August Price Ideas?

Lock in these low prices now! Simply borrow until the check comes in...:just-sign:

 

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How are folks losing out to inflation? If you have a standard, plain vanilla, tried and true, run of the mill, balanced portfolio, you have been kicking inflations butt every which way but Sunday.

 

I am not familiar with the article. The source for being oversold is the MACD - chart analysis, not any particular person's word for it. The easiest way I know of to see this is at netdania.com, pull up the silver spot price, enable the MACD from the Studies menu, put it to the daily view and zoom out.

 

Because not everybody is a day trader, not everybody has a job and thus a 401K in this economy, and not everybody trusts the financial system. Some people aren't as educated and don't realize they are losing out to inflation by hoarding cash. You already know that the only reason portfolios are doing so well is because of inflation going directly into those markets. You probably know that inflation beyond equilibrium creates deflationary pressure, and it remains to be seen how that will impact these markets. Yes they have done well in the last couple years since the Fed put them on life support, but that isn't a good enough reason for me to to bet on a horse destined for the glue factory.

 

Fair enough. No offense meant. I just saw that article on coinflation and wanted to comment on it anyway, in case anyone else was reading it.

The chart to me, at first blush, appears to show people are trying to ride momentum in the market. It doesn't really appear to support major price changes BECAUSE of long or short positions, it appears the longs or shorts are because of the price movement, not the other way around. As such, I am not sure what predictive value they hold.

 

I do not view equities that way. Have you studied their collective balance sheets? These firms have been making money, and hoarding it, do to uncertainty. Every year they were treading water innately they were growing in value. I simply view the past couple of years as reverting to the mean, the mean being innate value of the firms.

YES, I believe some segments are overbought. YES, there are some valuations I very much disagree with. However, to say stocks are "on life support" from the Fed I believe is being too simplistic and one sided. There is innate VALUE in these firms. What is Coca Cola worth? Well you get a piece of that value for every share you buy. You are like 1 billionth owner of the right to make and bottle Coca Cola worldwide. You are treating equities, (btw quite a few dig up PM), as some kind of handouts. YES, there have been corporate handouts, (and I have disagreed with every single one), but 99% are companies making money wanting to be left alone to run their businesses.

Btw, inflation is bad for equities. That is Finance 101. Its worst for bonds, but bad for stocks as well on the whole.

 

Aug 1 will be $16.50/Oz. I can't wait! :thumb:

 

Also note in the chart that we are at support from the former blow off top in 2008 ($21), and that the pattern is repeating based on the low after that blow off top in 2008 also hitting support from the former blow off top in 2004 ($9). There is a consistent time span between this pattern of blow off tops every ~4 years in this bull market (ignoring the one from 2006 since 2008 had a higher high and lower low) where it touches down to old support and then jumps to new highs also on a consistent percentage basis.

2004: Blow off top from 9 to 4
2008: Blow off top from 21 to 9
2011/2013: Blow off top from 49 to 21

4 * 2.33 ~ 9
9 * 2.33 ~ 21
21 * 2.33 ~ 49
49 * 2.33 ~ 114 by 2016 if the pattern remains intact.

 

You seem to be operating under the assumption that the integrity of regular stocks is enough to outweigh the disintegrity of the derivatives market which is estimated between 700 trillion and 1.7 quadrillion dollars depending on the source. Not very likely IMO. Their fates are intertwined due to counter party risk and high frequency trading.

 

Ok, one at a time. Day trading has nothing to do with inflation, it is simply a way to capitalize on VERY short trends in the market. Now if you don't have a job, and you have no money your dollars cannot inflate away, can they. Now if you don't have a 401K, why is that? Some folks would rather spend their bucks on lavish vacations then putting some away in a 401k. Sorry, I have no sympathy with them. If the reason is your company does not a 401k, open a an IRA, excuses are for losers. As far as trusting the financial system, if they think they have a better way, that is their decision, the tools to build wealth are available to all. If people are not educated about the ways of the finacial world, they should be working with a finacial planner, it is silly they should be making thier own financial decisions if they don't know what they are doing. I mean, I don't fix my own car!!! As far as educating these folks. Lord knows I have been trying my best


Moving on, I disagree with your reasons why the markets are doing so well, but at the end of the day the reasons are irrelavent. The market are going up, it was predictable, people should be there. And as far as your last statement goes, of course things will not go swimmingly well forever in any market and I simply have one word for that. DIVERSIFICATION!!!!!!

