if one was not long, then one could only see the train disappearing in the distance. That you are concerned shows that not everyone has been sucked into to the bull market, and perhaps it will continue til you and I capitulate.

Grasping for something bearish? Look at http://stockcharts.com/charts/indices/McSumNYSE.html and
http://stockcharts.com/charts/indices/McSumNASD.html

To me those McClellan summation indices divergences from the underlying markets are considerable and what some sort of correction in the equity indices resembles is like you can see on the left-hand side of the summation charts that occurred last summer.

There just have not been any serious bottoms put in since last summer. Shucks, I hope if another occurs, I don't fail to appreciate and act upon it.

What you explain as to how Ka- could occur has to be one of the possibilities and I think has been mentioned more than once in these fora.

I share youR dilemma and frustration. Perhaps there is comfort in knowing you are not alone, but be careful with whom you keep company.

[c1ue]

Re: Coming Ka Event: Real or Nominal?

db,

If you are keeping a lot of cash in order to protect your capital - that is not necessarily a bad strategy.

However, it is always important to keep in mind the risk/reward: i.e. by keeping cash, how much market appreciation are you willing to forgo in order to reduce your risk?

Given that it is impossible to time such events, ultimately your only choice is to select a risk/reward ratio which is more comfortable to you than being fully invested (thus max risk).

Also note that Ka-Poom theory also directly stipulates that a liquidity crunch would cause all portions of the market to drop - at least initially.

Again, timing is the problem.

It is dangerous to give advice on other people's money - all I will say is that for myself - I am 50% invested spread through 3 tranches:

Tranch A: Morgan Stanley managed mutual fund portfolio
Tranch B: Citibank/Smith Barney managed 60/40 value/growth stock portfolio
Tranch C: Remaining Dow stocks accumulated over the past 17 years (JPM, C, IBM) - using these stocks as dividend plus base to sell calls with the occasional option put buy on other stocks for speculation

This first half is averaging about 12% Yoy since I started it (mid 2005), mostly because of Tranch C pulling the average down somewhat. I estimate I have given up about 3% to 5% Yoy for this half with the tradeoff of having almost no bonds, no leverage on any given component greater than 2.5x, and very little time investment on my part.

The other 50% is moving abroad to various new businesses.

It is possible to buy a hard asset in the US - however - the prices are so ridiculous with the long term growth potential so low that I could not find anything of remote interest.

Abroad you have growth potential and also currency appreciation potential (depending on which currency) in addition to hard asset potential. A hard asset for me is some type of business or commodity which is income producing and a daily consumable.

BTW the Russian Fed numbers are completely worthless. Besides the fact that a large part (majority possibly even) of the economy is 'black' i.e. underground, Russians all have tremendous amounts of money which is largely absent from venues where it can be counted (banks, stocks, bonds, salaries, etc). This is despite bank interest rates of 9% and up!

Many businesses have the 80/20 rule: 80% of pay is in a paper bag. I have seen $1M+ transactions conducted in cash to avoid taxes and Russia FICA equivalents even though taxes are 13% flat and with FICA only equal 30%. Russian FICA also covers national health.

Monetary growth is certainly something to be aware of, but what is just as important is the growth of the underlying economy. In the US, value creation is slim to none outside of financial services - that is the primary problem.

[dbarberic]

Re: Coming Ka Event: Real or Nominal?

First the hyerlink in Y/Y increases in money supply, it that something you put in the post, or did the iTulip system put it in? You dated the data, but the hyperlink refers to a book. Not real important, but kind of important.

Link removed. Not supposed to be there.

[friendly_jacek]

Re: Coming Ka Event: Real or Nominal?

I want to repeat a question that I posed once before, will the “Ka” be in nominal, or in real dollars and could the “Ka” occur in one segment of the market? It never seemed like we came to a conslusion on the thread.

