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I suspect we are ready for a huge market correction...

Buckle up...

I've been expecting that since February. But hasn't happened, yet. But I'm wondering if it will. If you look at all the indicators, they are all falling off the cliff. But yet, here we are, still hanging on.

The downside trade is crowded, and that may be a sign that we are headed higher. Just can't say, even though my instinct is lower.

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The lastest and greatest... JP Morgan downgrades their Q2 GDP estimates, 2nd time in the last week. We started at 3.0%. Then then downgraded to 2.5%. And they just downgraded again to 2.0%.

This basically assures that we hit actual GDP of 1.5%.

And the kicker, they are maintaining Q3 GDP estimates of 3.0%. No way in the world that happens, short of more QE... And if someone knows something before the rest of us, it's Goldman and JP Morgan, with their direct line to Bernanke. So you can absolutely bet on more QE now, no matter what they call it going forward.

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I'm not suggesting there will be Mad Max times. But a global reset, a wholesale change in currencies, banking, taxes, regulation? Yes. Government failures, revolutions, war? Yes. But Mad Max apocolyptic civilization? No.

I find it incredible that you actually answered this question earnestly. I was trying to be darkly funny.

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I find it incredible that you actually answered this question earnestly. I was trying to be darkly funny.

Well I've had people ask me, given my pessimistic view on the global economy, what I expected out of a total collapse. A lot of people have been conditioned, based upon movies, to expect a future of Mad Max, the Terminator, etc. And for some reason, this is where people go in their minds when you talk about a total collapse. So I've had to give this answer before.

My next door neighbor is a really nice retired guy from Canada. Normal as can be, 4 kids, tons of grandkids, very friendly, on our HOA board, just an all around nice person in my experience. And pretty intelligent too. If you ask him what he expects of the future, he expects something along the lines out of Terminator. For real. He asks me about particular investments and my thoughts. And I tell him, if he thinks the terminator is coming, screw the gold, get a lot of shotgun shells. At least that slows them down.

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Very good interview with John Williams of Shadow Stats.

John Williams: No Way Out! | FINANCIAL SENSE

Summary:

He says hyperinflation by the end of 2014. Could the economy and budget be brought into balance? yes, but extremely painful. But by the time people feel enough pain to enact change, it will be too late by that point. Need people running the government to make the difficult changes we need, regardless of poll results, even if that results in being a 1-term elected official.

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Uffda, big drop today. So tempted to bail, but I'm long on all my positions. Could ditch the mutual funds for money market I suppose,

as 70% of my holdings are there (30% individual stocks)

Edited by DaYooperASBDT

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Ugly, ugly day. A 30 point move to the downside for the S&P - with volume. That's a big move.

Jobless claims tomorrow at 8:30 and Non-farm payroll on Friday 8:30.

We have the debt ceiling debate about to heat up, and QE2 running out this month. It takes the institutional funds days, even weeks, to exit positions. Without Fed liquidity we have nothing.

Should be quite interesting in the next few weeks.

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Today was a bad day but nowhere bad enough to change your long term outlook IMO. A number of bad reports came down at once. But we are still running positive from the beginning of the year. BTW, today IBD changed their outlook from 'market in correction' to 'market in confirmed uptrend.' Peeking at tomorrow's electronic version they have reversed themselves. But I wouldn't be surprised to see tomorrow make up some of today's losses. S&P futures at the moment are in positive territory. Yes, things could get ugly in the future but one day is nothing in the grand scheme of things.

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Guess it depends on what your definition of long term is. For me, it's not near as long as you. I'm old, don't have a lot of time left.

I also don't discount S&P 600 again.

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Well...It appears that another financial collapse is pending...

This one could be the BIG one...

And will supercede Dec. 21. 2012...

What stocks are out there based on preparing for impending disaters and surviving...

This thing could get ugly and out of control...

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Yeah, I suppose all this is relative to your age. I'm still 15 years or more away from retirement age. A year ago we were down 200 points in the S&P so there is a good bit a space to bail if things turn south fast. For as bad as today was the S&P still looks OK though it did drop below its 50 day MA. Bollinger bands have tightened but haven't turned south yet.

z?s=%5eGSPC&t=1y&q=&l=&z=l&p=s&a=v&p=s〈=en-US&region=US

Edited by Greenwit

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Granted, one day doesn’t make a market (I wasn’t trying to insinuate that, but it may have come off that way). But, what we have seen over the last month (market is down for the month of May), and knowing what we are looking at going forward – what exactly are we investing in?

