Investing for the Future Downturn

2012-03-02T05:50:00.002-08:00

The family rents a three-bedroom summer house in Connecticut and will go there again this year for one month instead of four. Schiff said he brings home less than $200,000 after taxes, health-insurance and 401(k) contributions.

“I wouldn’t want to whine,” Schiff said. “All I want is the stuff that I always thought, growing up, that successful parents had.”
Imagine the Stress

Imagine the stress of renting a three-bedroom summer home for only one month instead of four.

Imagine the stress of only making $350,000 pre-tax

Imagine the stress of making a mere $200,000 after tax and IRA contributions, and having to wash dishes by hand

Imagine the stress of being able to send your kids to the $32,000-a-year for the Poly Prep Country Day School in Brooklyn

2012-02-19T03:46:00.000-08:00

As the days pass and it gets closer the day I chose as the pivot day March 1st, we shall see which way the market turns up or down. We as investors must realize there are ups and downs of the stock market and filter out the noise from what we hear on Bubble Vision (CNBC) for what is real. Look at the numbers, real hard numbers, statistics, even the the governments over-inflated numbers but read between the lines and understand as to what is happening around you. Think for yourself, not what others want you to think. Every evening we are shown the problems of Europe, China, the Middle East only to distract us from our own problems. We are not in great shape and the sooner we take our heads out of the sand and face the problem, the sooner it gets solved. We have the largest natural gas and oil reserves in the world and who talks about it. You only hear about how gas is going to $4.00 a gallon this summer because of all the problems in the middle east, but we can't drill hear because the administration is placating to an environmental problem that we already have solved .
I am short until the 1st of March. I have been since my first post on Jan 18th. I know the market has gone up, but on low volume and for the most part, X-APPLE, it's up 1%. So when Apple moves back to 435-450 the market goes back to 1290-1300 then see if the forces can hold it from going lower. By that time the Greek Tragedy will be closer to unfolding and let's see how it plays out.

One quick note. Small business optimism is high, RIGHT!. Here is a chart from Doug Short and a statement from the Wells Fargo Small Business Survey

2012-02-12T01:13:00.000-08:00

YOU HAVE NOTHING TO FEAR BUT FEAR ITSELF. PLEASE RETURN TO YOUR CABINS, THE ICEBERG ONLY MEANS WE HAVE MORE ICE FOR YOUR DRINKS.

This market is trade able but it might be the last time before we get into a major correction that originally I thought would be on or about March 1st now I might have to move it back to June 1st as QE3 might slow things up. We could get Israel to help us get things back on track though. The SP500 is 42% over it's historic median trend line over the past 130 years and 70% over the median bottom adjusted for inflation over the same period. Bubble vision (CNBC) still touts nothing is wrong and everyone says your missing the market. I don't think so but time will tell. The chart below shows the percentage of stocks above the 200 day moving average- a little top heavy, hey-and the relative strength and moving average convergence graph below. You will see three negative divergences. Each time a new top has been made in the stock market averages and the stocks above their 200 day average all three indicators have been trending down, NOT UP, as they should be in a strong market. Remember what happened in June 08 when all three crossed over (see below), I hope you owned a lot of PUT options I did, and I do now.

2012-02-11T23:23:00.000-08:00

THERE IS NO NEED TO FEAR. PLEASE RETURN TO YOUR CABINS, THE ICEBERG ONLY MEANS WE HAVE MORE ICE FOR YOUR DRINKS.

This market is trade-able but it might be the last time before we get into a major correction that originally I thought would be on or about March 1st now I might have to move it back to June 1st as QE3 might slow things up. We could get Israel to help us get things back on track though. The SP500 is 42% over it's historic median trend line over the past 130 years and 70% over the median bottom adjusted for inflation over the same period. Bubble vision (CNBC) still touts nothing is wrong and everyone says your missing the market. I don't think so but time will tell. The chart below shows the percentage of stocks above the 200 day moving average- a little top heavy, hey-and the relative strength and moving average convergence graph below. You will see three negative divergences. Each time a new top has been made in the stock market averages and the stocks above their 200 day average all three indicators have been trending down, NOT UP, as they should be in a strong market. Remember what happened in June 08 when all three crossed over (see below), I hope you owned a lot of PUT options I did, and I do now.

2012-02-06T11:45:00.000-08:00

Kimble Charting Solutions asked , What would you do today, Well? Here is the chart, you decide.

The next chart shows the technical levels many markets are hitting today Feb 6th. Which way will they break up or down, I say up at least until March 1-3rd then we have to make a decision. Go with the over all trend which has been up or go with my gut feeling which is down. We shall see.

