Archives For Market & Economic Outlook

Sorry guys, I was suppose to publish this in Monday, but I somehow messed up this blogging software, so I finally got this working today. The market call is a little late, but still valid.

Last week, market leaders like Apple started to lag the overall stock market rally. Such an act is commonly considered to be a sign of a major stock market decline, but I don’t think so (which is why I bought Apple stock on Monday). I have to admit, even I was fooled into believing that 1470 (for the S&P 500) was going to be the market top, but I now believe I was wrong. A couple of reasons:

  1. The big one being QE3. Once QE3 helps the market break its old time high, the market will self fulfill its prophesy and soar higher.
  2. The economy and the job markets are stable.
  3. Home prices are stable.

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All over the web, investors are comparing this bear market/recession to that of the 1970s and the upcoming economic recovery to that of the 1980s. Really? I don’t think so. Here’s why:

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Warren Buffett conducted an interview with CNBC on Thursday, July 12 2012. For the first time in his lifetime, Warren Buffett said something bad about the U.S. economy (shock)! Coming from the King of Optimism, these words were like an “abandon ship!” signal. This has never happened before, because Buffett needs to adhere himself to the public by saying good things since the public only wants to hear the good news. Buffett never said anything negative about anyone or anything; all that come out of his mouth was a steady stream of good words “I couldn’t have done better myself, things are great, the economy will rebound to a new high in a few years, don’t worry guys, etc”. Guess all people turn honest when they realize they only have a few more years to live (Buffett has cancer). Here’s what he said:

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It’s has been evident for many years that gold and silver (and commodities) are in secular bull markets, which usually last 17 years while secular bear markets last around 15 years. Since the recent bull market for commodities began in 2000, we can predict that this secular commodity bull market will end in around 2016. (Yes, I do believe that the “experts” who predict the “death of commodities” are wrong.)

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There’s only 1 nation in the European Union that’s not in a terrible financial situation: Germany. All the rest – Greece, Italy, Spain, Ireland, Portugal, and even France – are overladdened with debt. It doesn’t make sense to have a monetary but not a fiscal (and physical) union, because ultimately, both things have to be rowing in the same direction for the union to work correctly. So in this dire situation, the European Union only has 3 choices left. These are

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