With all of this talk of the recession being over, that the market has bottomed, and green shoots (better to call them weeds) sprouting, it would be easy to sit back and “hope” your investments are finally safe. However, we are no where near the end of this fiasco yet. Those green shoots will be mowed down, Round-Upped, yanked out of the ground, and sent off to the eco-friendly yard waste composting center near you.
We have been given a gift. A recovery of 50% of the losses that occurred last fall through early spring (which I predicted last November here) is something we should be grateful for. But your personal theme song right now, should be Steve Miller Band’s, “Take The Money And Run”.
The market has peaked, as I have said many times before, this is a TEMPORARY RALLY. The market is getting ready for a crash of historic proportions. I am predicting that the DOW will fall under 5000. I think it will hit 4358 before it retraces. Why? Because there is a perfect storm brewing, including some of the following ingredients:
-Insider selling in May and June are at record levels. The insiders have used the bear market rally to dump their own holdings, make their profits, and let the sheeple to get completely screwed. Will you be one of them?
-The healthcare plan will bring unaffordable costs to businesses, which will force bankruptcy, worsening unemployment.
-The Commercial CDO bomb is set to explode soon. This one is 4 times the size of the supbrime debacle. See my article on derivatives if you don’t know why this is such a big deal.
-A new wave of ARM rollovers will be coming due this fall creating an even larger increase in foreclosures that will not begin to abate until 2011.
When the bomb hits this fall, it will likely hit global stocks as well. I love you China, but I fear for your stocks in the short term. I’m keeping some of my long term plays in Chinese and precious metals and resource stocks, but liquidating anything that is too risky to lose.
Where should your money be right not? Stay liquid and keep your powder dry: short term insured cash investments (CD’s), short term treasurys that are highly liquid. Don’t tie anything up that you can’t access quickly. You should have 10-20% (or more if you are comfortable with that) in silver and gold.
If you are trying to sell real estate right now, hit the bid, lower your price and MOVE IT NOW while people are still feeling the effects of the green weeds and OBAMA! euphoria, and willing/able to buy houses. Because after the crash, real estate is going to get ugly and the buyers will dry up. I don’t care if you have to have a freaking open house every day, with freshly baked cookies and champagne, just do it and dump it. (And for heaven’s sake, please keep anyone under the age of 8 away from the champagne).
Deep breath…AHHHHH. I feel better now. You’ve been warned.