A fair amount of my current portfolio is sitting in money market waiting for the “Ka” moment to occur to move towards fully invested. But, I’m beginning to become concerned that with the sheer volume of money printing that is occurring in just about all global central banks, that a nominal “Ka” event in the general stock market may not occur because all asset classes are riding a massive wave of liquidity and I don't see the central banks stopping it anytime soon.

Global markets are inflating their currencies, many in double digits.

As of 07/09/07, Country YOY %

• Russian Fed. M2 50.94
• India M3 19.70
• China M2 16.74
• Australia M3 14.05
• United Kingdom M4 13.84
• Mexico M4 12.21
• Brazil M2 11.92
• Denmark M3 10.62
• Korea M3 10.07
• Canada M3 8.08
• OECD Total M3/ EUROZONE 7.86/10.9
• United States M3 reconstructed 13.7
• Germany M3 6.16

As discussed else where, priced in terms of various hard assets, the US market is actually crashing, not rising. If the “Ka’ event is to occur in real dollars and not in nominal dollars, then I should be fully invested now and in hard assets to protect my purchasing power.

I understand the risks in the market place related to the housing/mortgage industry, but are we sure that it will ultimately manifest itself in a Ka event in nominal dollars in the general stock market. Or, with the current massive amount of US money printing, isn’t is possible that the Fed will step in and sweep this thing away using what ever means necessary and the stock market will keep hammering away on wave of liquidity. In that case, the Ka event will manifest itself in a busted housing market and devalued USD in real terms, but in nominal terms, the stock market will be breaking new records.

I bring this up, because your expectations for what exactly will be the Ka event has profound implications for how you want to allocate your portfolio now.

When I first came across itulip and similar sites at the beginning of this year, I became convinced of the Ka cause. With a lot of trepidation, I made a few investment moves. Some were very profitable such as going from US to global equities in my 401k or investing in commodities (oil and PM); some were not so good (shorting small US caps and some financial/mortgage stocks with modest losses).
Now, I just came back from a long trip to Europe and I saw a great economic expansion and investments in infrastructure, especially in Eastern Europe. Some of those countries are just beginning to experience benefits of personal credit and mortgage. There is no way this will stop anytime soon and most likely not before 2008-2010. It looks like we are in the midst of a poom phase. I admit that EJ’s "Ka-Poom Theory" Chart is misleading some.

The below threads are very helpful (IMHO):
http://www.itulip.com/forums/showthread.php?t=1442
http://www.itulip.com/forums/showthread.php?t=1475

[metalman]

Re: Coming Ka Event: Real or Nominal?

my read on ka-poom is that it's inevitable but the timing is unpredictable. i've been reading this site for many years. ej warned folks in 1999 about the 2000 correction. there was still money to be made between then and april 2000 but the problem with trying to find the top is... try getting out. and you got to look at the whole itulip context... rogers and finkel and hudson and twin focus ... all these guys. what keeps me awake is my gold/silver go down hard with my stocks while i wait for years ala 2000 - 2002 for the fed to rescue my ass. not sure i have the stomach for that. in fact, gold didn't really start to shine until 2004. that's 3 years. are we all thinking on the wrong timescale for ka-poom? it's a long cycle. maybe ej can give us an update/summary on where we're at in the ka-poom cycle.

[Guest]

Re: Coming Ka Event: Real or Nominal?

Regarding holding Gold bullion through KA :

There is supposed to be a clear advantage to being parked in B0nars or treasuries directly on either side of a crash. That's maybe taking a quite short term view if you otherwise believe "cash is trash" the rest of the time due to CB misuse of the currencies.

Picking a strategy where one is going to chose when to get into cash in anticipation of a big crash or big decline has a flaw - you cannot time it.

Looking back at the 1970's very few people actually made any money from the massive gold bull market, even in bullion - they were lured by the deceptive market into jumping in or out at the wrong times. After a decade, the market outwitted them at most of the turns.

