DEBT FINANCING MAKES THE WORLD GO AROUND.
Everyone knows the economies of the entire world are functioning, propped up by an enormous amount of debt. As time goes on we become complacent, but debt never sleeps. Its costs are compounded 24 hours a day, on weekends and holidays until they are paid off. Debt is much like a drug. Once you are dependent on it, you can only go so long until you need another fix. It has effects on the system, whether it is local government, state government or national government. Because there is never enough capital, parts of the body of government become unhealthy and rot sets in. Like a drug addict, you are no longer in control of your destiny. You are dependent on others to meet your needs. There is a cost to the entity and everything related to it. Taxes, inflation, unemployment, waste, confiscatory policies, shortages, even deflationary periods. It is a type of bondage.
Like alcohol and drug addiction, you change your life or you die.
WHAT ABOUT THE STOCK MARKET?
Stock market talking heads tell us that stocks follow earnings and if earnings continue to grow, then stock prices will rise. Thus quarterly earnings performance is very important. My research after looking over stock charts from 1936 to present has shown that stocks often peak a year or more before earnings peak, thus making quarterly earnings reports more of a short term effect, often just part of the background noise.
HOW CAN WE STAY AHEAD OF THE CROWD
I believe the answer is to understand stock market cycles. There has been a great deal of research written on the subject. Elliot Wave Theory, Dewey, W.D. Gann, Hirsch, Non Random Profits etc. You do not have to be a mathematician or expert chartist to benefit from cycle research. You simply need to know high from low and how long trends last on average. You may then benefit by taking less risk when price patterns have risen dramatically and more risk when prices are low and velocity has decreased.
WHERE ARE WE TODAY?
Stocks are generally high based on long term stock patterns. Market lows occur roughly four years apart when measuring from low point to low point. The last low point according to my work was October 2011. The next low point is estimated to be plus or minus six months from October 2015. Stock market declines last roughly a year to a year and a half on average thus by this logic we may be near a peak.
WHAT WILL CAUSE THIS DECLINE?
It could be a slowing in GNP thus creating deflationary activity putting fear into all investors. It could be an energy crisis perpetuated by a run out of the U.S Dollar and a Mid East crisis. It could be the start of World War III on an economic and military front.
We have a potential problem with automobile and student loans. These loans are larger than the housing crisis debt and are of lower quality. Even in a good economy it is unlikely that these issues will end well.
Even if we avert these problems, when investors are focused on them the cyclical patterns persist.
WHAT SHOULD YOU DO TO PREPARE!
Take less risk now. Hedge your long term holdings. Look for the change in investor sentiment and use puts, short positions,and reverse ETF's to benefit from the negative portion of the long term cycle.
DON'T EMBRACE THE NEGATIVE!
Assuming you profit handsomely from the decline, don't become a negative person. The world will not end. It will only feel like it will end. Be ready for the next buy zone in 2015. Remember, successful investors are intelligent bulls.
Mr. Robert Mann is a stock market cycles expert with over 40 years experience. He is CEO of Advisor's Capital Corp., a holding company that owns two investment advisory companies at 17 Tripp Road in Woodstock, CT. 06281. you may visit the website at http://www.retirementadvice.us. Be sure to click on latest news. A free email newsletter is available upon request.
Article Source: http://EzineArticles.com/?expert=Robert_K_Mann
Article Source: http://EzineArticles.com/8593656
Everyone knows the economies of the entire world are functioning, propped up by an enormous amount of debt. As time goes on we become complacent, but debt never sleeps. Its costs are compounded 24 hours a day, on weekends and holidays until they are paid off. Debt is much like a drug. Once you are dependent on it, you can only go so long until you need another fix. It has effects on the system, whether it is local government, state government or national government. Because there is never enough capital, parts of the body of government become unhealthy and rot sets in. Like a drug addict, you are no longer in control of your destiny. You are dependent on others to meet your needs. There is a cost to the entity and everything related to it. Taxes, inflation, unemployment, waste, confiscatory policies, shortages, even deflationary periods. It is a type of bondage.
Like alcohol and drug addiction, you change your life or you die.
WHAT ABOUT THE STOCK MARKET?
Stock market talking heads tell us that stocks follow earnings and if earnings continue to grow, then stock prices will rise. Thus quarterly earnings performance is very important. My research after looking over stock charts from 1936 to present has shown that stocks often peak a year or more before earnings peak, thus making quarterly earnings reports more of a short term effect, often just part of the background noise.
HOW CAN WE STAY AHEAD OF THE CROWD
I believe the answer is to understand stock market cycles. There has been a great deal of research written on the subject. Elliot Wave Theory, Dewey, W.D. Gann, Hirsch, Non Random Profits etc. You do not have to be a mathematician or expert chartist to benefit from cycle research. You simply need to know high from low and how long trends last on average. You may then benefit by taking less risk when price patterns have risen dramatically and more risk when prices are low and velocity has decreased.
WHERE ARE WE TODAY?
Stocks are generally high based on long term stock patterns. Market lows occur roughly four years apart when measuring from low point to low point. The last low point according to my work was October 2011. The next low point is estimated to be plus or minus six months from October 2015. Stock market declines last roughly a year to a year and a half on average thus by this logic we may be near a peak.
WHAT WILL CAUSE THIS DECLINE?
It could be a slowing in GNP thus creating deflationary activity putting fear into all investors. It could be an energy crisis perpetuated by a run out of the U.S Dollar and a Mid East crisis. It could be the start of World War III on an economic and military front.
We have a potential problem with automobile and student loans. These loans are larger than the housing crisis debt and are of lower quality. Even in a good economy it is unlikely that these issues will end well.
Even if we avert these problems, when investors are focused on them the cyclical patterns persist.
WHAT SHOULD YOU DO TO PREPARE!
Take less risk now. Hedge your long term holdings. Look for the change in investor sentiment and use puts, short positions,and reverse ETF's to benefit from the negative portion of the long term cycle.
DON'T EMBRACE THE NEGATIVE!
Assuming you profit handsomely from the decline, don't become a negative person. The world will not end. It will only feel like it will end. Be ready for the next buy zone in 2015. Remember, successful investors are intelligent bulls.
Mr. Robert Mann is a stock market cycles expert with over 40 years experience. He is CEO of Advisor's Capital Corp., a holding company that owns two investment advisory companies at 17 Tripp Road in Woodstock, CT. 06281. you may visit the website at http://www.retirementadvice.us. Be sure to click on latest news. A free email newsletter is available upon request.
Article Source: http://EzineArticles.com/?expert=Robert_K_Mann
Article Source: http://EzineArticles.com/8593656
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