2012-02-06T04:57:00.000-08:00

You wonder how things just never change. This is a New York Daily News article from 1949 and it is as true

today as it was then.

2012-02-01T04:20:00.000-08:00

Thanks to Mish Shedlock for his thoughts and Trim Tabs for their insights. The feeling from me is mutual. We must look past the Governments statistics and see what is right there in front of us, if we only parse the data and look from a different viewpoint. I point out that the numbers you see are not, in the truest sense of the word, TRUE! And you have to parse the data, read between the lines, cut the chaff(you get the idea) and see the world , not through rose colored glasses, but for what it is, A MESS.

Trim Tabs writes ... "At its peak in February 2010, the federal government’s emergency and extended unemployment benefits programs provided assistance to 6.0 million people. Since then, the number of people receiving benefits has steadily declined, and they totaled only 3.4 million as of the week ended January 6. Since only 2.2 million jobs have been created since the recession started in December 2007—fewer than the number of people no longer receiving benefits—it is likely that 1.0 million or more people now lack both benefits and jobs."
Trim Tabs writes "According to the BEA, the loss of income from extended and emergency unemployment insurance benefits has amounted to $57 billion since January 2010. In the past twelve months, the loss of income amounted to $23 billion, which is equal to about 13.4% of the estimated $188 billion increase in wages and salaries in 2011. In 2012, we estimate that expiring benefits will reduce incomes by approximately $25 to $50 billion.".
For someone with a mortgage and underwater on their house with rising food and energy costs, the presumption is not likely to be correct and/or savings are not likely to be sufficient.
The obvious result is a "forced lifestyle change" and less spending.
This boomer drag on GDP trends is enormous, yet few see it.
Moreover, interests rates of 0% on CDs does not help any.

2012-01-30T08:13:00.000-08:00

A different way of looking at the GDP numbers.
Thanks to DSHORT.com for the chart and John Mauldins The Transparency Trap for the insight.

When calculating real GDP, one subtracts inflation. The Fed prefers an inflation measure called PCE (Personal Consumption Expenditures). It is essentially a measure of goods and services targeted toward individuals and consumed by individuals. The number you read in the various media is the CPI or Consumer Price Index. The CPI is inflexible, in that it’s always the same basket of goods. PCE on the other hand, is supposed to take into consideration the notion that if steak is too costly, we’ll eat hamburger. The CPI is typically 0.3-0.5% higher than the PCE, which is convenient if you want the GDP number to look better.

The Fed changed to PCE in February of 2000. The change was buried in the footnotes of the annual Humphrey-Hawkins testimony by then-Fed Chairman Greenspan. So the anemic growth of 1.9% for the last decade would have been even worse if we had used the previous measurement of inflation (CPI). Understand, there is an argument in favor of using PCE, as many academics argue that CPI actually overstates inflation. But there is also an argument to use CPI. It somewhat depends on what you want the final numbers to be.

Fast forward to today, and the year-over-year change of CPI was 2.5%, with the PCE only rising 1.7%. And last quarter was down sharply, to +0.04% on an annual basis. An anomaly of lower energy and commodity costs? Partially, for sure. So if their target rate of inflation is 2%, using PCE gives the Fed grounds for a looser monetary policy.

“When/If these central banks go too far, as was eventually the case with home prices, expanding balance sheets will no longer be looked upon in a positive light. Instead they will be viewed in the same light as CDOs backed by sub-prime mortgages were when home prices were falling. The heads of these central banks will no longer be put on a pedestal but looked upon as eight Alan Greenspan’s that caused a financial crisis.

“The tipping point between balance sheet expansion being bullish for risk assets versus bearish is impossible to know. Given the growth rate of central bank balance sheets around the world over the past few years, we might not have to wait too long to find out. Enjoy it while it is still bullish.”

“Greece plans an orderly exit out of the Eurozone according to two sources close to Mr. Papademos, Greek Prime Minister, who spoke on condition of anonymity earlier today.  The sources confirmed that plans are ready to return to a legacy currency given the current circumstances and that such exit would be dealt with, quote ‘in as orderly a fashion as possible’ unquote….

“A Greek exit strategy will probably not be announced officially until early March when the EU finance ministers meet.”

Well then, we shall see.