Ask yourself what is better now than it was in 08 before the crash? Is employment better, is our debt situation better, is corporate profits better? We are looking at 100 plus oil, a housing market that is still in shambles, with no good news on the horizon. Credit has tightened significantly (as it should because we don’t need more credit – we are broke), and we have watched countless bad economic reports.

Are the banks that blew up the world any better? Not hardly. Take away FASB 157 (mark to make-it-up vs. mark to market) and half a dozen or so Wall Street banks are out of business immediately. They are just as big, or bigger, than they were before everything blew up. They are still levered to the hilt, and being bailed out by the Fed via MBS purchases, among other things. The mortgagegate problem isn’t going away any time soon, and law suits are starting to pop up everywhere (although the banks will slide out of this via payoffs).

The Fed is printing money like a drunken sailor, congress is as useless as ever, and not addressing anything that will fix the problems going forward. They talk of growth and debt reduction but talk is cheap, and in DC, usually just that – talk. Where is this growth going to come from? What will fuel our economy? I have no idea. The tech bubble blew up, housing bubble blew up, and the credit/debt bubble blew up.

For each unit of GDP we need a unit of energy. Crude is over 100 dollars a barrel and climbing again (which is recession positive), and easy credit (prior growth) gone, and jobs continuing to be lost. The days of cheap oil and easy credit are over, the only way companies can bolster their bottom lines (here in the US) is to fire people. The ponzi is out of gas, and if the Fed pulls liquidity, we have nothing. Nothing but more recession, if not depression.

Ok, I lied, we have headlines that tell us everything is just peachy – from this morning (I had to take a screenshot it was so funny).

marketwatch.JPG

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Wasn't the crash in 2008-09 caused by an 'event?' That event being the opposite of what we are seeing now....the liquidity crisis causing the collapse of the banks? I'm posing that as a question because I don't want to pretend to be an expert in these matters.

In any case, I've spent the last 40 minutes on the phone with Fidelity going over my exit strategy should things go south fast. I don't want to be in the business of trying to time the market and once you leave the market, when to get back in. I know many people who pulled out in '08-'09 and they are still not back in and missed out on tremendous growth. I don't want to be like that. I'm fine with a correction....even a big one. What happened during our last crash was not a correction.

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The last crash started with Lehman Bros and Bear Stearns going bust, or in other words, the beginnings of proof we had an insolvent banking system. That’s why (or at least what they told us) they made Goldman and Morgan Stanley into “bank holding companies” because they were investment banks/hedge funds with no legal exposure to the Fed discount window. They all took the bailout money when Paulson threatened America with “tanks in the street” and congress passed the TARP bailout. That was only the beginnings of the shenanigans that went on, and continues to go on.

I hear HBO is running the made for HBO move “Too Big To Fail” movie this month. I would love to watch it but I don’t have HBO. I did read the book. Sorkin is the author, who is on CNBC quite a bit. I think he’s shill for the banks so I’m not sold on the validity of the book. I’ve read a few on the entire thing, but still haven’t read “The Big Short” by Michael Lewis of “Moneyball” fame. His “Liar’s Poker” was a really good read. I recommend “Inside Job” which is out on video now. Very well done, and can be understood by people who don’t follow these things. Fred Mishkin is priceless.

And no, that was not a correction, that was a crash – and most of what has caused it hasn’t been fixed. The banks are still insolvent, while getting zero rate interest from the Fed, bad mortgages purchased by the Fed, and mark to fantasy accounting all in the attempt to keep their balance sheets above water. The whole thing could blow up again, and many think it will. I am in that camp, but I’ve admitted to being nuts so I’m good.

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I'm thrilled, a couple weeks I sold a stock that makes up like half my portfolio, and this morning I got back in at a 5% lower price.

I'm looking 10-20 years down the road and I was always going to get back in so it's not a huge deal, but it's always nice to make a little swing trade that saves a couple percent on your portfolio in the short term.

