Author: Wall Street Vibes

Are We in a Correction… or a New Bear Market?

This post was originally published on this siteAs stocks have grown increasingly volatile over the last several sessions, I keep hearing variations of an age-old question: “Is this just a correction in an ongoing bull market or the start of a new bear market?” This is exactly what the pundits on CNBC and Fox Business love to have teed up for them. (That’s why I quit doing those shows years ago.) It allows them to yak about the economy, interest rates, corporate earnings, commodity prices, political developments, Fed policy and all sorts of arcane market data from cyclically adjusted earnings to short interest to advance-decline ratios. Yet their answers are mostly nonsense, including the ones that – with the luxury of hindsight – turn out to be right. Put a dozen meteorologists in a room and ask them whether we’ll get rain or sunshine three weeks from Tuesday, and they’ll gladly concede that it isn’t possible to know. But ask a dozen stock market prognosticators what lies just ahead for stocks and they will furrow their brows, roll out their charts, and tell you to expect unseasonably warm weather with a smattering of clouds and a 20% chance of precipitation. They are paid to make short-term market predictions. And so they do. The real problem is the question itself. There’s no good answer to “What do you think the...

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How I’m Winning The Wall Street Journal’s Stock-Picking Contest

This post was originally published on this siteStock-picking contests have little to do with real investing. You can pick only one stock. You can’t change your mind. And you have to hold on to the stock no matter what. If the restrictive rules of a stock-picking contest weren’t bad enough… Winning isn’t even about picking the best stock. As John Maynard Keynes once suggested, a stock-picking contest is not much different from a beauty contest. You need to guess who others think is the most attractive – or, to take it further, guess what others think about what others...

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Are We Headed for Another Crash and Great Recession?

This post was originally published on this site “A forecast is never so useful as when it warns man of a crisis.” – Bertrand de Jouvenal “Today, the governments of the world are just creating ever increasing deficits. They are spending like there is no tomorrow… The world’s economy is being run as a giant Ponzi scheme… The ‘mother’ of all financial collapses is upon us NOW.” – 2012 promotional copy for Harry Browne’s You Can Profit from a Monetary Crisis (updated) Like the hurricane that ripped through Florida, a black bear ran through Wall Street at a fast and furious pace last week, erasing any yearly gains for the indexes. There was talk of another Halloween scare in October, but fortunately the markets stabilized on Friday and Monday. The sell-off on Wall Street – and the rally in gold – reminded me of all the predictions made over the years by the permabears. For example… Financial guru Harry Browne died in 2006, but the publisher reissued his 1974 best-seller You Can Profit from a Monetary Crisis in 2012, warning that we were about to suffer from the mother of all bear markets. Actually, just the opposite happened, and we have enjoyed the mother of all bull markets. In 1989, Browne wrote The Economic Time Bomb: How You Can Profit from the Emerging Crises, in which he predicted that...

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Why I’m Betting on a Rebound

This post was originally published on this site “October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain Last week was a white-knuckled ride for investors. Traders across the globe sat glued to their screens, watching nervously as the value of their investment accounts tumbled. The S&P 500 dropped more than 2% for two consecutive days. The Russell 2000 small cap index dropped 10% from its peak, entering correction territory. The tech-heavy Nasdaq wasn’t far behind. High-flying tech stocks...

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The Only TRUE Market Conspiracy Theory

This post was originally published on this siteI love a good conspiracy theory. Most everyone I know does too. That’s because when something unexplainable happens, like an extreme stock market plunge or earthquake, it’s only natural to want to cobble together an explanation… even if it isn’t entirely rooted in facts. Having spent the last decade on Wall Street, I’ve heard some doozies. Most of them try to prove that the stock market is rigged against the individual investor. But one 30-year-old conspiracy theory says that there is a secret cabal working in Washington, D.C. for investors. It is called the Plunge Protection Team (PPT for short). Its job is to ensure an orderly stock market and protect investors from sudden crashes. It’s a nice fairy tale for investors. However, it isn’t one that ends with “happily ever after.” Even if the group really does exist, it hasn’t done a great job over the years. Last week’s market plunge is a great example. The major indices began to sell-off last Wednesday over fears, and losses accelerated into the close. The carnage continued on Thursday at a sickening pace. No one stepped in to buy the market. There was no sign of the PPT. Last week’s market correction shows that you can’t count on this secret government organization to backstop your retirement. But you should count on trailing stops to...

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