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  • Re: Bearish Information Re. Panel discussion with Faber, Moebius, et. al.

    http://www.marketoracle.co.uk/Article1386.html dated 6/27/07

    To me, some interesting exerpts.
    Marc Faber: We had a more than 20-year bull market in bonds - Sept 21, 1981, to June 2003 when the 10-year (US) Treasury bond yield fell to 3.3 per cent and the JGB (Japanese government bond) yield fell to less than 0.5 per cent. We are now at the onset of a major bear market in bonds worldwide that should bring interest rates above the level in 1981 when US Treasuries were yielding over 15 per cent. But this process will take at least 10 years. In this environment stocks will not do well in real terms but will rise in nominal terms. How high will depend on (US Federal Reserve chairman Ben) Bernanke's money printing presses.

    Christopher Wood: The 10-year US Treasury bond yield has broken above the long-term trend line, in place since the beginning of the great bond bull market back in 1981. The recent equity rally has occurred in the context of rising government bond yields, just as the sell-off in February/March occurred in the context of falling bond yields.

    All this suggests that the Fed model, where hundreds of billions of dollars of portfolio capital is allocated globally on the relationship between bond yields and earnings yields, has broken down.
    Marc Faber: Excess liquidity has been driven by the US current account deficit growing from 2 per cent of GDP in 1998 to close to 8 per cent now. Growth of the current account deficit has slowed down as the US consumer is struggling. If US inflation were properly measured, we would already be in a phase of stagflation in the US . (The rate of new money flowing into the global system) has slowed down considerably and so not every asset bubble can continue to expand. The global bond market was the first casualty.

    The reason that other asset markets have continued to soar is, however, increased leverage and a flight from cash into assets as people rightly begin to realise that paper money's purchasing power is collapsing. Therefore, any catalyst, no matter how small, could one day reverse investors' expectations and lead to a process of de-leveraging and a collapse in asset prices.
    Interviewer: Is it equity or bond markets that are most at risk of a severe and lasting correction?

    Marc Faber: Emerging stock markets are now vulnerable because they are the most extended. They were the prime beneficiaries of the excess liquidity.
    Mark Moebius: Those markets that have risen the most will probably suffer the greatest percentage falls, so emerging markets, since they have risen more than developed markets, should have greater declines.
    Interviewer: What would be the likely magnitude of a correction in terms of percentage fall?

    Mark Moebius: A severe market correction could range between 20 per cent and 70 per cent.

    William Thomson: That is impossible to say. It depends on the reason for the reaction and will vary from market to market. Ten per cent is hardly a correction; 25 per cent does not seem unreasonable; 50 per cent seems far too great unless we have a true crash, especially as we had one like that in 2001-3.

    Christopher Wood: If credit spreads blow, a bear market would ensue which would mean 50 per cent-plus corrections. Otherwise, corrections are likely to be limited to 10-15 per cent.

    Marc Faber: Once the shares of Goldman Sachs are down by 20 per cent from their peak the phones at the Fed and at (US Treasury Secretary) Hank Paulson's office will ring asking them to cut interest rates to support the asset markets. So, who knows? But in real terms (in gold terms) US financial assets will be 'toast' for a long time.
    Faber and Moebius are to my understanding well regarded investors. I don't know anything about Thomson and Wood.
    Jim 69 y/o

    "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

    Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

    Good judgement comes from experience; experience comes from bad judgement. Unknown.

    Comment


    • Re: Bearish Information Re: Leverage

      BEING STREET SMART
      By Sy Harding
      THE DOWNSIDE OF LEVERAGE! June 29, 2007 http://www.decisionpoint.com/TAC/HARDING.html

      Harding offers what to me is an easily understood explanation of the factors of leverage and how hedge funds have employed it, and how they may come to suffer from it.
      He concludes:
      The realization that the Bear Stearns hedge funds were apparently not even aware their mortgage-backed securities were tumbling in value, roiled markets two weeks ago. Analysts wondered how many other hedge funds holding similar investments may be forced to announce losses in coming weeks. If that happens, the falling dominoes that began in the real estate markets would not stop at the hedge funds. They would tumble on into the banks and brokerage firms that have loaned hedge funds the hundreds of billions that are at risk in those investments.

      The market's unfavorable season does seem to have an unusual overhang of potential problems this year.
      Jim 69 y/o

      "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

      Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

      Good judgement comes from experience; experience comes from bad judgement. Unknown.

      Comment


      • Re: Bearish Information Re. Gold

        MARK HULBERT 7/6/07
        Discouragement in the pits
        Commentary: Contrarian analysis more bullish about gold

        http://www.marketwatch.com/news/stor...siteid=yahoomy

        Originally posted by Hulbert
        Consider: The current HGNSI level is still markedly above its record low reading, which is minus 31.3%. It's not even as low as it was on five other occasions over the last 12 months.