2012-01-26T08:35:00.000-08:00

Here is achart from streettalklive.com that shows consumer sentiment. So you see a pattern. We may be peeking and when that happens the market is usually at the top

2012-01-26T08:33:00.000-08:00

Well housing came in a lot worse than expected and you can see what that has done to the rally after good earning from some of the SP 500 company's-even if they were on lower guidance and lower expectations- and better than expected consumer spending. The rally hit my high point in the charts as I see it. The 1331 level is where my charts say's we should be bumping up on resistance over the 5 year chart I have been following. I wish I knew how to input it into the blog, maybe one day I will.

Here is the two latest charts i can show in reference to the housing market. Thanks to streettalklive.com and Doug Short for these two. It helps to illustrate my point. Until the job market improves and the FED stops the easy low interest rate environment, this market has a long way to go before it heals itself.

2012-01-25T04:10:00.000-08:00

And while Government can’t fix the problem on its own, responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief.

That’s why I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won’t add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust.

Let’s never forget: Millions of Americans who work hard and play by the rules every day deserve a Government and a financial system that do the same. It’s time to apply the same rules from top to bottom: No bailouts, no handouts, and no copouts. An America built to last insists on responsibility from everybody.

Top to Bottom: More Bailouts, More Handouts, More Copouts

While reading the first paragraph above I knew without a doubt a huge bailout proposal was coming up.

Sure enough, the very next paragraph contained a massive bailout proposal and in more ways than is readily apparent at first glance. For starters "responsible homeowners" don't need mortgage relief. Secondly, $300 a month is a lot of dough so I would like to see an accounting.

Finally, and most importantly, every loan that is refinanced will be paid off in full. Thus, any bank, hedge fund, mortgage provider, or GSE that is paid off on a nonperforming loan will be immediately made whole.

This is a massive backdoor bailout of banks, mortgage companies, hedge funds, foreign banks, and anyone else holding mortgage related garbage.

In case you were wondering about the big rally in bank shares this year, this proposal just might have something to do with it.

The Orwellian irony of it all comes in the third paragraph with Obama's bald-faced lie "It’s time to apply the same rules from top to bottom: No bailouts, no handouts, and no copouts."

How the Taxpayer Ripoff Works

The New York Times explains the ripoff in President to Offer Way for Easing Home Debt

For those of you who don't get Mike "Mish" Shedlocks blog from Sitka Capital Management here is a good explanation to last nights State of the Union Address. Somehow the Presidents new idea is going to solve this chart's fundamental problem. By putting more debt on the governments books, NOT.

The White House plans to propose legislation that could allow a few million homeowners to reduce monthly mortgage payments by refinancing their current loans into new ones guaranteed by the Federal Housing Administration.

The program would broaden the availability of government-backed mortgages to include many borrowers whose loans are held by private companies and who have been unable to persuade those lenders to reduce their interest rates. Existing federal programs focus mostly on borrowers whose loans are owned by the government.

The new program will be directed at people whose mortgage debts exceed the value of their homes, according to a senior administration official who spoke on the condition of anonymity because the details have not yet been finalized. The official estimated that the program could benefit two million to three million homeowners who have loans that are not guaranteed by the government, and that the program’s cost would not exceed $10 billion.

$10 Billion?! Really?

The proposal as outlined rates to take every ~~"responsible"~~ underwater mortgage held by banks, Fannie Mae, Freddie Mac, hedge funds, foreign banks, and pension plans, and transfer all of them to the FHA. The idea this will only cost $10 billion is absurd.

The "small fees on the largest financial institutions" are absolutely guaranteed to not cover the cost of this monstrous proposal. Indeed there is something in Obama's proposal for everyone except "responsible citizens".

"Let’s never forget: Millions of Americans who work hard and play by the rules every day" will be royally screwed by Obama's proposition in the form of higher taxes down the road.

Mike "Mish" Shedlock

2012-01-24T12:22:00.000-08:00

The markets are up the earnings are coming in a little under normal even after the downward revisions and earnings pre announcements have been made to the downside. We are at , what I call , a NOW WHAT MOMENT. Where do we go from here. If the past is any judge for the future I believe we are near a yearly top-maybe another 2 percent-and it all begins the long slow painful death. The VIX is at a yearly low and everyone thinks the world is a better place to be. Europe finally has their act together (do they) and Portugal is back in the news, whats next.