 

I believe you are correct, and when that happens, I will be ordering my monster box

 

My point was simply that there are numerous methods of investment, and not everybody is an investor or knowledgeable about markets and the history of money so it isn't fair to assume everyone automatically knows how to protect themselves from inflation or that inflation is not an insidious, hidden, and unrepresented tax.

You have said yourself, don't fight the Fed. I assumed you understood that the reason why people say that is because they are directly pumping up stocks, bonds, and MBS with QE through their primary dealers, and that fundamentals do not not take precedence over this.

The reasons are very relevant, because the reasons have consequences; causes and effects. To simply look at stocks and say, well they are at all time highs so I should buy is foolhardy because that has no bearing on whether they are overbought, underbought, safe, risky, etc... Icarus comes to mind. The reason for stocks being so high (inflation) necessitates deflationary pressure. This is typically met with more inflation, creating more pressure. It's not a sustainable model, but rather a vicious cycle. The good news for gold and silver holders is that hard assets are immune to default so even if they do take a hit they are protected in ways that traditional financial vehicles cannot be.

To be truly diversified effectively one needs assets both within and outside of the financial system, because when the derivatives start to unwind black holes of infinitely rehypothecated phony assets it will have far reaching impacts in the cyber-financial world due to counter party risk.

 

dup post

 

Again, I do not understand how you say the Fed is "inflating stocks". In what way? I agree there is tons of easy money around, but to me stocks are up due to dividend returns being higher than interest returns. With the market being up this reason is being rectified. Is this the way in which you mean the Fed is "inflating stocks"? The same could be said of PM prices, in that people were only buying them for higher anticipated returns than could be obtained from owning bonds.

Regarding your worry about derivatives, you DO know the sum value of all derivatives is zero right? So, if you are not investing in firms with high derivative participation, what risk is there? The only "risk" I see is for firms having large derivative positions, positions that either have counterparty risk that the asset may not materialize, or derivative positions that they do not understand and could hit them harder than anticipated. BUT, on the whole, the entire system is not at risk due to derivatives, since IN TOTAL all derivatives equal zero. The huge numbers you throw out is done frequently to scare uneducated market participants in my experience, (usually done by salesmen so you will buy their crud like bomb shelters, canned food and bars of silver).

 

If you can't see the connection between QE and stocks hitting all time highs I'm not sure what else to tell you. If it was a snake it would have bitten you. There is no way companies have been profitable enough for dividend returns to justify this balloon run up. Stocks are extremely disconnected from credit right now. The economy is stagnant at best. Jobs are stagnant at best (employment to population ratio).

What I don't think you are grasping about derivatives is that one single asset is used as infinite collateral. We literally have trillions and trillions of dollars of assets that are fractionally leveraged at hundreds of magnitudes to one which means that if that one asset is called upon then hundreds of other assets go *poof*. This is the method used to make institutions appear solvent when they are not, because they get to ballon their balance sheets for free by reloaning the same asset over and over. For it to be a zero sum game there needs to be real collateral backing each and every one of those rehypothecated assets which is not the case.

I am not trying to scare anybody. I'm trying to protect people from criminal activity and the risks associated. I didn't create the risk. If you saw a train wreck coming would you not warn anybody for fear of frightening them? That's silly. I disapprove of your attempt to make me out to be a fear mongerer and I also disapprove of your attempt to justify fraudulent activity. I don't have any worries about it either. I am fully protected from these people. I feel bad for those who aren't.

 

First, you are making a personal observation and equating that to the whole country. I see jobs booming, housing booming, where I live. Maybe you are living in an economically depressed area? I see profit reports from companies going up. I see their balance sheets ballooning with cash. That is why I am saying stocks are going up. If you are right, why didn't stocks go up for the whole period of QE? If there is such a direct reaction, why did it not happen earlier?