If we don't seriously expect a drawdown of more than 20-30% at very worst - the committed investor holds bullion right through the KA. To not accept the prospect of a possible 20% drawdown in the near term suggests one lacks confidence in the outcome, in which case the investment should be re-examined.

[Jim Nickerson]

Re: Coming Ka Event: Real or Nominal?

http://www.shadowstats.com/cgi-bin/sgs/?ref=234993 Shadowstats.com, John Williams. Look at this chart, and it shows about 2.5% disinflationary move from perhaps mid-2006 until approximately end of Oct. 2006. Could that be it for Ka-? Same chart now shows inflation increasing, and gold has been too.

Finster, who is possibly visiting up in the international space station, has not updated his short-term rate of inflation chart in three weeks now, but it has been showing disinflation for a long time. http://users.zoominternet.net/~fwuthering/FFF/Inflation

I just read Richard Russell's daily comments from Thursday (being bearish, I was so down trodden I couldn't bring myself to read it Thursday) and Friday. About precious metals he wrote Friday

Anyway you look at it, this action is bullish for the precious metals. For holders of the metals or their stocks, all that's needed now is patience. The action is bullish, which is what this chart is telling us. To participate in the action of gold and silver, all you need are three funds -- GLD, GDX, and SLV. And, of course, you also need the missing ingredient -- patience.

Regarding the general equity markets and Dow Theory, he wrote Friday

After yesterday's upside surge, I thought today's performance was surprisingly good. Instead of backing off, the market was higher. My PTI rose to a new record high. Furthermore, from a Dow Theory standpoint the new record highs in BOTH the Industrials and Transports was a HUGE PLUS in the price structure, and the Dow Averages were confirmed by a new high in the S&P. Who could ask for anything more.

The market is overbought and it seems to be staying overbought -- characteristic of a very powerful market. So far the stock market is not supplying investors or even traders with an advantageous place to enter. You have your choice -- close your eyes, clench your fists and buy 'em -- or wait for a better entry point.

Meanwhile, the bull has Wall Street by the horns. And the third phase of the great bull market heads higher.

Dan Sullivan, another advisor I follow (The Chartist) Friday recommended 10 more stocks for Traders on the close Friday.

Now here are two old guys, Russell really old at 82 and Sullivan a bit younger I believe, who seem unrelentingly bullish right now. Russell strikes me as screamingly bullish. One could take this on contrarian basis as a "sell signal." On the other hand, I have to ask is Russell really as sharp as a lot of people give him credit for being? I don't know, but there is no mistaking his bullishness after not having been for 4+ years. He may turn out to be a big fool, or he may be correct.

I try to track a bunch of ETF's, and I isolated 15 this morning all of which are very near their highs, and I chose them additionally because the volume figures I have suggests these are not thinly traded ETF's. I looked at the charts on all these mothers, and damned if I do not believe that they all are really breaking out. For anyone interested they are EEM, EWH, EWS, EWT, EWW, EWY, EWZ, FXI, IWF, IWO, RTH, SMH, XLB, XLE, XLI. Perhaps the weakest I remember was EWW.

My conclusion from all this is perhaps we are in Poom now.

[grapejelly]

Re: Coming Ka Event: Real or Nominal?

I subscribe to Steve Saville's Speculative-Investor letter. He discussed Russell at length a month back I recall. He said Russell is misled by inflation, plain an simple. I tend to believe Saville's point here.

Look at it like Zimbabwe and you get it instantly: if you applied Dow Theory to Zimbabwe, you'd be screamingly bullish also.

The real issues are what is the bond market doing and what will it do? Saville points out that the bond market has been underestimating inflation. At some point the bond market will realize that inflation is much worse than what was thought, and the "bond vigalantes" will return.

That will drive stocks down in both real and nominal terms.

The other source of angst has to be that great worldwide inflation driver, Japan. At some point, nobody knows when the Yen carry trade will unwind. See above re bond prices.

