Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Secret The Bankers Know

Stock-Markets / Stocks Bear Market Jul 06, 2009 - 12:32 AM GMT

By: Paul_Lamont

Stock-Markets

Best Financial Markets Analysis Article"Cash was, is, and always will be - king. Always have cash in reserve. Cash is the ammunition in your gun. My biggest mistake was not in following this rule more often. Time is not money because there may be times when your money should be inactive... Often money that is just sitting can be later moved into the right situation and make a fortune. Patience-Patience-Patience. Patience was the key to success - Don't be in a hurry." - Jesse Livermore. How To Trade In Stocks, 1940.


The Great Comparison

Two years ago, we began to note similarities to the beginnings of the Great Depression. Our thesis was built on financial history and circumstantial evidence. But now we can make a more substantial comparison with economic data. As you can see below, (from VOXEU.org) the world economy is either performing closely to or worse than the 1930s. For instance, the contraction in world industrial output is very similar.

***More For Clients and Subscribers***

Progress Thus Far

All assets go down in price when deflationary fear takes hold. This obviously occurred in 2008. But right now we are currently in the reflationary bounce which we forecast at the end of February. As we stated: "We expect an intense selling Panic in March, much like September's action. The sell-off should end with the failure of a significant institution. This temporary bottom will support a sharp bounce into the fall." While we didn't have the institutional failure at the bottom (we aren't perfect), we did get the sharp bounce. It could continue into the fall.

Using the 1929-1933 Dow Jones Industrial Average chart below, we have indicated our position in this bear market rally.

It is hard to ignore the next major move on that chart-which is down in a big way. After this rally peaks, we expect a replay of the credit crisis. Except this time it will be permanent. Option Arm mortgage recasts are arriving on schedule. We recommend Dr. Housing Bubble's explanation of these truly insane loans. They are as hopeful as subprime mortgages. Our Credit Collapse chart, which assisted us in warning of the credit crisis, is updated below.

In addition to Option Arms, banks will also need to refinance over $1Trillion in commercial mortgages (see chart below). Banks don't have the capital or the stomach for more losses. The bankers know they have bad loans coming down the pipe that is why they are hoarding reserves. Without more loans, defaults occur, prices fall and the downward spiral is reinforced.

***More For Clients and Subscribers***

What's Next

Over the next couple of weeks, we expect a return of fear. This correction will refuel the current bear market rally. We look forward to selling near the next bear market rally peak. Contact us if you would like us to update you during this critical juncture.

By Paul Lamont
www.LTAdvisors.net

At Lamont Trading Advisors, we provide wealth preservation strategies for our clients. For more information, contact us . Our monthly Investment Analysis Report requires a subscription fee of $40 a month. Current subscribers are allowed to freely distribute this report with proper attribution.

***No graph, chart, formula or other device offered can in and of itself be used to make trading decisions.

Copyright © 2009 Lamont Trading Advisors, Inc. Paul J. Lamont is President of Lamont Trading Advisors, Inc., a registered investment advisor in the State of Alabama . Persons in states outside of Alabama should be aware that we are relying on de minimis contact rules within their respective home state. For more information about our firm, or to receive a copy of our disclosure form ADV, please email us at advrequest@ltadvisors.net, or call (256) 850-4161.

Paul Lamont Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in