Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20
Global "Debt Mountain": Beware of This "New Peak" - 13th Nov 20
Overclocking Zen 3 Ryzen 5600x, 5800x, 5900x and 5950x to 4.7ghz All Cores Cinebench R20 Scores - 13th Nov 20
Is Silver Leading Bitcoin or is Bitcoin Leading Silver? - 13th Nov 20
How Elliott Waves Simplify Your Technical Analysis - 13th Nov 20
How to buy Bitcoins using debit/credit card? - 13th Nov 20
Will COVID Vaccine Kill Gold and Silver? - 12th Nov 20
Access to Critical Market Reports - 12th Nov 20
Stock Market Dow Futures Reach 30,000 on News of COVID-19 Vaccine Trials Success - 12th Nov 20
8 Terms & Conditions You Must Know Before Asking For Life Insurance Policy Quotes - 12th Nov 20
Gold Stocks Post 2020 US Election Outlook - 11th Nov 20
Champions’ League Group Stage Draw: All You Need To Know - 11th Nov 20
Stock Market Secular Trend - 11th Nov 20
Stock Market Correction Curtailed by US Election - 11th Nov 20
What Causes a Financial Bubble? - 11th Nov 20
Ryzen 9 5900X RTX 3080 - Scan.co.uk vs Overclockers.co.uk UK Custom PC System Builder Review - 10th Nov 20
Killing Driveway Weeds FAST with a Pressure Washer - Saving Block Paving from LOTS of WEEDs - 10th Nov 20
Trump Fired, Biden Hired, What Next?  - 10th Nov 20
Looking for a Personal Loan? Here Is What You Have To Know  - 10th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Stock Market Bounce, The Suitcase Farmer

Stock-Markets / Stocks Bear Market Apr 08, 2009 - 03:30 PM GMT

By: Paul_Lamont

Stock-Markets Best Financial Markets Analysis ArticleLast month in Panic Selling Will Lead To a Sharp Bounce , we stated: "Bearish sentiment is everywhere. Investors have finally realized what we have been discussing for the last two years. And now that we are near a temporary bottom, some investors are taking action. Unfortunately, investors are reacting to the past. They should have been in cash during the downtrend...Instead, investors should be positioning themselves for a counter trend rally: by either not selling their stocks or if they are in cash, by considering market exposure (depending on your risk tolerance)."


With the market up roughly 20% in 2 weeks, investors now want to know how to reallocate their portfolio to profit from the bounce. How sentiment has changed! It is hard to believe that in the beginning of this month, investors were selling their stocks to buy CDs . Because the market has come up so far and so fast we are now less sure that we have established a multi-month bottom.

So we will take a wait and see approach until the retest of the early March low. However investors should sell their Bond positions as we continue to expect long term interest rates to rise despite the Fed's attempt to manipulate the market.

How To Prevent Panic
J. Wayne Fears in The Complete Book of Outdoor Survival states;  "Survival instructors teach that the first thing to do once you realize you are lost is to STOP ." STOP stands for S it, T hink, O bserve, and P lan. "By following this simple outline you can control your urge to panic." Some investors may find this useful as they examine their recent brokerage statements.

S it. "By sitting down you can prevent getting into deeper trouble. This one act can also start the thinking process, and it suppresses the urge to run or to make hasty decisions. You may need this time to get over the initial shock that you are lost."
T hink. "In a survival emergency, man is at the mercy of his mind. That is the reason many survival experts refer to the mind as the best survival kit. In order to survive, one must keep control of the mind by thinking back to past training, by determination, and by maintaining a positive mental attitude."
O bserve. "Observe your surroundings to discover what problems must be solved and what resources you have to solve them." 
P lan. "Now that you are organized, set plans. Maintain a good survival spirit. Dispel fears."

Meanwhile, Back at the Ranch
While Bankers have been living the high life (until recently), farmers have been going through a tough few decades. We found a useful list of " 101 Ways To Save Money " on the Alabama Cooperative Extension System website. But there have been periods in economic history when farmers and ranchers were considered the big men of the day . As Jim Rogers has stated, in the next decade the farmers (and not the bankers) will be driving the Maseratis .

***More For Clients and Subscribers***

Since that time, some commodities have gone up in a frenzy ( which in May 2008 we warned would collapse ). And collapse they did! The following chart shows the CRB Index which is near those long term lows once again.

And what can we expect at a major bottom in commodities? Let us look back to the early 30s, a bottom that supported a multi-decade commodity bull market.

The Suitcase Farmer

"To begin with, quantities of farmers had lost their farms during the hideous early years of Depression- lost them by reason of debt. These farms had mostly fallen into the hands of banks or insurance companies, or of small-town investors who had held the mortgages on them, or were being held by government bodies for non-payment of taxes, or had been bought in at tax sales ( Since Yesterday by Fredrick Lewis Allen)."

In addition to farm foreclosure, there was a drop in prices due to a lack of demand (Great Depression) and a drought of epic proportions which led to the Dust Bowl.

"In the callous old Wall Street phrase, the farms of the United States had been "passing into stronger hands"; and that meant that more and more of them, owned by people who did not live on them, were being operated by tenants....More and more the farm owner, whether or not he operated his own farm, was coming to think of himself as a business man, to think of farming as a business. He was less likely to use his farm as a means of subsistence, more likely to use as much of it as possible for the growing of crops for sale...A striking example of this trend was the appearance of the "suitcase farmer" - a small town business man who bought a farm or two, cleared them of houses and barns, spent a few weeks each year planting and harvesting them, (using his own tractor or a hired one), and otherwise devoted himself to his business, not living on the land at all. A Kansas banker told Ladd Haystead , toward the end of the decade, that he estimated that between twenty and thirty per cent of the land in western Kansas was owned by suitcase farmers. This was what was happening to the territory when the victims of drought had fled!" ( Since Yesterday by Fredrick Lewis Allen).

And how did this contrarian suitcase farmer fare?

"Farm prices rose. For example, the farmer who had received, on the average, only 33 cents a bushel of wheat in 1933 received 69 cents in 1934, 89 cents in 1935, 92 cents in 1936, $1.24 in 1937 and 88 cents in 1938. The cotton farmer who had received an average price of 5.6 cents a pound for his cotton in 1933 received between 10 and 13 cents during the next four years, and 7.9 cents in 1938."

Your Frozen Account Consultant
In January 2007 , we stated:

"With the cash you have raised from selling assets, we recommend a portfolio of 3 month U.S. Treasury Bills, which protect principal. We do provide this service, but we want to stress that you can call your financial consultant tomorrow to allocate everything into a U.S. Government-only money market fund. While this is not ideal, it will initially protect investors, until more evidence demands further preservation and our services.  History shows that most investors will not take action, but those that do, will be able to eventually buy assets at bargain prices."

After doing a review of the contents of various money market funds, many are still holding short-term debts of the Enron-like entities known as SIVs that hold leveraged mortgage assets. We see no way around money market fund investors taking losses and possibly being faced with frozen funds such as happened to auction rate securities holders . To quote one investor: “It's a moral outrage...Their pitch was, keep your cash with us, we get a higher rate.” And while we may have a bounce in confidence for a few months, we urge investors to begin the process of moving your cash to higher ground (U.S. Treasury Bills) for the next down leg. If long term interest rates rise as we expect, interest rate derivatives should provide more fireworks for the financial sector. 

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

© 2005-2019 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

6 Critical Money Making Rules