Higher Stocks But Be Careful!

Tue, Mar 29, 2011 - 7:49pm

Understanding Wall Street

Most people really do not understand Wall Street is a legalized casino designed to benefit the big boys and destroy the public, but I do. You don’t have to believe me, simply look at your mutual fund performance over the last 20 years. Look at all the boom to bust cycles we have gone through in the last 12 years in numerous sectors. In 1999-2000, you had the tech and internet bubble; in 2005, you had the blow off spike in the housing stocks; in 2008, you had the same the Ag-Chemical stocks blow off. Also, oil spiked to $145 per barrel and sharply reversed after talk of $200-$300 oil. Who always loses out? You got it, the public, while the Wall Street gets richer.

Stocks Manipulated Higher

Stocks will more than likely continue to move higher this year but I don’t believe it is for the right reasons, nor do I agree with it but I will respect it and the technicals. I firmly believe it is all manipulation led by the Fed, Wall Street and the Elitists to make us feel good while they know the economy and the world debt issues are in dire straits. The move higher will be self fulfilling because the media and pundits will spin the following reasons as to why it should go higher:

  1. Corporate Profits: Corporate profits are up and continue to rise and P/E ratios are reasonable. Agreed but how will profits hold up as input costs continue to rise?
  2. Unemployment is Improving: Unemployment rate is down to 9.4% from over 10%.
  3. GDP Improving: Latest GDP numbers from last Friday, March 25 was revised upward to 3.1% from 2.8%.
  4. Third Year of a Presidential Cycle: Since 1900 stocks have rallied 78% in the third year of a presidential cycle with an average return of 11.3% and since 1945, stocks have rallied 94% of the time with average return of 17.1%.
  5. Japan Earthquake/Tsunami Effect: Due to the devastation in Japan, there will be a big re-build taking place. Of course, this is all Wall Street focuses on.

Wall Street Ignores:

  1. Debt Issues: Debt issues show no signs of getting better in the Euro zone region nor do they here domestically. Why worry though right? The EU will come to the rescue and Bernanke will keep printing money.
  2. Unemeploment numbers: The real unemployment number is over 20% if we look at how the numbers were calculated back in the 1990’s. However, Wall Street hypes the manipulated numbers and points to an improving jobs picture.
  3. Housing Sector: Latest release of new homes sales from last Wednesday, March 23 fell to their lowest levels since data started being collected in 1963.
  4. Japan Earthquake/Tsunami Effect: One can’t help but think there could be some initial negative economic consequences of this catastrophic event.
  5. Middle East Issues: Continued unrest could escalate into further oil disruptions which could lead to even higher gas prices at the pump. This in itself, is like a tax increase.

The Federal Reserve is trying to create inflation with (Quantitative Easing) QE1 & QE2 (currently under way) in hopes of creating jobs and stimulating the economy. In reality, it is doing neither and actually hindering it. As inflation climbs, unemployment will grow and wages will remain stagnant. As usual, the anointed will continue to accumulate wealth, Wall Street and the Elitists.

People worldwide see the dilemma of the US, UK and Europe and that is partially why you are seeing the turmoil that has erupted in North Africa and the Middle East. The world public is tired of tyrants and governments that refuse to answer the needs of the people. Don’t think it can’t happen here.

Typically, in the past, when you have blow ups such as those we are seeing in North Africa and the Middle East, the dollar has rallied strongly. Not this time. The dollar is falling not only against the six major currencies, but also versus gold and silver. This to me is very worrisome. My fear is of eventual hyperinflation and thereafter a deflationary depression.

All I can say, is do not get lulled into thinking the good old days are back. Stocks may move higher this year for the reasons I have outlined above. However, does it really matter if it occurs at the expense of the US Dollar getting slammed? Be extremely careful of the stock market going into a bubble phase in down the road, which sets up a potential crash back to reality.

Conclusion:

As I have said before, if you are going to play in this legalized casino that we call Wall Street, you better be sure you are investing your money with someone who knows the ins and outs and really has your interest at heart. If your interest lies in day trading and swing trading, then make sure you learn from and partner up with someone who has experience, market savvy and knows how to beat Wall Street.


Since December of 2008 we have been teaching our members in our nightly video updates and daily live webcasts to be vigilant in this continued complex market environment. We teach our members how to protect their portfolios and actually capitalize and make money in both rising and declining markets. Take advantage of our 1 week “FREE” trial and learn how we make money on our day trades, swing trades and investments, on a consistent basis.

About the Author

Senior Trader
BrianP [at] ProfessionalStockTraderLive [dot] com ()
Financial Sense Wealth Management: Invest With Us
Subscribe to Financial Sense Newshour on iTunes
randomness