It’s been a year since I first wrote in the Title of a blog post here on YashLabs, “America’s collapsing economy” and earlier than that since I first saw where this was going.
Of course, I was standing on the shoulders of Giants: Aaron Russo, Ron Paul, Peter Schiff, Nouriel Roubini, Ludwig von Mises, Murray N. Rothbard, Meredith Whitney.
Some recent quotes by Gurus and authorities are ominous:
- IMF warns of Global Great Recession
- The crash of 2008 is now worse than that of 1929.The latter article was published just 1 year to the day after my own first post.
- George Soros: “We witnessed the collapse of the financial system,” Soros said at a Columbia University dinner. “It was placed on life support, and it’s still on life support. There’s no sign that we are anywhere near a bottom.”
- Warren Buffett: “The economy has fallen off a cliff.”
- Paul Volcker: “I don’t remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world”
1. The models and people using them were wrong
A new model of how markets work must be evolved from now on, using the internet as a preferred tool for analyzing the collective behavior which makes Mr. Market’s mood swings. The model must incorporate economic fundamentals as well as shorter-term drivers, together with an engine to detect and implement a radical investment technique switch or regime switch.
2. Regime switching must come into play
Value investing or buy and hold does not work in such a drastic crashing market with a synchronized global downturn.
When sentiment goes down, Mr. Market becomes irrational, fear-driven, and rumor and news-driven.
I can affirm this because I have tested this myself for more than a year:
– From February 2008 till September 2008 in a virtual environment where news-driven trades made the portfolio gain 36.5% (from -7 to 29.5) in just 8 days – from the 16th of September to the 23rd of September. All these trades were documented right here on this blog and the history can be seen on the portfolio site at UpDown.com.
Since then, I haven’t even bothered with the virtual portfolio, but considering the disastrous performance of many Hedge Funds, Funds of Hedge Funds, other funds, at the point I left it, between 16-30%, the performance was stellar.
- From October 2008 (one of the worst month ever to invest in and where my performance was 30%) to date 2009 with real money. Here as well, I have been mostly on the positive side.
If you think that’s good, see what Timothy Sykes did with his decisions: since November 2007, he’s up around 250%.
3. Some things about the nature of money are still left unsaid
How is it that despite the political ‘change’, more billions are still borrowed with interest by the Government from the Federal Reserve (which does not belong to the people)?
It is because people do not understand the fundamentals of currency. In this system, to pay the interest, more money has to be printed. Since this Fiat currency is not indexed on any precious metals, the massive injection of it into the system is bound to cause its devaluation.
The future probably holds a new currency indexed on precious metals. All Fiat currencies are bound for destruction at one point or another.
4. It is time to rethink your values
By using ethics, sustainable development and spiritual values, and putting Mankind before money, you will be in a better way to move forward.
5. A get-out-of-stock signal – Martin Armstrong
I have been interested in Fibonacci sequences, Elliott Waves and Kondratieff’s cycles, but one man’s model beats them all. His model predicts events to the date, and by his texts, something is supposed to happen on the 19th of April 2009. The computer and software supposedly self-destructed itself on purpose when stolen from him.
The man’s story is as flabbergasting as his model’s results. Reading the following essay, I thought of the movie Pi by Darren Aronofsky. It turns out the Judge accused Armstrong of inspiring himself from the movie when the latter was actually inspired from his own life.
Writing from a prison cell on a typewriter, Martin Armstrong says about America’s finance woes and collapsing economy that “It’s just time” (pdf download).
Read it, it’s fantastic. It also says to get out of markets.
Contra-Hour also hosts Armstrong’s newest: “Is it time to turn out the lights”
Perhaps the cycle of American politics has come to its end as predicted by Armstrong’s model?
Who knows? After a while – it might just be time to pull a John Templeton on the US and the World.
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