        So we're not seeing anything like excessive levels of bearishness.
        The bottom line? Prospects for a meaningful gold rally are far better now than they were a month ago. But they are not good enough to justify throwing caution to the wind.

        It will be crucial to see how the gold timers react after gold rallies, whenever that begins to happen in earnest. If gold timers on balance remain cautious and skeptical, then the rally is likely to continue.
        But if the gold timers rush to jump on the bullish bandwagon, as they did in the days preceding my June 6 column, then contrarian analysis will have to conclude that the rally is yet another in a frustrating series of false starts.
        Depending upon one's personal opinion, this might just as well be in the Bullish thread, but the Bearish thread gets more hits, so here it is.
        Jim 69 y/o

        "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

        Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

        Good judgement comes from experience; experience comes from bad judgement. Unknown.

        Comment


        • 500 Trading System

          Take a look at the track record page of
          www.consensus-trading.com That's very good trading.

          Comment


          • Re: Bearish Information Re. Parallels to 1987

            http://www.msnbc.msn.com/id/19650867/site/newsweek/


            Barton Biggs considers how now is eerily similar to 1987.

            Originally posted by Barton Biggs
            Beginning in mid-May 1987, the U.S. and most other world stock markets took off, with the Dow Jones industrial average climbing from just over 2200 in late May to well over 2700 (a gain of more than 20 percent) by August. Big-capitalization blue-chip stocks led this surge. This pattern is very similar to what is currently happening. Each scare is followed by a surge to new highs. Gradually the bearishness is beaten out of the sellers. Big-capitalization stocks are on the rise. We could be headed for another blowoff and then a bust. My guess, though, is that in terms of time, we are in the spring of 1987. There could be a spike ahead. But then watch out.
            I believe Biggs is retired now, but he used to be something like global strategist for Morgan Stanley. Personally the things I read that were attributed to him generally made good sense.
            Jim 69 y/o

            "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

            Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

            Good judgement comes from experience; experience comes from bad judgement. Unknown.

            Comment


            • Re: Bearish Information Re. Hussman on risks.

              http://hussmanfunds.com/wmc/wmc070709.htm 7/9/07

              Originally posted by John Hussman
              • With stock valuations rich, interest rates still relatively low but clearly rising, just 18% of investment advisors bearish, and short-term trends overbought, my hope is that investors do not allow the excitement (or frustration) of a market near new highs to obscure the very real danger here for long-term investors. The best performing investment models I've developed over the past 25 years are defensive. Those with a record of strong full-cycle returns at limited risk consistently reject market exposure in the current environment. Generally speaking, if a model accepts large risks here, it accepts large losses historically.

              • We do not need to be correct about these risks immediately in order to substantially benefit from avoiding them.


              As usual, “on average” is the operative phrase. To say that stocks have substantial risk but have performed worse than Treasury bills, on average, means by definition that there is a spread of possible returns, some positive, some quite negative, but on average below Treasury bills. This of course allows for the possibility that returns in the next particular instance may be on the positive side of the average, as well as the possibility that the next particular instance may be on the negative side. In either case, my hope is that the historical analysis I've provided in recent weeks helps to underscore that the market is presently in a set of conditions where avoiding risk would have ultimately been beneficial to long-term returns. When the average expected return on stocks is below the Treasury bill yield, there is simply no reason to accept risk.
              Jim 69 y/o

              "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

              Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

              Good judgement comes from experience; experience comes from bad judgement. Unknown.

              Comment


              • Re: Bearish Information

                Buying Puts--->
                Article appeared July 16th 2007

                TraderDaily.com
                Options Check

                Bets in the options market are pointing to a 10% drop on the make in the U.S. stock market. Forewarned is forearmed and all that.

                Bets in the options market against the Standard & Poor's 500 Index have exceeded wagers it will rise by a 2-to-1 margin for a month, the longest since Bloomberg began compiling the data in 1995.
                That's seen as a warning sign the market is due for a decline of 5 to 10 percent after the S&P 500 rose to two records last week, say managers of almost $1 trillion at Morgan Stanley Global Wealth Management, National City Private Client Group and Russell Investment Group. The Leuthold Group, whose flagship fund has beaten 99 percent of similar funds over the last five years, expects the S&P 500 to slide as much as 19 percent by the end of the year.
                The options market is ``a bell ringer,'' said David Darst, who oversees $728 billion as chief investment strategist at New York-based Morgan Stanley's private banking unit. ``On a short- term basis, the market's ahead of itself and could have a pullback.'' Darst, who cashed in some stocks in the past 12 months, said the market could drop as much as 10 percent.
                The increase in so-called put options coincides with analysts' outlook for the worst corporate earnings since 2002. Retail sales slid in June by the most in almost two years, a signal that near-record gasoline prices and falling home values are taking a bigger toll on consumers than economists had forecast.
                (Continue reading this story on Bloomberg)

                Copyright © 2007 Doubledown Media, LLC. All rights reserved. Trader Monthly, 240 West 35th Street, 11th Floor, New York, NY 10001 Your use of this site is governed by our Terms of Service (http://www.traderdaily.com/members/terms.html).

