WEEKEND THEATER - THE DEPRESSION NEXT DOOR

I'm a bit torn.  I'm very busy and yet I feel the mounting pressure to post my predictions for 2013 and also do a review of 2012.  If you have a moment read my post, CONFIDENCE LOST - 13 for 2012 where I make a few predictions about how the year would turn out.  I will probably come back and do a formal review, but the truth is, it doesn't matter, the year is over.

The score is that I felt like it would be a negative year in markets and that was wrong, but overall I hit about 8 or 9 of the 13, and especially made some good calls that made money.

It is fun to document what I'm thinking, so I will do a brief bullet point list for 2013 this weekend so we can look back and laugh about how good or how silly I've was in the beginning part of the year.

As we bask in the glory of the financial cliff deal and are joyous about how we'll continue to keep deficit spending rolling for a few more months, I thought I'd give you some weekend viewing pleasure that highlights the wonderful experience of some friends across the pond.  The Spanish were truly folks that were completely swallowed up in the housing bubble and they have suffered greatly from its bursting.

The video is a wonderful one as it really highlights how middle class families and unrelated industries get crushed when markets, investors, governments, and regular people suspend their sensibilities and assume that price increases can go on forever and that they are smart enough to exit before the collapse.

THE GREAT SPANISH CRASH





ENJOY AND HAVE A GREAT WEEKEND.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

MOVE IN THE TREASURIES (TLT) SAYS BIG THINGS ARE COMING

Just a note as I'm still trying to get back in the swing of things after returning from Florida.

Just as we saw in October of 2008 we are seeing a move in Treasuries that is abnormal.  Buyers of Treasuries in size are typically NOT Mom and Pop (although I bet we have more Moms and Pops in there than 1 year ago).  Just as we saw in 2008, bad things happen when lots of people are willing to put their money away for 30 years and receive 3.94% or sock it away in the 10 year for 2.95%.  Although when put in contrast to the money market rates or savings rates they get in their checking account it's great right?

This move in treasury rates is not good and I will be watching the bond market for additional signals that confirm this breakout.  This is not a moment to be a hero and take on a bunch of extra risk.  In fact, if we do get some sort of stock market rally, it must be used as a opportunity to unload some long positions.

GOATMUG

CAN YOU SURVIVE THIS RIDE? A LOOK AT EVEREST AND THE 1930'S

Well, Goatmug survived a well needed adventure to Disney World with the family.  As he battled with crowds and the Florida heat he was able to coax his kids to ride Space Mountain twice, Splash Mountain twice, Big Thunder River once, and Expedition Everest at Animal Kingdom 3 times.  Clearly the Goatmug family is comprised of roller coaster junkies.  The break from staring at charts all day allowed me to refresh and get a renewed picture of where we are and where we are going.  I don't have much time to write right now, so I'll leave you a taste of two pictures that probably say as much about what I think will happen as writing my normal long winded rant.

Where do I think we are going in the next 6 to 8 months?

Goatmug, that is a lovely picture of poor saps descending into terror, but is there something that you can produce that will help give us a tangible outlook for where the markets could go?

Well of course.  I pulled S&P 500 Data from Robert Schiller's website which I frequently use to look at P/E ratios.  http://www.irrationalexuberance.com/  I created a graph and added a note of how deep I believe this move could be.  The combination of economic headwinds, political leadership (lack of it), and the risk of a national debt default give me more confidence to show this picture.

 

Well As usual my blogger editor did strange things to my chart and deleted the embedded comments.  Note that we had the peak of 1929 and then the fateful crash.  We recovered from the lows driving up around 25% or so into April of 1930.  The market dropped almost without pausing through June of 1932.  During that period almost 84% of market valuation was destroyed.

I had an emailer send me data on the ERCI Leading Indicators information showing that growth is declining.  I could only respond by saying, YES, that is what we have been commenting for several months.  Today's Consumer Confidence numbers are only parroting that information.  Consumers know that things are bad and jobs are not coming on line.  This double dip I've been speaking about is about slowing growth, poor income levels, rising debt levels, rising defaults (consumer and commercial), and a lack of real job prospects (not government fake jobs!).  Oh yes, and a cliff dive on the housing recovery.  Sales, prices, are going to go down while more foreclosures are going up.  This is no mix for a recovery.

The only thing I can say is be looking for more STIMULUS!

More to come soon, buckle up.  I'm still sticking to my 950 on the S&P 500 projection here, but may need to build a fundamental and technical case for year end at 825 or so.    I also have a 1/2 year review on my Annual Projections.  My results are mixed so far, but some of the projections were so dour that I'd happily report if I was wrong.

It's good to be back.

GOATMUG

DOES THIS ARTICLE SAY THAT?

Please click on the link here for a MarketWatch article.  I think this guy is more bold in preaching his message than I am even though we are in total agreement.  (Perhaps I have a softer way of speaking?)  It's interesting to read from my perspective because I'm sitting here nodding my head as I review it, but at the same time I am shaking my head saying to myself...."this guy sounds like a whack job!" 

I guess now I know how many people feel when they read this blog.  I do try to balance the information with a good dose of bearishness sprinkled in with a picture of what could be different if I'm wrong.  I also try to highlight trend changes and things that demonstrate that improvements could be coming.

So, this guy doesn't mess around, just drops it in our laps and says get ready.  Personally, I think we have about 10 to 15 days to prepare (meaning market advance higher) and then it begins to crumble in earnest.  This is about the amount of time we've had between flash breakouts of new credit concerns in the Eurozone.  10-15 days is enough to lull one to sleep to get your portfolio blasted..  Don't say we (or the credit markets) didn't warn you.

MARKET CRASH

Oh yes, and if you are thinking that the new "Son of Stimulus" that is being thrown about by the Obama Administration is going to help us, you can think again.  $200 Billion in newly printed, errrr... wasted dollars won't do anything but give some government worker a job for a month or two.

GOATMUG