Let's take a look at the long term bias of the American consumer. DSHORT.COM had a good chart on this morning showing miles driven over the past 40 years by Americans. Adjusted for population growth we are nowhere near a all time high as you would expect-given the great things you hear from the media and the FED, yet, we are still paying more for petrol and our utility bill keeps increasing and we are using less fuel per person as compared to 1998. HUM, seems we might not be getting pertinent information from the media. Yes, I know cars get better gas mileage today than 40 years ago that is one reason. Yet every October you here heating oil is going up because of cold winters approaching and even when that does not occur prices go up. In April the summer drive season is coming and more fuel will be needed prices go up. Any reason that fuel consumption has gone down over the last 5 years yet prices at the pump have gone up proportionally. Yes, QE1, QE2 and eventually QE3. We pay more because our dollar is worth less. The dollar exchange rate has gone from 85-76 in the same time. A stronger dollar brings down the price of commodities.This means the big multi-national company's can stay competitive in the world market by cheaper exports to counties that need our goods. Great it creates jobs, NOT. Most of the expansion for these company's has been to hire overseas and still make the profits. Net, we are down 120,000 jobs from these same company's over the past 6 years. The world market is slowing and it's just a matter of time 1-2 years or so before it all takes hold. Sorry to keep sounding so dour but most people don't take that much time( for a blue collar guy) reading and studying as I do. You only hear what they want you to hear.

2012-01-24T12:01:00.000-08:00

What's wrong with this picture.

It seems as the market goes up the street and the media says all's well and good. But really what doe's this say. When everyone is on the same side of the trade something is a foot. Check out the tops of market sentiment and the lows and how they very closely correlate to the tops and bottoms of markets. Where do we go from here no one knows, my guess is down at least for the short term with a moderate upswing after UNCLE BEN calls QE3 sometime in March but an inevitable leg down after May 15th or so. Lets take a look at another chart to better dramatize the effect.

Thanks to streettalklive.com and dshort .com for the charts and help in making my predictions.

2012-01-18T13:05:00.001-08:00

Today we mourn the passing of a beloved old friend, Common Sense, who has
been with us for many years. No one knows for sure how old he was, since his

birth records were long ago lost in bureaucratic red tape. He will be remembered

as having cultivated such valuable lessons as:

- Knowing when to come in out of the rain;
- Why the early bird gets the worm;
- Life isn't always fair;
- and maybe it was my fault.

Common Sense lived by simple, sound financial policies such as don't spend more

than you can earn and use reliable budgetary strategies like save some of what

you earn, and adults, not children, are in charge.

His health began to deteriorate rapidly when well intentioned, but
overbearing regulations were set in place.

Reports like that of a 6-year-old boy charged with sexual harassment for kissing

a classmate; teens suspended from school for using mouthwash after lunch; and

a teacher fired for reprimanding an unruly student, only worsened his condition.

Common Sense lost ground when parents attacked teachers for doing the job
that they themselves had failed to do in disciplining their unruly children.

It declined even further when schools were required to get parental
consent to administer sun lotion or an aspirin to a student; but could not
inform parents when a student became pregnant and wanted to have an abortion.

Common Sense lost the will to live as the churches became businesses; and
criminals received better treatment than their victims.

Common Sense took a beating when you couldn't defend yourself from a
burglar in your own home and the burglar could sue you for assault.

Common Sense finally gave up the will to live, after a woman failed to

realize that a steaming cup of coffee was hot. She spilled a little in her lap,
and was promptly awarded a huge settlement.

Common Sense was preceded in death, by his parents, Truth and Trust, by

his wife, Discretion, by his daughter, Responsibility, and by his son, Reason.

He is survived by his 4 stepbrothers;
I Know My Rights

I Want It Now
Someone Else Is To Blame

I'm A Victim

Not many attended his funeral because so few realized he was gone.

2012-01-18T10:55:00.000-08:00

So what do we do from here. If as I believe the market is going down how do we invest. The safest way is do buy good dividend paying stocks that have increased their dividend over time. As mentioned in a prior post JNJ would have netted you over a thousand percent during the last 11 years. What other stocks are out there, well in the US.Thanks to dividend.com for the chart.

