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.

Why Apple Will Enter A Bear Market In 2016

Apple is the darling of many investors. The expectation is that the company can do no wrong. Such unrealistic expectations are always shattered. It’s just a matter of time.

Hedge Funds loved Apple. Carl Icahn bought over 53 million shares, and the Apple ‘groupies’ on the internet insult everyone who pointed out the future negatives with four letter words instead of facts.

Can China Reflate Its Economy?

Now the global institutions think it is better to issue warnings rather than continue hiding the big problems. Only Wall Street analysts still play the “let’s pretend all is well” game.

We hear all the time that China cannot have a crisis because it has $3.7 TRILLION in reserves. We disagree with that for several reasons. First, who has counted that? Is this Chinese accounting? It may have accumulated over the years, but hasn’t it been spent on extravagant and unproductive governmental projects, such as building cities where no one except the street sweepers live?

Year-End Rally Now, But Then What?

As everyone knows, the seasonally positive period of the year has started. The recent August-September crash, during which the DJI plunged 1089 points in about 30 minutes, caused a lot of selling by over-invested money managers. But then the market formed a double-bottom on September 29. One day prior, On September 28, we issued a “Special Bulletin” saying:

The major indices are getting close to their August 24 crash bottom. Old lows provide support. There will be lots of bulls buying, thinking that a good bottom has been made. That will produce a bounce.

The Important Message From Junk Bonds

The ever important Junk Bond market is giving us key signals right now! Could this be the next crisis to take over the markets? Check out at the chart below.

Currently, 15.7% of all junk bonds are classified as “distressed.” That the highest since 2012. We predict that soon it will be the highest since the global crisis of 2008-2009.

Junk bonds have plunged since 2013, while the S&P continued to make new highs.

Alibaba: One Year After—Celebrating The Losses

Today is the anniversary of Alibaba’s founders sucking $22 billion out of pockets of US investors. About 40% of that, or $8.8 billion, has already gone to money heaven. The media is full of stories about this firm.

Even after the plunge, 39 Wall Street analysts have a “buy” on the stock, while there is only one with a “sell.” That’s wonderful for experienced contrarians. Shorting such lopsided advice can be very profitable. We predict that eventually there will be “class-action” law suits for lack of disclosure of the IPO.