The Folly of Central Bankers

The virtually unlimited level of credit creation by the major central banks over the past seven years has created conditions never seen before in the history of mankind. Yields on government bonds in many countries are now below zero, which we have never seen to this extent in history. In Europe, over $11 TRILLION of government bonds now have a yield below zero. That means the bond owner, in effect the lender, pays interest to the borrower.

This is the ultimate absurdity. How can anyone believe that this won’t eventually result in an unstoppable crisis?

How to Fix the Fed!

The forecasts of the Federal Reserve have always been amazingly inaccurate, for at least the past four decades that I have been watching the Fed.

In fact, for 38 years at my firm, Dohmen Capital, we have used the Fed as an excellent contrarian indicator at important turning points, especially as the economy goes into recession. When the Fed Chair tells Congress “there is no recession in sight,” it confirmed our work that either the recession was immediately ahead, or had already started.

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.

15 Reasons To Sell Most Stocks Now

The start of the year has been one of the worst ever for the stock market. The bulls have been shaken, but they haven’t given up pounding the tables with their bullish message. We haven’t even seen concern break out, much less bearishness. Such lack of concern and fear in an environment of great excesses is always a flashing yellow light for me.

I look at the technical aspects of the markets, which include ‘sentiment’ and measures of money flow and exposure. Here are 15 warning signals I see for investors in 2015:

↑ Back to Top