Stock Symbol	Company Name	DARS™ Rating [?]	No. of Years	Dividend Yield**	Current Price*	Annual Dividend
DBD	Diebold	Login/Signup for Ratings	58	3.64%	30.74	1.12
AWR	American States Water	Login/Signup for Ratings	57	3.18%	35.26	1.12
DOV	Dover Corp.	Login/Signup for Ratings	56	2.09%	60.25	1.26
NWN	Northwest Natural Gas	Login/Signup for Ratings	56	3.77%	47.17	1.78
PG	Procter & Gamble	Login/Signup for Ratings	55	3.17%	66.26	2.10
EMR	Emerson Electric	Login/Signup for Ratings	55	3.26%	49.05	1.60
GPC	Genuine Parts	Login/Signup for Ratings	55	2.86%	62.90	1.80
MMM	3M	Login/Signup for Ratings	53	2.61%	84.23	2.20
PH	Parker Hannifin Corporation	Login/Signup for Ratings	52	1.77%	83.47	1.48
VVC	Vectren Corp	Login/Signup for Ratings	52	4.81%	29.10	1.40
CINF	Cincinnati Financial	Login/Signup for Ratings	51	5.14%	31.32	1.61
KO	Coca-Cola Co.	Login/Signup for Ratings	49	2.79%	67.35	1.88
JNJ	Johnson & Johnson	Login/Signup for Ratings	49	3.50%	65.12	2.28
LOW	Lowe's	Login/Signup for Ratings	49	2.09%	26.80	0.56
LANC	Lancaster Colony Corp.	Login/Signup for Ratings	49	2.08%	69.32	1.44
ITW	Illinois Tool Works	Login/Signup for Ratings	48	2.83%	50.96	1.44
CL	Colgate-Palmolive	Login/Signup for Ratings	48	2.59%	89.73	2.32
NDSN	Nordson Corp	Login/Signup for Ratings	48	1.17%	42.86	0.50
CLC	Clarcor Inc.	Login/Signup for Ratings	47	0.93%	51.38	0.48
CB	Chubb Corp	Login/Signup for Ratings	46	2.23%	69.80	1.56
TR	Tootsie Roll	Login/Signup for Ratings	46	1.36%	23.60	0.32
HRL	Hormel Foods	Login/Signup for Ratings	45	2.05%	29.24	0.60
SWK	Stanley Black & Decker, Inc.	Login/Signup for Ratings	44	2.30%	71.21	1.64
FRT	Federal Realty Investment Trust	Login/Signup for Ratings	44	3.04%	90.75	2.76
TGT	Target	Login/Signup for Ratings	44	2.41%	49.88	1.20
ABM	ABM Industries	Login/Signup for Ratings	44	2.84%	20.43	0.58
CWT	California Water Services Group	Login/Signup for Ratings	44	3.40%	18.09	0.62
SJW	SJW Corp	Login/Signup for Ratings	44	2.99%	23.08	0.69
SCL	Stepan Co.	Login/Signup for Ratings	44	1.40%	80.21	1.12
CBSH	Commerce Bankshares	Login/Signup for Ratings	43	2.30%	40.01	0.92
MO	Altria Group	Login/Signup for Ratings	42	5.67%	28.90	1.64
BKH	Black Hills Corp	Login/Signup for Ratings	42	4.41%	33.08	1.46
FUL	H.B. Fuller Co.	Login/Signup for Ratings	42	1.18%	25.46	0.30

2012-01-18T10:28:00.000-08:00

Thank's to Barry Ritholtz for this chart on housing.Hey the Justice Dept. is doing a great job finding everyone who has anything to do with insider trading. Has anyone in the US been arrested for the mortgage mess we are in today. Oh, Anthony Mozilo from Countrywide made over a billion and had to have his company bailed out by Bank Of America and now we are all paying for it, and what does he get a 60 million dollar fine, oh boy. Fannie and Freddie are owned by the Gov. and the directors made millions and now have fat jobs somewhere else. Dodd and Frank received huge discounts on mortgages and congressmen are allowed to own stocks in company's they are deciding regulation on. WHAT'S WRONG WITH THIS PICTURE! What is this country turning into. Please write your congressmen and tell them what you think. If you agree with what their doing, buy another house and don't pay for it and see what happens.

2012-01-18T03:28:00.000-08:00

I would like to thank Mike "Mish" Shedlock for these three charts. Look at the money the Fed has put back in the market in the past 5 years and where it's sitting, getting .25% interest and not being lent out. Banks take the money and park it at the Fed. There will be a day of reckoning in this country in 2013-2014. Here I would like to add the Q ratio of the replacement Value of the SP 500 and the market value of the SP 500. Here is a chart supplied by Doug Short to illustrate. What does the last chart suggest? I believe the market is overbought and due for a correction, but only time will tell if I'm right or wrong.

2012-01-17T09:40:00.000-08:00

Here we go again. Bubble vision (CNBC) says the worlds a better place. Everyone has been downgraded and the markets going up. What could be wrong, all the pundits must be wrong, I DON'T THINK SO! But only time will tell. This chart from Kimble charting Solutions is pretty compelling, let's see which way it breaks up or down. My guess is down sometime around the first week of March, again, only time will tell. For those of you who have an analytic brain like me it would be wise to read the book This Time it's Different By Reinhart and Rogoff it's a real eye opener. Hey even UNCLE BEN read it and told the House Finance committee in June of 2010 it was a remarkable book.

