G&G Associates Tax & Financial Consulting
Something Isn’t Right…The Big Disconnect
Hotep G&G Readers,
Last night I saw the best movie of the year, “Wall Street…in movie theatres now.” This movie was right on point with what I’m about to discuss right now. If you want to get a glimpse of what really is going on in NY on greed street…my mistake…Wall Street and with the government you’ll go check it out.
If you want to know what you can do and learn how to protect yourself from the greed that’s sucking away your portfolio’s and earning potential, you’ll subscribe to G&G Investment Society’s (GGIS) newsletter today. Yes…today so don’t wait another minute.
Now… what’s going in the Markets here in the good old USA.
I'm seeing one of the biggest disconnects of all time — between the underlying U.S. economy and the performance of the stock market. Just consider what we've learned about the economic fundamentals in the past several days.
• Consumer confidence plunged in September — to 48.5 from 53.2 in August. That was far below the 53 reading economists were expecting, and the worst in seven months.
• The Richmond Fed's manufacturing index plunged from 11 in August to NEGATIVE 2 in September. Economists were looking for a reading of 6. That was the worst since January. The report followed a dismal Dallas Fed reading from a day prior. That region's index tanked to -17.7 from -13.5 in August.
• The housing market? Yeah, it still stinks. New home sales flat-lined at 288,000 in August, the second-worst month in U.S. history. Home prices fell to their lowest level since December 2003. Builder confidence held at the lowest level since early 2009. Existing home sales bounced a bit, but they recouped less than a third of their 27 percent July swan dive.
In other words, things aren't getting better in the real world. Yeah right…they're getting worse! But on Wall Street it's party time. Investors are essentially the most bullish they've ever been. And it looks like September 2010 could be the best for stocks of any September in seven decades.
Do you have a Home-Based Business (HBB)? If not, Why? This is your quickest, safest and most assured way to get a GUARANTEED 25-35% ror on your investment. Remember, with a HBB you get to deduct over 422 business expenses. Without a business you get about 7-10 business deductions. Look at it this way…if you are in the 30% tax bracket (25% Fed & 5% state); for every dollar you deduct 30 cents goes to you. For every dollar you do not deduct 30 cents goes to Uncle Sam.
If I can’t show you how to save a $1000 on your taxes next year, then I’ll give you a free yea’s subscription to the G&G Investment Society (GGIS) newsletter service. Somehow I think you can use the money more than your Uncle.
Give me a call and I’ll show you how to implement this strategy and keep 30 cents on every dollar by doing so as well. This is what you call SMART planning and investing.
What's going on?
Promise of Free Money Distorting Markets ...
Once upon a time not so long ago, asset class performance closely tracked the underlying fundamentals. If oil supplies rose, oil prices fell. If income, jobs, production, and corporate profits gained, so did stocks. If the economy improved, bond prices fell and interest rates rose. You get the picture.
But these days, it's a different story ...
Stocks, bonds, commodities, and other assets are trading in virtual lock step thanks to the Fed's most dramatic intervention and interference in the markets of all time. All it takes is a whisper of "quantitative easing" and stocks take off, bonds take off, commodities take off, and the dollar implodes.
About the only asset class that's NOT responding to all this free money talk is the one asset the Fed probably wants to respond the most — housing.
The latest S&P Case-Shiller report showed that home prices resumed their deterioration in July, falling 0.1 percent. Prices are down 3.6 percent since the Fed rolled out QE1 in November 2008 and 28 percent since the peak of the market four years ago.
Stated another way, the fundamentals haven't mattered lately. Stocks are reacting to the prospect of the Fed debasing our currency. That debasement is driving up asset values, as well as contra-dollar investments and the price of almost everything we consume.
A few examples:
• Gold has surged almost $300 an ounce from its February low and today hit an all-time high $1,317.
• Copper has jumped 188 percent from its recent low,
• Corn has exploded 58 percent,
• Wheat has climbed 65 percent,
• And sugar has risen 90 percent.
But the Disconnect Simply Cannot Last
Stock market bulls would have you believe this will last to infinity and beyond. "Don't fight the Fed," they say.
I have a different take. "Fighting the Fed" may sting a bit in the SHORT TERM. But it has been an incredibly successful strategy over the LONGER TERM.
For instance ...
You could've "fought the Fed" by shorting the heck out of housing and mortgage stocks even as Fed officials told you the problems in those sectors were "contained." Doing so would have made you a fortune!
You could've "fought the Fed" by selling stocks into every single interest rate cut between 2008 and 2009. The Fed first lowered interest rates from 5.25 percent in September 2007. The Dow traded at 13,820 then. It proceeded to plunge to 6,470 over the ensuing couple of years.
And you could've "fought the Fed" back in 2000, when Alan Greenspan was singing the praises of the technology revolution even as the Nasdaq was about to crash.
The list of Fed policy failures and economic forecasting blunders goes on and on and on.
So to answer the question I've been hearing lately, no, I wouldn't be buying stocks willy nilly because of the Fed. I'd be selling into the rally, and positioning for downside gains in vulnerable sectors using the FOREX market, options and inverse ETFs.
And unless and until the real economy takes a turn for the better, the Fed's QE2 program should ultimately fail to levitate stocks over the longer term.
With the falling dollar and the explosion in gold, silver, oil and other natural resource prices, you need to stay on top of your game and manage your “OWN Finances.”
Become a GGIS subscriber now and you’ll be sure that we make sure you stay on top of your Tax and Financial Future to make sure your BUSINESS … AT HOME is protected. Remember…most people look after their bosses business, but fail to look after their own Business At home.
Take advantage of our 2010 discount offer if you are not yet a member of the GGIS paid newsletter service and you’ll be on your way to knowing how to protect your portfolio...at least what’s left of it. I’ll keep you informed on the “REAL DEAL” in our economy so you can protect your wealth. So....Sign up today!!!
To become a member of the G&G Investment Society newsletter subscription, send an e-mail to GGIS@gngassoc.com and/or visit our website at www.gngassociates.net and click on the “Products & Services” link and we’ll get you signed up right away.
DON'T WAIT ANOTHER DAY!
- 1 year subscription - $49
- 2 year subscription - $84
- Lifetime subscription - $199
If you missed a past G&G article, click on the link below to visit G&G Associates archive:
Until the next time!
Asante Sana (Thanks)
Tax & Financial Consultant, RFC
866-361-3872 toll free fax
"Your mind is like a parachute, it only works when it is open."
P.S. If you're not a GGIS Paid Subscriber reader yet, it's not a bad way to start the year. The recent dollar rally has actually given everyone some new opportunities to invest on the cheap. And currently, our GGIS portfolio is packed with great plays to kick-start your "anti-dollar" portfolio for 2010. Click here www.gngassociates.net for details about how to subscribe now (and get access to our members only website where you get or all kinds of extra bonuses and premium reports), for just $49 a year or $199 for a lifetime subscription.
P.S. #2 If you are looking to Travel and looking for steep discounted travel, visit www.gngassociates.net, click on the “G&G Travel” link and let your travel planning begin. Let us know where you want to go and we’ll do our best to find you the best deal your money can buy.
LEGAL NOTICE: This work is based on SEC filings, current events, interviews, corporate press releases and what I've learned as a financial consultant. Nothing herein should be considered personalized investment advice. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.