                LINK TO ARTICLE
                (on bloomberg)
                Last edited by TraderJoe; July 17, 2007, 08:53 AM.
                ~Joe

                Comment


                • Re: Bearish Information

                  Originally posted by TraderJoe View Post
                  Buying Puts--->
                  Article appeared July 16th 2007


                  LINK TO ARTICLE
                  (on bloomberg)
                  Not how I was taught the game is played, I would be very worried about these puts covering and shooting the market higher, before I'd consider this to be a bearish sign.

                  The increase in so-called put options coincides with analysts' outlook for the worst corporate earnings since 2002.

                  To me the above has upside surprise written all over it, so far the press is rolling out the earnings in a very favorable light, perception is everything not the number itself. Low expections equals upside surprise not downward surprise, high expectations leads to downward surprise. Upside surprise, lots of shorts and puts in the market, tells me the market can go a lot higher before it changes direction.
                  "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
                  - Charles Mackay

                  Comment


                  • Re: Bearish Information

                    Originally posted by Tet View Post
                    Not how I was taught the game is played, I would be very worried about these puts covering and shooting the market higher, before I'd consider this to be a bearish sign.

                    The increase in so-called put options coincides with analysts' outlook for the worst corporate earnings since 2002.

                    To me the above has upside surprise written all over it, so far the press is rolling out the earnings in a very favorable light, perception is everything not the number itself. Low expections equals upside surprise not downward surprise, high expectations leads to downward surprise. Upside surprise, lots of shorts and puts in the market, tells me the market can go a lot higher before it changes direction.
                    Being somewhat of a contrarian myself, I can "half-agree" with you.....but if you read the article you will find they aren't necessarily indicated the 2-1 put buying comes from so called dumb money, but professional investors (including hedge funds who are shorting futures, not buying puts)
                    ~Joe

                    Comment


                    • Re: Bearish Information RE. Ehen not to buy.

                      http://hussmanfunds.com/wmc/wmc070716.htm

                      July 16, 2007
                      A Who's Who of Awful Times to Invest

                      John P. Hussman, Ph.D.
                      All rights reserved and actively enforced.
                      Reprint Policy

                      Originally posted by Dr. Hussman
                      December 1961 (followed by 28% market loss over 6 months)

                      January 1973 (followed by a 48% collapse over the following 20 months)

                      August 1987 (followed by a 34% plunge over the following 3 months)

                      July 1998 (followed abruptly by an 18% loss over the following 3 months)

                      July 1999 (followed by a 12% loss over the following 3 months)

                      December 1999 (followed by a 9% loss over the following 2 months)

                      March 2000 (followed by a 49% collapse in the S&P over the following 30 months)

                      The defining characteristics of these instances were:

                      1) price/peak-earnings multiple above 18

                      2) 4-year high in the S&P 500 index (on a weekly closing basis)

                      3) S&P 500 8% or more above its 52-week moving average (exponential)

                      4) rising Treasury and corporate bond yields

                      Depending on how we define the interest rate trends, we can include two additional historical instances of these conditions: October 1963 and May 1996, both closely followed by 7-10% corrections.

                      One more instance completes the list: July 2007.


                      Jim 69 y/o

                      "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

                      Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

                      Good judgement comes from experience; experience comes from bad judgement. Unknown.

                      Comment


                      • Re: Bearish Information Re. Gold Shakey.

                        http://www.decisionpoint.com/ChartSp...tSpotMenu.html

                        Originally posted by Carl Swenlin, 7/20/07
                        On Thursday our trend model for gold switched to a buy, which means our medium-term posture is bullish on gold; however, when I looked at a very long-term chart of gold I saw something that gave me a slightly queasy feeling. What I saw was that gold is forming a pattern now that has very similar dynamics to the one that preceded gold's crash in the early 1980s. Note the huge parabolic blowoff top in 1980, followed by a failed rally top, followed by the crash.