2012-01-16T12:22:00.000-08:00

Well another day has passed and another downgrade, does this surprise anyone, not me. I am sorry to sound so pessimistic all the time but it is inevitable we are in fore a rude awakening. If you think the last ride down was bad LOOK OUT. While siting on the back porch having a cold one with a friend of mine in Feb 2006 we discussed the troubles in the market even as it was going up. We were watching Bubble Vision (CNBC) as they talked about the housing prices going up and the market accelerating. We cold see even in our area of SW FLORIDA that these prices were unsustainable. We sold our investment homes for a few bucks profit and got the hell out of DODGE. We went short the market in March 2007 a little early but the right move in hindsight. At the time we could not go short the market in our 401k'S -as we can now- and just watched the ride down. Even back in March 2009 I still did not feel the market hit bottom so I missed much of the ride up. I still did 6-8 % and then eventually 16% but not the 90% ride I could have made. Oh well, live and learn. Again, in hindsight now that I understand the value of QE1,2 , and 3,4,5 that has been tried and realize the commodity boom was all because of easy money (AGAIN). The big boy's understand it , us retail people at the time, did not. Smart money made money up and down and then got bailed out by the Government-Surprise-again.

You can keep throwing good money to bad, hey I did early on in my investing-thinking I knew what was right and wrong, now I'm a little smarter. Just look at the charts and you will see what I'm talking about. The Japanese tried it and Roosevelt tried it in 1931 only to see it backfire a year later and into another recession. Please see the charts from DSHORT. COM here is one. Kimble charting does a great job of explaining how the pattern always comes back. My guess, minus QE6, is the market will have an inflection moint around March this year and a major one around Feb-April 2013. when the big one hits you have around 2 years for big gains. If you can play the market to the downside get ready your chance is coming.

2012-01-12T06:06:00.000-08:00

Well just when you thought it was safe to get back in the job market, surprise it's not. The market is at a tipping point and the latest unemployment numbers did not help. We thought the market could go up to 1330 by March 1st and that still is possible with better than expected corporate earning during this quarter. The jobless claims sure did not help those prospects. Three sectors are breaking out from a consolidation Regional Banks, Homebuilders and Financials. Let's see how this continues as the first of the big Financials reports tomorrow.

2012-01-11T12:54:00.000-08:00

This chart explains where we are today 1/11/2012. That's fine but without real government spending cuts, austerity and rational tax policy's we are in for big problems. My best guess is on or around March 2-12 we will see a decidedly lower market. Of course this changes by a few months if the Federal Reserve begins to pump money back into the system. Then the problem falls on whoever becomes President next year and then the faucet get's turned off. Oh! did I make a prediction, YES.

2012-01-11T09:32:00.000-08:00

Hi, my name is Paul . I invest for my family and friends and have been rather successful through the years. Sure I have had my ups and downs but through it all we are doing quite nicely. Even last year during what best can be described as a roller coaster year in the market, we managed a 46% return on our investments. NOT BAD. We are here to explain what we believe will be the direction of the market in the following year or so and to be ready to adjust your retirement savings. If you thought 2008 was bad wait till you see the next leg down.

For the better part of 30 years I have been investing for our retirement's and we have done quite well on a blue collar income. The last four years have been wild to say the least. Most retail investors (like you and me) are usually late to the party on the way up and get in as the market is about to go down. Hey, even I made some big mistakes along the way, yet we still have quite a nice nest egg to show for it, DO YOU!

I feel the best way to invest is to take dividend paying stocks and reinvest the dividends. Even if the market goes nowhere you would have made over 1000% in JNJ since 2000.

Over the next few months be very cautious with your 401k's and IRA's and get ready to get out on the first sign of distress. If you can't buy individual stocks go into cash or short term bonds but nothing out more than 2 years. TIPS would be a great way of protecting yourself in the event of hyperinflation that I believe will occur sometime in 2014, but more moderate inflation that will start later this year. For the short term look for the UUP dollar ETF to outperform the CRB index as it has just crossed. The good news the commodity's you buy sugar, corn, rice, cotton should go down over the short term, but later in the year that will change.

For the time being stay tuned for more posts on how to invest for the coming downturn. I would like to thank Doug Short on dshort.com for the use of his charts.