Wednesday, January 13, 2016

But Obama Said the Economy is Great!

Spent most of today and some of yesterday planning things like which insurances I'm going to keep and which ones I'm going to drop.  Along the way, I spoke with a financial planner I've been working with and find he echoes the words you've seen in other places lately, like the RBS saying "sell everything and get into cash".  Bill Bonner posted this chart and explanation:
Typically, stocks are said to be in a bear market when they fall 20% or more from their 52-week (or year) high.

By that definition, the widely watched S&P 500 Index is still a long way from being in a bear market. It is down 10% from its 52-week high last May. But as you can see from today’s chart, the average stock in the small-cap S&P 600 is down 31% from its 52-week high. And the average stock in the mid-cap S&P 400 is down 27%. Even in the large-cap S&P 500, the average stock is down by more than 22% from its 52-week high.
About the same time, you may have seen Zerohedge's somewhat alarming headline that "Nothing Is Moving," Baltic Dry Crashes As Insiders Warn "Commerce Has Come To A Halt".  Which registers a solid 7 on the Richter Pucker scale.  Not to pile on, but Canada seems to be going into a currency collapse with the loonie dropping in exchange with the dollar to the lowest level since 2003, and no end in sight. 

It's stuff like this that makes retirement hard.  Not the sleeping in; that comes pretty easily.  Certainly not the lack of meetings.  Financial planning and setting life up when the world looks like this is the hard part.  But if you're working for a living and are seeing the possibility of layoffs coming in all of this, we're in the same boat.  

Offhand, it looks like the long anticipated snap back to the mean is starting.  Since I think the world's central banks don't have a single vertebrate working for them, I expect frenzied amounts of money to be created.  "We were only kidding about that quarter point rate increase!"  


  1. I totally agree with your comments. I would add though that for various reasons the U.S. will do better than some other countries in this. Not because of anything our politicians do or because our workers are doing well but rather for the somewhat serendipitous reason that in a world where economies are crashing big money looks for a safe haven and the U.S. is it. There may be better places like Switzerland but there are no real investments in Switzerland for billions and billions. So for this reason capital is flowing into this country even though our economic picture looks grim.

    1. Years ago, I tried to come up with a colorful way of expressing that, and refer to it as "the least disgusting girl at the dance" theory. The money comes to the US for the same reason "the least disgusting girl at the dance" gets asked to dance every time. She's not hot, just the best option.