Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Four Horsemen of the Financial Markets

Stock-Markets / Financial Markets Nov 24, 2007 - 11:30 AM GMT

By: Andy_Sutton

Best Financial Markets Analysis ArticleIt's a tough market. It's tough being short because you fear the bounce. It is tough being long because you fear the fundamentals. So where do you go? You can't go into cash because you know it is losing value. It is downright foolish to hold bonds because the only thing worse than holding something that is losing value now is holding something that is likely to lose even more of its value later. Luckily, there is some stability out there, at least from a common sense perspective.

The Fundamentals

Despite a reported GDP growth of 3.9% annualized for the third quarter, it is becoming more and more obvious that we are already in a recession or at least on the verge of one. Housing has continued to be a boat anchor, the banking sector is being hit with massive writedowns for mortgages gone bad, and fuel prices across the board have remained stubbornly high, forcing consumers to make the choice between cutting back on other areas or taking on even more debt. Couple all of this with the tab on our national credit card (now well over $9 TRILLION), and it is hard to imagine a scenario in which we pay of this massive accumulated debt honestly through overproduction and underconsumption. In my view, the fundamentals have been and will continue to be a drag on our economic performance, our economic standing in the world, and the American standard of living. It is also my view that the fundamentals, even though they are not talked about all that often, play a large role in determining the direction and strength of movements in the other areas discussed in this article.

The Dollar

The Dollar's recent fall has been so dramatic that nobody even wants to talk about it. During a recent OPEC meeting, the oil ministers couldn't decide whether or not they even wanted to mention the falling dollar. Certainly, much of the hype surrounding this meeting was political in nature, but the message is pretty clear: If we don't talk about it, maybe nobody will notice. The dollar has gone nearly straight down; especially since the real turmoil in the credit markets began back in August. The US Dollar Index was poised around 82 as recently as August 15th. Early this morning, the Index traded just under 75. That adds up to an 8.5% decline in just over 3 months. While in the short-term there is always the possibility for a rally, the long-term fundamentals are awful.

Given the fact that the US is the epicenter for the recent credit blowout (which is only beginning), has persistent trade deficits, a skyrocketing national debt negligible savings, and no apparent willingness to change any of it, I predict further declines for the Dollar going forward. While the short-term positives of the Dollar's fall are trumpeted as ‘good' for our economy, the long-term negatives are virtually ignored. A weaker Dollar will cause US consumers to pay more and more for imported goods (including oil and related products). Since there are no American-made equivalents for many of these products, consumers will be faced with the choice of either paying the higher prices or doing without. I know which side of the trade I'm betting on in this case.


Gold has been in a breakout since the credit crisis and subsequent collapse in the US Dollar began in August. Recently, the yellow metal has been consolidating a bit right around the $780 to $800 area, but even on the worst days of selling, gold has held up extremely well. I dare say that perhaps at least some people are beginning to realize that gold is REAL money and that, like the 1970's, the time again has come to get out of paper and get back to a true store of wealth. The sad thing is that most will wait to buy gold until it has once again ‘proven' itself, and will miss out on a tremendous opportunity. The same may be said for silver. Once you understand the fundamentals, the problems surrounding the dollar, and the rising price of nearly everything, the decision to possess real money becomes a much easier one.


The $100 watch is on for oil. Prices have been sitting firmly above $92 for the past few weeks, and any profit taking has been met with strong buying. Oil and gas inventories in the United States have continued to diminish and OPEC has been unwilling (or unable) to meaningfully increase production. There are two major themes going on in petroleum investing right now. The first is the argument that supplies are constrained while demand is rising hence the higher prices. The frightening component to this argument is that there seems to be no way to significantly increase supplies in the near term. While oil equivalents like tar sands, oil shale and ethanol are coming online slowly, the world demand is devouring these additions with appetite to spare.

The flip side of the coin is the argument that a worldwide economic slowdown, spurred by problems in the US residential mortgage market, will serve to destroy enough demand to cause stabilization in prices. I think this argument is flawed for at least two reasons. First, the argument is dependent on the fact that the US consumer is still the driver of the world economy. Therefore, any hiccup in the US economy will ripple around the world. Secondly, the argument doesn't take into account the growth in demand of the nations that produce much of the world's oil to begin with. There is simply less to export. Many of the Gulf nations subsidize oil and gas prices for their citizens and demand is on the rise.

Also, consumerism is growing in Asia; China in particular. Sales of consumer goods in China are rising rapidly. Wal-Mart, TV, and DVD player sales are through the roof. Car sales are up drastically. There are 1.5 billion people in China alone; approximately 5X the population of the United States. It is patently absurd to assume that as these people become more and more prosperous (as their currency appreciates against ours) that they will not consume more and more of what they produce, lessening their dependence on tapped-out consumers here. They will simply cease to need us as a market for their manufactured goods.

The good news is that these four horsemen can, have, and will continue to move together. Once we understand the fundamentals and the trends, we can use them to our advantage, despite whatever daily ‘noise' the markets try to throw our way.

Best Wishes to all for a Happy Thanksgiving!!

For those individuals who are interested in specific companies and recommendations, please contact us. Due to a growing number of requests, we are going to begin offering, among other services, a paid newsletter that will profile specific recommendations on companies and industries. For a nominal fee, subscribers will receive a monthly newsletter that will discuss current issues in personal finance, investment, macroeconomics and related strategies designed to navigate today's difficult financial landscape. All interested parties should visit for forthcoming information or email us at Tomorrow's investments…Today.


By Andy Sutton

Andy Sutton holds a MBA with Honors in Economics from Moravian College and is a member of Omicron Delta Epsilon International Honor Society in Economics. He currently provides financial planning services to a growing book of clients using a conservative approach aimed at accumulating high quality, income producing assets while providing protection against a falling dollar.

Andy Sutton Archive

© 2005-2019 - 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