This has the feel of a blowoff top to me. I also noticed that in the last two weeks, my junior miners have diverged from the rest of the market. That is unusual. For the longest time over the past year at least, they went up with the market (but weaker) and down with the market (but weaker). Now they haven't gone up or down with the market...I don't have the quantitative inclination to research this properly but that is my impression from my own portfolio.

Finally, in answer to the OP, I will point out that the market volatility has increased this past week or two, and there are some beginning rumblings of credit spreads (finally) widening...

[Jim Nickerson]

Re: Coming Ka Event: Real or Nominal?

I subscribe to Steve Saville's Speculative-Investor letter. He discussed Russell at length a month back I recall. He said Russell is misled by inflation, plain an simple. I tend to believe Saville's point here.

Look at it like Zimbabwe and you get it instantly: if you applied Dow Theory to Zimbabwe, you'd be screamingly bullish also.

The real issues are what is the bond market doing and what will it do? Saville points out that the bond market has been underestimating inflation. At some point the bond market will realize that inflation is much worse than what was thought, and the "bond vigalantes" will return.

That will drive stocks down in both real and nominal terms.

The other source of angst has to be that great worldwide inflation driver, Japan. At some point, nobody knows when the Yen carry trade will unwind. See above re bond prices.

This has the feel of a blowoff top to me. I also noticed that in the last two weeks, my junior miners have diverged from the rest of the market. That is unusual. For the longest time over the past year at least, they went up with the market (but weaker) and down with the market (but weaker). Now they haven't gone up or down with the market...I don't have the quantitative inclination to research this properly but that is my impression from my own portfolio.

Finally, in answer to the OP, I will point out that the market volatility has increased this past week or two, and there are some beginning rumblings of credit spreads (finally) widening...

Is there even a stock market in Zimbabwe? I don't know.

Here's a conversation Russell had with himself on 7/9/07, wherein his imaginary friend is posing questions and Russell writes his answers.

Question -- Russell, I know that you're writing for over 10,000 subscribers and you have to be careful about what you say. But c'mon, drop the blasted caution -- pretend you're talking to a tight-mouthed friend, and it's off the record. Where do you really think we're heading?

Answer -- Off the record? OK, here goes. We're sort of insulated here in the US. The average American doesn't realize what's happening in Shanghai, in India, in Asia, in Australia, in Turkey. I believe we're moving into a worldwide, inflationary boom of unprecedented proportions.

Almost every central bank on the planet is now boosting its money supply.-- nobody wants an "expensive" currency. Commodity prices in general are booming. Oil prices are surging. Populations that never owned cars before are buying cars hand-over-fist. Airline orders are in backlog. Defense orders are surging. The luxury business is running wild. Housing prices the world over are heading north.

Stock markets here in the US have had a big move; they're overbought and have been resting. Yet, consider this -- the S&P hasn't even bettered its year 2000 record high. It will.

I'm watching gold, a gold breakout may be the trigger that lights up the US markets. Here's what I'm watching for. On my P&F chart a price of 670 on spot gold would be a big gold bull signal. On GLD, the gold ETF (again P&F) the bull signal will come at a price of 69.

HUI has turned bullish and it's upside P&F "count" is 420. GDX, the gold-share ETF will issue a bull signal at a price of 44.

Question -- Russell, why are you targeting gold and gold stocks as the trigger that will set off the boom?

Answer -- Gold has been held back for 14 months. Rising gold is something the public understands. It's a psychological phenomenon. When gold breaks out to new highs and heads north, it sets investors' hearts beating faster. It's something in the DNA of mankind. That's why I'm using gold and gold shares as a sort of "trigger." Long-time subscribers probably remember this one -- "There's no fever like gold fever."

I don't think Russell is unaware of inflation. I guess all of us have seen the DJI adjusted in terms of gold. That doesn't mean that the equity markets will not continue up in nominal terms. If it takes more bonars to buy something, which in my life it almost always has except for electronics, wouldn't you rather have more bonars--one way to get them is to hold assets that appreciate in bonars.