                        While the current pattern is not as exaggerated as the earlier one, the dynamics are the same -- a blowoff top, followed by a rally that has so far stalled below the previous top. To be objective, we must acknowledge that the rising trend line is still intact, but the similarity between the two patterns should keep us on edge until the current pattern is resolved.
                        Jim 69 y/o

                        "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

                        Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

                        Good judgement comes from experience; experience comes from bad judgement. Unknown.

                        Comment


                        • Re: Bearish Information Sy Harding, a decent contributor.

                          BEING STREET SMART

                          By Sy Harding
                          RED FLAGS ARE STILL FLYING IN DEBTLAND! July 20, 2007.
                          http://www.decisionpoint.com/TAC/HARDING.html

                          Harding posts an article on decisonpoint.com every Friday. It generally is concise and brings forth some decent points from Harding. It is worth putting it on one's calendar to check each Friday.
                          Last edited by Jim Nickerson; July 24, 2007, 12:28 AM.
                          Jim 69 y/o

                          "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

                          Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

                          Good judgement comes from experience; experience comes from bad judgement. Unknown.

                          Comment


                          • Re: Bearish Information Re. Buying Climax.

                            http://www.marketwatch.com/news/stor...siteid=yahoomy 7/24/0007

                            MARK HULBERT
                            The stock market's buying climax
                            Commentary: There's mounting evidence that it's losing steam

                            This was enough to satisfy the definition of what Michael Burke and John Gray of Investors Intelligence call a "buying climax." This happens whenever a security makes a new 12-month high and then closes the week with a loss. Buying climaxes "are a sign that stocks are moving from strong hands to weak ones," the editors argue.

                            Not only did the overall market experience a buying climax last week, but lots of individual stocks did so as well. According to Investors Intelligence, in fact, no fewer than 362 issues last week had a buying climax.

                            What does this mean for the overall market? Burke and Gray report that they have found, in their work, that 80% of the time following a buying climax, prices in four months' time are lower.
                            Jim 69 y/o

                            "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

                            Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

                            Good judgement comes from experience; experience comes from bad judgement. Unknown.

                            Comment


                            • Re: Bearish Information - PRPFX rising wedge update

                              On the same subject - the rising wedge for PRPFX.

                              Adjusted pattern starts at the beginning of this year and ends by mid-summer 2008. The drop should happen before that. This fund never crossed the DMA200 for the last 5 years. So, if it does, it is worth buying.

                              m.
                              Attached Files
                              медведь

                              Comment


                              • Re: Bearish Information - PRPFX rising wedge update

                                Originally posted by medved View Post
                                On the same subject - the rising wedge for PRPFX.

                                Adjusted pattern starts at the beginning of this year and ends by mid-summer 2008. The drop should happen before that. This fund never crossed the DMA200 for the last 5 years. So, if it does, it is worth buying.

                                m.
                                Originally posted by PRPFX PROSPECTUS
                                Permanent Portfolio
                                Investment Objective. The Permanent Portfolio seeks to preserve and increase the purchasing power value of its shares over the long term.
                                Principal Investment Strategies. The Permanent Portfolio invests a fixed target percentage of its net assets in each of the following investment categories:
                                • gold;
                                • silver;
                                • Swiss franc assets such as Swiss franc denominated deposits and bonds of the federal government of Switzerland;
                                • stocks of U.S. and foreign real estate and natural resource companies;
                                • aggressive growth stocks; and
                                • dollar assets such as U.S. Treasury securities and short-term corporate bonds.
                                Investments may include gold and silver bullion and bullion-type coins; Swiss franc denominated deposits and bonds of the federal government of Switzerland of any maturity; stocks of U.S. and foreign companies whose assets consist primarily of real estate and natural resources such as oil and minerals; stock warrants and stocks of U.S. companies that are expected to have a higher price volatility than the stock market as a whole; and U.S. Treasury securities and short-term corporate bonds rated “A” or higher by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“Standard & Poor’s”), and having a remaining maturity of twenty-four months or less. The Permanent Portfolio may invest in shares of companies of any market capitalization, including small- or mid-capitalization companies; however, at least 60% of its investment in aggressive growth stocks will ordinarily be in securities listed on the New York Stock Exchange. The Permanent Portfolio may own investments issued by foreign banks and governments and may own stock in foreign companies or investments held outside the United States, including emerging markets.
                                This strikes me as an interesting mutual fund. It has done well certainly for the last 5 years, and from the charts I can find, held up reasonably well from 2K top, and actually started up in early 2002 and never looked back. As of May 31, 07 has ~25% cash.

                                Does anyone including medved have any insights they wish to share?
                                Jim 69 y/o

                                "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

                                Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

                                Good judgement comes from experience; experience comes from bad judgement. Unknown.

                                Comment

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