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Stock Markets Crash D-Day as Black October Approaches

Stock-Markets / Financial Crash Sep 29, 2008 - 10:10 AM GMT

By: Money_and_Markets


Best Financial Markets Analysis ArticleMartin Weiss writes: Tomorrow is your last chance to get on board with new inverse investments for massive profit potential in a Black October.

Plus, tomorrow is also your last opportunity to join us before we double our prices starting October 1. No exceptions, please.

I'm sorry to be so strict. But with everything that's happening in the world today, the demand for our recommendations has exploded. So to avoid too many investors crowding into investments that may have limited liquidity, we feel the higher price is the only fair mechanism to limit the number of subscribers.

But the potential payoff dwarfs the price, especially when stocks fall.

For example, if you've been following our alerts, you'll remember that Mike Larson has been targeting Wachovia Bank as a great opportunity for put options — inexpensive investments that can explode in value when stocks sink.

Well, just in a matter of a few hours on Friday, Wachovia shares plummeted so dramatically that the owners of its put options enjoyed one of the greatest and fastest profits we've witnessed in years.

This doesn't happen every day, and losses are also possible. But as this panic spreads — and as the speed of events accelerates — we're seeing these kinds of situations pop up more and more frequently. The reason ...

The Credit Crunch Is Now Reaching an Explosive Phase

More so than at any other time in our history ... and perhaps more so than in nearly every other country on the planet ... ours is a debt-addicted society.

As soon as the debt dosage is reduced, our economy suffers withdrawal pains. And if it's cut off cold turkey, the affected industries go into convulsions — precisely the drama that's unfolding before our eyes:

Credit markets are choking. Sales are collapsing. Companies are folding. Jobs are vanishing. Not next month or next year. Right now.

Just look at how Washington has panicked! In less time than it takes to appoint a dog catcher, Congress has decided to pass the most radical, most grandiose and most expensive financial rescue package of all time.

This unprecedented rush to judgment wasn't just to help members of Congress run back to their election campaigns; it was driven by the utter force of the credit market convulsions.

Specifically ...

Companies are getting cut off. Large corporations regularly issue commercial paper — short-term IOUs — to raise the cash they need to finance their day-to-day purchases, meet payroll, even pay the electric bill.

Before the crunch, in the three years through 2006, they raised an average of $223 billion per year in new money with these IOUs and similar kinds of paper, according to the Fed's latest quarterly estimates.

But now, their access to that instant cash has virtually vanished: In the 12 months ending June 30, not only were they unable to get any new money from this source, but they actually had to pay back $361 billion more than they could raise.

In this kind of credit implosion, virtually unheard of in modern times, the only choice for many companies is to promptly lay off workers, shut down operations or make a beeline to the bankruptcy courts.

Home equity loans are virtually extinct. Not long ago, consumers could go to almost any bank, borrow on their home equity and walk off with a wad of cash to spend. In 2005, for example, they took out $1 trillion in home equity loans.

But now, that giant ATM machine has been virtually unplugged: In the second quarter of this year, the pace of new home equity lending plunged to an annual rate of only $80.8 billion, down by a whopping 92% from its 2005 level. And this credit shutdown is a disaster for all companies that do business with consumers directly ... or indirectly.

Local governments are getting shut out. State and municipal governments typically have easy access to credit because of their tax-exempt status. No more! Now they're being forced to pay more or are dropping out, sending shock waves of local budget cutting across the country.

Detroit is getting slaughtered. In the first three weeks of September, car sales plunged 34% compared to the already-depressed level of one year ago. Why? Again, because of the acute and chronic shortage of credit: No auto loans = no sales.

These convulsions from the debt-addiction withdrawal are hitting small businesses, schools, churches and charitable organizations.

They're sweeping through urban communities, suburbs and farms.

They're slamming everything from Hugh Hefner's Playboy to London's 2012 Olympic Village.

No wonder Washington is spooked! No wonder the president himself is warning about financial panic!

But we've been ready for this for quite some time. We know what to do. And we're going about it step by step, without hesitation ...

Urgent Steps We're Taking

First, we warned our readers about all this a long time ago, telling them to get out of nearly all U.S. stocks. Many have heeded our warnings, and we hope you're among them.

Second, we're taking advantage of any post-bailout rally on Wall Street to help the balance of our readers get out of the market.

Third, as before, we're recommending that you shift the proceeds of your sales to cash, parking most of it in the safest, most liquid place possible: Treasury bills or Treasury-only money market funds.

Fourth, for subscribers to our Safe Money Report — ideal for this kind of crisis — we are getting ready to issue a new set of portfolio recommendations to help protect you — and profit — from what could be one of the blackest Black Octobers on record.

And remember: The more you can build your wealth now during this crisis ... the better it will be for the entire country when it comes time to reinvest after the crisis.

If you want to participate, tomorrow is your last day to join due to the convergence of two factors:

1. Major price hike October 1. This coming Wednesday, the price of our service doubles. But if you join by tomorrow, you can get in before the price increase and reap a huge savings.

2. Major new Black October recommendations. At around the same time, we are going to recommend a new set of investments to help protect you from a Black October, while giving you some of the greatest profit potential we've ever seen. And if the market enjoys a post-bailout rally that helps lower their purchase price for you, all the better!

To join now, click here .

Or for more details, including our latest report, visit this web page .

Good luck and God bless!


This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit .

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