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The last crash started with Lehman Bros and Bear Stearns going bust, or in other words, the beginnings of proof we had an insolvent banking system. That’s why (or at least what they told us) they made Goldman and Morgan Stanley into “bank holding companies” because they were investment banks/hedge funds with no legal exposure to the Fed discount window. They all took the bailout money when Paulson threatened America with “tanks in the street” and congress passed the TARP bailout. That was only the beginnings of the shenanigans that went on, and continues to go on.

I hear HBO is running the made for HBO move “Too Big To Fail” movie this month. I would love to watch it but I don’t have HBO. I did read the book. Sorkin is the author, who is on CNBC quite a bit. I think he’s shill for the banks so I’m not sold on the validity of the book. I’ve read a few on the entire thing, but still haven’t read “The Big Short” by Michael Lewis of “Moneyball” fame. His “Liar’s Poker” was a really good read. I recommend “Inside Job” which is out on video now. Very well done, and can be understood by people who don’t follow these things. Fred Mishkin is priceless.

And no, that was not a correction, that was a crash – and most of what has caused it hasn’t been fixed. The banks are still insolvent, while getting zero rate interest from the Fed, bad mortgages purchased by the Fed, and mark to fantasy accounting all in the attempt to keep their balance sheets above water. The whole thing could blow up again, and many think it will. I am in that camp, but I’ve admitted to being nuts so I’m good.

We both know that I disagree with your interpretation of the facts/data, but I do think there's a possibility that it could blow up again. To hedge against it I'm invested in companies that maintained most of their value during that last bust, but I think will do well enough going forward. There's a handful out there that do both. I personally view that as the safest way to go right now. I'm not looking to double my money, I just don't want ride the market down or get stuck out of the game if it goes up.......if we get another bust, *then* I'll look to double, but now I'm just going to play it safe.

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Good for you Driz. I am glad to see people who manage and make decisions about their own money - I respect that greatly. And good luck for sure.

As far as if we agree or disagree - that's what makes a market -there are two sides to every trade. We just have a different strategy. There is nothing at all wrong with that. In the end I hope we all make money.

Any day my portfolio goes up (and/or the better half's) I look at her and say, "Dear, we beat the whore today." It's a great feeling.

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Today was a bad day but nowhere bad enough to change your long term outlook IMO. A number of bad reports came down at once. But we are still running positive from the beginning of the year. BTW, today IBD changed their outlook from 'market in correction' to 'market in confirmed uptrend.' Peeking at tomorrow's electronic version they have reversed themselves. But I wouldn't be surprised to see tomorrow make up some of today's losses. S&P futures at the moment are in positive territory. Yes, things could get ugly in the future but one day is nothing in the grand scheme of things.

We are up for the year based upon what? And valued in what? If you value the S&P in gold, instead of a deflating dollar, the S&P is down for the year. It's the Fed's mirage. The market looks like it's going up. Inflation adjusted, or in terms of gold, it's actually down. But people feel better because it looks like they have more moeny.

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Granted, one day doesn’t make a market (I wasn’t trying to insinuate that, but it may have come off that way). But, what we have seen over the last month (market is down for the month of May), and knowing what we are looking at going forward – what exactly are we investing in?

Ask yourself what is better now than it was in 08 before the crash? Is employment better, is our debt situation better, is corporate profits better? We are looking at 100 plus oil, a housing market that is still in shambles, with no good news on the horizon. Credit has tightened significantly (as it should because we don’t need more credit – we are broke), and we have watched countless bad economic reports.

Are the banks that blew up the world any better? Not hardly. Take away FASB 157 (mark to make-it-up vs. mark to market) and half a dozen or so Wall Street banks are out of business immediately. They are just as big, or bigger, than they were before everything blew up. They are still levered to the hilt, and being bailed out by the Fed via MBS purchases, among other things. The mortgagegate problem isn’t going away any time soon, and law suits are starting to pop up everywhere (although the banks will slide out of this via payoffs).

The Fed is printing money like a drunken sailor, congress is as useless as ever, and not addressing anything that will fix the problems going forward. They talk of growth and debt reduction but talk is cheap, and in DC, usually just that – talk. Where is this growth going to come from? What will fuel our economy? I have no idea. The tech bubble blew up, housing bubble blew up, and the credit/debt bubble blew up.