[EJ]

Re: Coming Ka Event: Real or Nominal?

All,

Great questions. We're working up an update, after a dozen interviews with fund managers, investment bankers, and many others over the past few weeks.

Briefly, "Ka" as defined by Ka-Poom Theory is a rush to liquidity. It is a period of fear and confusion in global financial markets. If we've experienced anything that approaches a period of fear and confusion–and it won't be the kind of thing you can sleep through–I must have missed it. We had a couple of minor episodes, and some recent volatility, but no big deal. Instead every newsletter writer and talking head has a line about how emerging markets are now risk free, you can't lose money in Asia, etc, and various clever explanations for why a collective global central banks put is an even more sure bet that the Fed put of old. The obvious problem with the global central banks put is that it causes market participants to need to take more and more risk to achieve the returns to which everyone has become accustomed, or the fund managers get fired. Most fund managers, and as we'll soon learn the ratings agencies, all knew that sub-prime securities were doomed. So why sell them? Because if your bank doesn't, your competitor will. That is the dynamic that underpins the great global liquidity. It may result in risk pricing distortions so severe that we see the stock markets rising well into the Q4 recession, with reflation by omnipotent global CBs, the eventual success of which cannot be questioned by anyone who knows anything, already baked into securities prices.

"Poom" is when reflation goes haywire, due to a political breakdown in the system. The dollar hot potato is dropped. Interest rates rise instead of falling to 3% as Gross expects, or used to expect (I've lost track.)

This "Ka" event will not be like 2000, led by a sell-off in the equity markets. That will be a secondary event. This crisis will center on the bond and currency markets where most of the sources of instability are buried.

The markets continue to rally, and may have a ways to go, but not for the reasons Russell thinks. I got out of public stocks in late 1998, missing huge run-ups that happened until March 2000. I also had lots of money at stake in private deals, so I had plenty of speculative exposure and enough paid off to make the risk worthwhile. I do not blame anyone for wanting to stick around to pick up the really big piles of coins that appear in front of the steam roller toward the end of a cycle, just so long as one is aware that that's what one is doing. No doubt there is big money to be made picking up big piles of money as the roller comes nearer, because everyone else has already run away scared, leaving more for you. The decision to stay in depends on your appetite for risk, and that's personal. But if anyone stays in because they believe something has fundamentally changed about risk pricing, as Russell seems to believe, they will likely be disappointed.

[Jim Nickerson]

Re: Coming Ka Event: Real or Nominal?

All,

Great questions. We're working up an update, after a dozen interviews with fund managers, investment bankers, and many others over the past few weeks.

Briefly, "Ka" as defined by Ka-Poom Theory is a rush to liquidity. It is a period of fear and confusion in global financial markets. If we've experienced anything that approaches a period of fear and confusion–and it won't be the kind of thing you can sleep through–I must have missed it. We had a couple of minor episodes, and some recent volatility, but no big deal. Instead every newsletter writer and talking head has a line about how emerging markets are now risk free, you can't lose money in Asia, etc, and various clever explanations for why a collective global central banks put is an even more sure bet that the Fed put of old. The obvious problem with the global central banks put is that it causes market participants to need to take more and more risk to achieve the returns to which everyone has become accustomed, or the fund managers get fired. Most fund managers, and as we'll soon learn the ratings agencies, all knew that sub-prime securities were doomed. So why sell them? Because if your bank doesn't, your competitor will. That is the dynamic that underpins the great global liquidity. It may result in risk pricing distortions so severe that we see the stock markets rising well into the Q4 recession, with reflation by omnipotent global CBs, the eventual success of which cannot be questioned by anyone who knows anything, already baked into securities prices.

"Poom" is when reflation goes haywire, due to a political breakdown in the system. The dollar hot potato is dropped. Interest rates rise instead of falling to 3% as Gross expects, or used to expect (I've lost track.)