Second, my MBA specialty was derivative Finance. I think I "grasp" it sir. I think you are the one not understanding a single asset can be involved hundreds of times because the asset doesn't matter. You are the one not really grasping how its a zero net game, and its being used for the most part for legitimate purposes. The sum value, though, balloons highly because of the way the accountants account for them. If I wish to hedge something, I buy a future. If I no longer need to hedge, I sell the future. To me, I have no derivative. However, to accountants, I own two. Multiply this simple example by millions upon millions of transactions, and you quickly see how very illusory this number is. A very large percentage of these are "made up" numbers because of the way its accounted for.

That is why I am saying its not a big deal, and not worth basing your investment life upon. Should you buy companies that play deriviatives? I wouldn't, but it doesn't mean that the derivative number bandied about by market bears is overly worrisome.

Btw, point taken. I will attempt to not portray you are a fear mongerer. My only problem is that sometimes you make their exact arguments they are making to you back on this board. I do realize, though, that you are not the one trying to profit from those arguments.

 

As I stated, I am looking at the employment to population ratio. Neither of us can make any sort of accurate determination by looking at our own finite surroundings. The picture is very clear so no need to discuss further.

As I'm sure you know, QE2 was not open ended like QE3 and QE4 were which only began this year. So the new QE injections coincide with the run up in stocks which began around Christmas time in anticipation and the correlation is intact. The picture is very clear so no need to discuss further.

And now we are finally to the heart of the matter. You are a wall streeter like I said before. I feel bad for having to apologize for that one, but at least now there is no question.

The simple fact of the matter is that if you have only 1 asset then you only have value for that one asset. Having 100 phony instances of the same asset still boils down to only the value for the 1 asset no matter how you slice it. The picture is very clear so no need to discuss further.

Now that I know you fully grasp the situation, what you are failing to admit is that these derivatives have counter party risk among multiple institutions and therefore pose a serious systemic risk. However I am happy to see that you are willing to admit the numbers on these balance sheets are made up.

 

YES!!!! The permabulls here are not the fear mongerers, but I would like to humbly suggest that the permabulls are the VICTIMS of the fear mongerers as is evident by the parroting back of the fear mongerers rhetoric to a tee. It also a perfect example of how well the fear tactic works.

As a former salesman in retail electronics, I can tell you, as far as the management was concerned, our only job was to sell extended sevice contracts. They wanted the super high margins the extended service contracts delivered. It mattered little how much we actually sold, as long as we could get the service agreement. So how did we sell those contracts. You got it, FEAR baby. Convince the customer that he does not want to be looking down the barrel of a $1000 repair on his home theater, and you got him, all that is left is to tag him and bag him.

BTW, I had a problem with my moral compass in this area and decided retail sales was not for me, but the lessons I learned were priceless

 

As I stated, I am looking at the employment to population ratio. Neither of us can make any sort of accurate determination by looking at our own finite surroundings. The picture is very clear so no need to discuss further.

As I'm sure you know, QE2 was not open ended like QE3 and QE4 were which only began this year. So the new QE injections coincide with the run up in stocks which began around Christmas time in anticipation and the correlation is intact. The picture is very clear so no need to discuss further.

And now we are finally to the heart of the matter. You are a wall streeter like I said before. I feel bad for having to apologize for that one, but at least now there is no question.

The simple fact of the matter is that if you have only 1 asset then you only have value for that one asset. Having 100 phony instances of the same asset still boils down to only the value for the 1 asset no matter how you slice it. The picture is very clear so no need to discuss further.

Now that I know you fully grasp the situation, what you are failing to admit is that these derivatives have counter party risk among multiple institutions and therefore pose a serious systemic risk. However I am happy to see that you are willing to admit the numbers on these balance sheets are made up.

Read more: http://www.cointalk.com/t229478-3/#ixzz2WbUtMgEE

"No need to discuss further" huh? So we just all hold hands and elect Inflexion our El Commandante since he has all the right answers then? No sense in participating in something like a DISCUSSION forum, huh? :rolling:

I could really sleep well at night knowing I had all of the right answers and there was no further need to think.

 

Fear is the mind killer. My decisions have never been based on fear, and I have never been afraid while making them. Feel free to stereotype people as you wish. It is a free Internet, but if your definition of permabull is correct then I am not one.