For each unit of GDP we need a unit of energy. Crude is over 100 dollars a barrel and climbing again (which is recession positive), and easy credit (prior growth) gone, and jobs continuing to be lost. The days of cheap oil and easy credit are over, the only way companies can bolster their bottom lines (here in the US) is to fire people. The ponzi is out of gas, and if the Fed pulls liquidity, we have nothing. Nothing but more recession, if not depression.

Ok, I lied, we have headlines that tell us everything is just peachy – from this morning (I had to take a screenshot it was so funny).

marketwatch.JPG

BRAVO! I couldn't have said it better myself.

The one thing I may differ on is mark-to-model vs mark-to-market. But it's really not worth the banter, and I hate talking about accounting.

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I just moved all my TSP (Government employee 401K's) to the G-fund (essentially bonds) and sold everything in my IRA's bracing for the impending mess.

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I just moved all my TSP (Government employee 401K's) to the G-fund (essentially bonds) and sold everything in my IRA's bracing for the impending mess.

I may not come. Never underestimate what Wall Street, the Fed, and crony government can do. If Benny and the Injets comes out and announced QE3, or some other silly thing, this market will take off like a rocket.

In anther thread there are some charts and talk about Jackson hole back August 27th of last year. Look at what the markets have done since then. If a guy would have just bought a simple low risk index fund that day and sold a few weeks ago - that would be a years return - easy. More than any money manager would have gotten you.

It can happen again. If this correction continues I expect the talk will turn to "the Fed needs to save us, we need another stimulus, we have to pass the debt ceiling, yada, yada, yada."

It's a ponzi scheme, ponzi's must be fed if they are to continue. TPTB want it to continue, even if on camera the CONgress clowns say otherwise.

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I just moved all my TSP (Government employee 401K's) to the G-fund (essentially bonds) and sold everything in my IRA's bracing for the impending mess.

While I agree with Screwball, a QE3 announement will send us up like a rocket, I think you made the right move over the short term. I wouldn't hold bonds for long though... perhaps 1-3 months depending upon what happens, then back into equities.

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But before Bernanke can begin talking up more QE or other easing, he needs three things: 1) Significant evidence of the economy has stalled or in decline -- this should be an awfully easy hurdle to clear as we already have this evidence; 2) It has to fit within the federal debt ceiling -- right now there is not enough capacity to monetize more debt, we will see when they negotiate the debt ceiling increase; and 3) Commodity prices have to be pounded into submission otherwise inflation will get out of hand too quickly -- and this can be done over the short term with margin shenanigans with commodity futures (just like they did to Silver earlier this month).

#1 - Check. Almost every metric reported has gone negative and missed expectations, most by large margins. This will eventually give us the market decline/crash needed by Benanke to justify more QE (or whatever he is going to call it this time).

#3 - Check. Bernanke needs the illusion that inflation is "transitory" and/or not an issue. Commodities currently getting beaten into the ground. Upon sufficiently seeing the commodities haircut, Bernanke will have his ammunition to fend off the inflation havoc his QE causes.

#2 - Still in Progress. There can be no QE until the Debt Ceiling is raised. If this is tied to a new budget with trillions of cuts, that will be August at the earliest. However, if a market crash and economy in decline with more job losses is convincing enough, I suspect we could see the Debt Limit passed earlier. But that remains to be seen.

You won't see more QE without this all coming together, and it will, we just don't know when.

But the market is likely to start pricing in QE3, as soon as Bernanke starts to indicate it will be a reality. And that might happen before the Debt Ceiling is formally raised.

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We are up for the year based upon what? And valued in what? If you value the S&P in gold, instead of a deflating dollar, the S&P is down for the year. It's the Fed's mirage. The market looks like it's going up. Inflation adjusted, or in terms of gold, it's actually down. But people feel better because it looks like they have more moeny.

During the past year our company's mutual funds are +30% small cap and approximately +20%-24% mid and large cap. How is that possibly bad? And of course the company match makes the those percentages effectively much higher from the standpoint of the investor. No, inflation is not rising that fast. I'll convert all my stocks and bonds to gold but first I need to finish my underground bunkers. BTW, I don't care the 'based on what' part....that doesn't generate any money for the retirement years.

Edited by Greenwit

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