This "Ka" event will not be like 2000, led by a sell-off in the equity markets. That will be a secondary event. This crisis will center on the bond and currency markets where most of the sources of instability are buried.

The markets continue to rally, and may have a ways to go, but not for the reasons Russell thinks. I got out of public stocks in late 1998, missing huge run-ups that happened until March 2000. I also had lots of money at stake in private deals, so I had plenty of speculative exposure and enough paid off to make the risk worthwhile. I do not blame anyone for wanting to stick around to pick up the really big piles of coins that appear in front of the steam roller toward the end of a cycle, just so long as one is aware that that's what one is doing. No doubt there is big money to be made picking up big piles of money as the roller comes nearer, because everyone else has already run away scared, leaving more for you. The decision to stay in depends on your appetite for risk, and that's personal. But if anyone stays in because they believe something has fundamentally changed about risk pricing, as Russell seems to believe, they will likely be disappointed.

EJ,

I guess you kinda know me enough to appreciate I am no whiz in comprehending a lot of this stuff. I don't know what Richard Russell thinks he knows in his heart, but I interpret what he is saying about there coming a "third phase" of the bull market, which I guess dates from at least 1981-82, or even some I believe 1974, with further appreciation in equities because of the massive liquidity which he believes or knows exists. I don't recall that he has argued there are no risks in any markets. I interpret his bullishness being based on his evaluation of a lot of markets from a technical perspective. He has not to my recollection mentioned anything about there being values in anything especially except precious metals on which he has been steadfastly bullish.

It seems to me he is saying, "To hell with fundamentals, the action of the markets say they are going to go up." Perhaps other subscribers to his service will interpret all this differently.

I am not saying he's correct and you are not. I absolutely do not know who is correct.

Another thing Russell apparently thinks is that the "public" has not been in the market, and when the "public" does get in, that will boost it even more. Now I don't know how anyone assesses just who the "public" is, or how anyone assesses how much whoever is the "public" is in or out of the markets. I don't know whether such comments are idle speculation, or if they have some basis.

[friendly_jacek]

Re: Coming Ka Event: Real or Nominal?

Another thing Russell apparently thinks is that the "public" has not been in the market, and when the "public" does get in, that will boost it even more. Now I don't know how anyone assesses just who the "public" is, or how anyone assesses how much whoever is the "public" is in or out of the markets. I don't know whether such comments are idle speculation, or if they have some basis.

http://www.contraryinvestor.com/mo.htm has some good explanation on "public" in the last paragraph of the July monthly observation.

[zoog]

Re: Coming Ka Event: Real or Nominal?

http://www.contraryinvestor.com/mo.htm has some good explanation on "public" in the last paragraph of the July monthly observation.

Either the public indeed wakes up and starts throwing money at the US equity market hand over fist to finally "get in on the action", or the public simply is not going to show up, implying they are short on the ability to invest (cash).

As the Housing ATM has been spitting everyone's cards out, I would suspect the latter is the case. Without the general public jumping in, I'm not sure how bubblicious the stock market can get this time.

It may result in risk pricing distortions so severe that we see the stock markets rising well into the Q4 recession...

This seems plausible especially if a lack of Joe Public investors prevents things from going vertical between now and then.

[Jim Nickerson]

Re: Coming Ka Event: Real or Nominal?

http://www.contraryinvestor.com/mo.htm has some good explanation on "public" in the last paragraph of the July monthly observation.

That reference doesn't answer the question. Who is the public and who really knows what the public is doing.

Zoog, perhaps I am different, but I never took a penny out of my house loan to invest in stock market equities. If people are setting on cash in their investment accounts because they have been fearful of a market collapse, there could be who knows how much money that could go into things that might move the indices. EJ has cash I think, and I know I do. EJ's cash might move the market, but mine wouldn't be enough to produce a gnat's fart. But I don't who it is that writes commentary on web or MSM that knows how much cash I have or that anyone else has.