I was right.
It’s official: we had a crash Monday. And next week might be even worse. The week before last the Fed pumped an average of $188 billion per day into the system. They pumped another $650 billion YESTERDAY ALONE. This of course begs the question:
Who needs a $700 billion bailout when you can do $650 billion in one day?
I hope you took steps to protect yourself before yesterday’s action. If you’ve been reading these pages regularly, all of this should come as no surprise. In fact, if anything you probably watched the crash with some detached amusement.
To me this is the ultimate vindication. Throughout 2008 I warned time and time again that the market would become a wrecking ball for investors’ portfolios. I was laughed at, insulted, and even threatened for my bearish pessimism. Meanwhile clown after clown got up on television and talked about how the bottom was in, financials were a great buy, and the Fed’s got everything under control.
CNBC and Bloomberg have done investors and the American people a great disservice by putting these guys on camera and promoting them as experts. I tried to get on CNBC but was told they only interview money managers who have a certain amount in assets under management. They continued to promote their goldilocks view of the financial markets for months, even after the Fannie/ Freddie deal.
Well they were all wrong. And this financial crisis still isn’t anywhere near over. I realize it’s not good manners to engage in shameless self-promotion, but in light of Monday’s action I want to review my warnings from these pages during the last year. As you’ll see, I warned investors multiple times to shift their assets to cash, buy gold on the corrections, and prepare for the coming crash in the fall.
April 3rd:
If you’re an amateur investor-someone who spends less that a few hours a day researching investment opportunities- I strongly suggest moving a portion of your portfolio to cash. We are in one of the most volatile markets in years. And while the talking heads think we’ve hit a bottom, it’s highly likely stocks will be headed lower in the coming months.
April 4th
I strongly suggest buying gold during this recent pullback if you haven’t already done so.
April 28th
Investments banks that were just as exposed to mortgage backed securities as Bear Stearns- most notably Lehman Brothers- have a long way to go downwards… Financials have had a nice rally. But investors will car donations up quickly when they realize the true fundamental shift that has occurred for these businesses. Dividends will be cut if not discontinued. Banks will go under. And financial stocks will plunge again to new lows, wiping out these gains.
April 30th
…any exclamation of “worst” is just wishful thinking. And while the heads of [investment banks] may not feel any pain, their bodies are bracing for more trouble. For those of us who won’t make millions from getting it wrong, I suggest selling financials into this latest rally. You’ll be glad you did in the coming months.
May 5th
I think it’s highly probably that we will see stocks tank sometime within the next six months. If you’re fairly new to investing, I strongly suggest moving some of your portfolio out of stocks and into cash right now.
May 7th
$600 isn’t going to do anything for the US economy. And anyone who believes it will needs some serious stimulation to their brains. The US has been in a recession for months. And it’s looking worse than the recessions of 2001 home refinancing 1990…My suggestion? Save your $600. And start saving as much of your income as you can.
May 8th
Seems to me, the only thing banks don’t have much of is cash. The FDIC only insures up to $100,000 per account. However, many banks are not FDIC insured. I highly suggest finding out if your bank is. If it isn’t, you should consider shifting your money into an account that is FDIC insured.
May 16th
Anyone buying into the idea that the credit crisis is over is a Prozac prescription This is a sucker’s game. And the ones buying into financials and others companies exposed to the credit crunch are going to find out who the suckers are before the end of the year.
June 6th
… I believe the market is ripe for a major (20% or more) downturn in the coming months. Novice investors would do well to shift a sizable portion of their portfolios to cash.
June 9th
I strongly suggest you take steps to protect your portfolio now, if you haven’t already done so… The first thing I’d do is shift any “uncertain” positions into cash… A second item to consider is opening a few short positions… Finally, I suggest opening a number of hedges or investments that will do well when stocks have a rough time.
July 1st
I have to tell you, this scares me. Rarely if ever will Wall Street retract an assertion. However, to my knowledge Wall Street has NEVER in its history publicly admitted to being wrong. God only knows how bad things are going to get if they’re doing this now.
July 3rd
Both the Royal Bank of Scotland and Barclays Bank have warned about a potential crash/ financial storm in the next two months. It’s tempting to write these warnings off except for the fact that crashes occur when the market is oversold, not when it’s overbought.
July 25th
I strongly suggest covering some of your long positions and moving the money into cash or establishing some shorts.
August 7th
You see, the credit crisis is a solvency crisis, not a liquidity crisis. Put another way, you cannot solve a debt problem-and the problems facing the US, the US consumer, and even Wall Street are all debt problems-by issuing more debt. This is why the Fed’s interest rate cuts and frantic pumping of liquidity into the system haven’t done much to solve the situation… Even the permabulls and dumb money are beginning to realize that these interventions aren’t actually fixing anything.
August 12th
However, this whole situation has given us one blessing: the ability to buy gold at a low. Gold is now almost at its 2008 low. As the primary inflation hedge and catastrophe insurance, gold will be THE investment of choice for the remainder of 2008.
August 20th
I think the market is headed for a very ugly fall in the next month. I wouldn’t be surprised to see the S&P 500 fall to test and possibly even break through its July lows. I highly recommend establishing some shorts or taking profits. Things are about to get nasty.
Sept 4th
If the S&P 500 breaks below 1225 we’re in for a very, very nasty fall.
Sept 16th
I hate to say it, but the likelihood of a crash has increased dramatically. So while a 3% return in a CD or money market account might not strike you as sexy, it sure beats losing 18% with stocks: currently the S&P 500’s return for the year.
Sept 18th
I would not be surprised to see a full blown crash in the coming weeks… Move everything that you can into cash.
I told readers of my investment advisory International Wealth Advisory to close out all of their positions except gold and a single income play two weeks ago. Yesterday’s action didn’t faze us in the slightest. I hope it didn’t hurt you either. If you’ve been reading my commentary you’ve been well prepared for months.
I really wish the same could be said for the poor saps watching CNBC and Bloomberg.
Best Regards,
Graham Summers
www.gpscapitalresearch.comwww.gpscapitalresearch.com
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