Just Say No To Stocks

TINA is not a girl, it stands for “There Is No Alternative” to stock investments.

This is the latest obfuscation by Wall Street. It’s the typical illusion deliberately created at market tops to keep naïve money managers from selling, because that would interfere with the selling and shorting by the large Wall Street firms.

Wall Street never mentions that stocks are vastly overvalued. The smartest money managers say they can’t find anything to buy. They never tell you that corporate earnings have now had an earnings decline for five consecutive quarters.

Why China’s Crisis Threatens Your Wealth

Many US investors say, “why should I be interested in what is happening in China? I would never intend to invest there.”

Over three years ago, I wrote an e-book, The Coming China Crisis. Surprisingly, a number of our clients asked, “why would I be interested in China?” When you look at how the global markets are intertwined as I do, with China accounting for more than 50% of global economic growth, I was surprised to hear that. Perhaps now people are more enlightened.

The Bear Market Rally Is Just ‘Smoke And Mirrors’

We hear so many reasons for the stock market to have had the big plunge last August 24, when the DOW plunged 1089 points in less than 30 minutes. We are told to believe that investors suddenly all turned bearish at the same instance. The word “manipulation” is never used.

Many investors didn’t even know that many ETFs plunged 30%-40% in that same time interval, although the stocks held by the ETF may only have declined 10% or so. How is that possible? The regulators swept it under the rug.

Is The Stock Market Rally Running Out Of Gas?

The major central banks, the U.S. Fed, the ECB and the Bank of Japan have all pledged to provide liquidity as far as the eye can see. The only problem: it hasn’t worked. So either it has backfired and actually subdued economic growth, or as Nobel Laureate Paul Krugman would say, they haven’t done enough.

At Dohmen Capital, we don’t agree with the Krugman theory. If something hasn’t worked for five years, in various economic zones, it seems to be a good clue that it’s the wrong medicine. Call the doctor!

The Fiction Of Earnings Growth

The financial establishment’s wonderful corporate earnings forecasts of last year are going up in smoke. It was all hype, probably with the goal to keep investors from selling, as that would have interfered with the selling from the establishment’s own portfolios.

Look at the cuts in earnings forecasts. In late 2014, some Wall Street forecasts were for a 15% rise in corporate earnings in 2015. I wrote in our Dohmen Capital services that there would be a decline. As it turned out, earnings declined 4.9% year-over-year in the 4th quarter of 2015 according to FactSet.

Bulls and Bears: Beware of this Market Rally

Markets oscillate, they don’t go in a straight line. Novice investors often don’t realize that. When I speak at a conference, and for example I am bullish on the stock market, an investor will come up and say, “But you’re wrong because the stock market was down the past two days.”

Such an investor should buy US Treasuries and go golfing.

Oscillations and waves occur everywhere in the universe. Did you hear about the recent discovery of “gravity waves” the existence of which was predicted by Einstein? Finally they have instrument to prove their existence.

Is Gold Making A Triumphant Comeback?

Analyzing the long term economic and market cycles, the probability is very high that the stock market downturn may eventually be the worst since the Great Depression. Of course, there are many more safety nets now, and the central banks of the world will coordinate in order to soften a decline. But the Fed and other central bankers are not the solution. They are the problem.

All the ‘safety nets’ have to be paid for with money the governments don’t have. Therefore, it will have to be financed with ‘money creation’ by their central banks.

Is It Too Late For Investors To Panic?

In the first phase of a devastating bear market, such as early 2008, analysts always say, “Don’t panic. No one ever made money panicking.”

Our reply is that panicking is very productive at times. Panic is a protective response built into all life forms. It triggers the flow of adrenalin, which initiates a “fight or flight” response giving you either more speed when running away, or more energy to fight and make decisions.

Why The Next Two Years Could Be Worse Than 2008

On December 16, the Fed hiked interest rates by 0.25% as widely expected. The majority of analysts had predicted that because almost every Fed official coming into the media had made the case for a hike for several months.

In other words, the members of the FOMC had made up their minds, no matter what the facts were.

I wrote in our award-winning Wellington Letter that a hike would lead to a severe reduction of liquidity, and thus a strong market plunge in 2016.

Here Comes The Recession And Bear Market

Let me discuss one major error of most analysts you see in the media. It is about the Fed rate hike. There is a great misconception.

The majority of analysts tell you that the 0.25% rate hike by the Fed is not important. They obviously know little about how the Fed works.

But this is much more important than just a small rate hike. One has to know what it compels the Fed to do to achieve its goal.