Financial Sense Blog

The essence of contrary investing is going against the crowd, where one buys when the public sells and sells when the public buys. If the bulk of people believe that a certain outcome will occur, such as a higher future stock market, then they are likely already invested, and when there is no one left to buy the opposite typically happens in which a market selloff ensues.

The truth is probably a little of both. The critical issue remains that we have not really seen any real meaningful improvement in the economic outlook. Arguably, the economy has improved somewhat over the last year. The question remains: How high can you take stocks without significant economic improvement? The reality is that stocks can go as high as the mutual funds and institutions want to push them.

There is an intriguing Chapter in Wilhelm Roepke's 1948 book, The Moral Foundations of Civil Society, in which he writes about those nineteenth century thinkers who anticipated the crisis of the twentieth century. According to Roepke, "It appears that in all great crises of world history most people utterly deceive themselves as to where they stand, just as if Providence had drawn a veil over the impending disaster." Though a society inwardly crumbles, an "optimistic self deception" prevails -- attended by "that astounding superficiality of diagnosis with which so many of us have judged the state of the world" in the past...

The trend on the S&P 500 index, our Equities benchmark remains UP. For reasons unknown to me, this trend, now a little more than a year old, continues to cause rage, apoplexy and likely angina in a wide range of commentators and writers who insist that it is a junk rally on low volume with a host of non confirming indicators.

I looked at the long term picture on the SPY earlier in the week. Today I will look at gold and GLD. The chart below is one I originally used in my FSN article "Gold a cycle recipe for disaster" last year.

Yes you will get great sleep as a day trader - especially if you master day trading and USE STOPS.

A couple of years ago Cullen Murphy wrote an elegant little book titled with the question, "Are We Rome?" He was not specifically referring to the Roman republic, but to the late Roman Empire. It is a distinction worth making, because Rome lost its freedom and its greatness long before the barbarian incursions of the fifth century...

Due to my ongoing interest in palladium, I decided to investigate the new platinum and palladium exchange traded funds sponsored by ETF Securities.

Over the course of the last two years I’ve frequently taken a step back to look at the big picture in terms of secular trends (decade long cycles) versus the cyclical trends (year long cycles) in the stock market. Looking at past cycles and current trends I estimate a secular bear market low will occur in 2014 to 2015. The support for this estimation can be found in the following three articles below.

Perhaps it is a sign of the times we live in that we feel the need to ask ourselves this question. The answer might appear simple, in that textbook definitions normally list the following three properties of money: