When you look around and follow the news and read these blogs you know the status of stock prices today – whether they are high or low and whether it is an appropriate time to buy, sell, or hold. You should also know which asset classes you should own and how much of each is appropriate for you. These are all things the Wall Street establishment has convinced the average investor that they can’t understand or determine on their own – because it’s “too complicated” for the mere mortal to ascertain.
As demonstrated in these blogs, that’s totally bogus. These blogs, which are based on the concepts outlined and defined in my book, LOSE YOUR BROKER NOT YOUR MONEY, prove that independent investing is the best avenue to achieve financial success and independence. (Reviews)
The 15-51 Indicator is living proof that strength is indeed in numbers – smaller numbers to be exact – and that it’s easy to outperform professional fund managers and the market averages with simplicity and superior 15-51 construction.
While this important, for sure, successful portfolio management requires an unbiased view of “the Market.” Politics and political correctness can easily skew reality and prompt investors into making poor decisions – like buying high and selling low. This blog area commentary is directed strictly from the free-market perspective to benefit independent investors – one that acknowledges the critical significance world politics inflict upon marketable investments – but cares little about establishment politics, be it government, media, or Wall Street propaganda.
In a nutshell, the Dow Jones Industrial Average rattled lower this week because Wall Street is antsy because “the market” is at the top of its action zone, Europe is getting worse, Asia is slipping further into recession, and with oil prices already at $110 a barrel, the possibility of another Middle East eruption with Iran further threatens fragile Western markets. Consider this most recent Dow retreat a mere warning to make your defensive investment moves if you already haven’t done so. More volatility is on the way, sure to be followed by a major correction.
Why?
Because President Obama’s policies have failed to meet the Hope and Change promised in his first presidential campaign. His approval numbers are slipping and his recent action against the Supreme Court has disturbed many independents. Some now are considering Romney as a viable alternative that may have a chance to win – and that maybe better times might be coming. That speculation, along with a blind eye to negative Market fundamentals, has driven stock market valuations to pie-in-the-sky levels.
I caution you to not get caught up in the hype.
Remember, the mid-pint of the DJIA’s action zone is 11,342. It should be trading below that right now because the free-market is in recession. Yet the Dow closed the week around 13,000, while the 15-51 Indicator (also over-valued) closed at whopping 66,798. It should really be trading around 40,000.
Stock market valuations are currently built on pure speculation and greatly affected by current government, media, and Wall Street propaganda. In other words, valuations are up this high for political reasons – not because Market fundamentals have changed to a positive direction.
Everyone knows that the government cannot keep spending at these levels. Limited government spending will bring about the realization of a recession, as can be seen currently throughout Europe and Spain specifically, and for that reason this stock market will sell-off upon this epiphany – because that’s what stock markets do. They inflate and deflate all the time. If you’re ready for them they’re not so bad to experience and easy to profit from. Capitalizing on these events is what investors should be planning right now.
Independent investors must realize the politics in stock market valuations and not make the mistake of getting caught up in them. After all, in the face of more than one hundred bank failures the Dow Jones Industrial Average ran up to 14,100 exactly one year before the entire financial industry collapsed. Fundamentals had nothing to do with that valuation.
The same is true here.
Be careful, stay tuned, and let me know if you want to talk.
PS: This is my 100th Blog! — who said it wouldn’t last?