J. Paul Getty Quote!

Stock Market - "For as long as I can remember, veteran businessmen and investors - I among them - have been warning about the dangers of irrational stock speculation and hammering away at the theme that stock certificates are deeds of ownership and not betting slips.

The professional investor has no choice but to sit by quietly while the mob has its day, until enthusiasm or panic of the speculators and non-professionals has been spent. He is not impatient, nor is he even in a very great hurry, for he is an investor, not a gambler or a speculator. There are no safeguards that can protect the emotional investor from himself."

January 23, 2017

Rare Signatures

John P. Hussman, Ph.D.

As I've detailed regularly, the emergence of an extreme “overvalued, overbought, overbullish” syndrome of market conditions has historically been a powerful warning against further speculation. In prior cycles across history, the emergence of this syndrome was regularly accompanied or closely followed by deteriorating market internals (an indication of subtle underlying risk-aversion among investors), and a steep market loss would typically follow. In the half-cycle since 2009, our reliance on that aspect of history proved costly, because Fed-induced yield-seeking (“there is no alternative!”) encouraged investors to speculate long after severe “overvalued, overbought, overbullish” syndromes emerged. In mid-2014, we adapted by imposing an additional constraint on our methods: in the presence of zero-interest rates, one had to wait for market internals to deteriorate explicitly before adopting a hard-negative market outlook.

DYI: DYI has been negative since 2014 going on year 4 leaving me with the feeling of the boy who cried wolf!  During this time dividend yields and long term bond yields were sub atomically low always a clear indication of an overblown market.  DYI are compounder's of money as dividend yield and bond yield is my first importance then capital gains.  Simply stated the greater the yield the larger my asset allocation for these two assets - stocks and bonds.  DYI's marker for precious metals mining companies is the Dow/Gold Ratio.  When it is flashing positively towards gold and the mining companies up goes our allocation.  Also for those mining companies that do pay dividends yields will be greater further expanding DYI's goal as compounder's.

Presently, Fed policy has achieved “liftoff” from the zero interest rate bound, and despite the recent post-election blowoff, our key measures of market internals remain unfavorable here. Given that environment, my expectation is that the overvalued, overbought, overbullish extremes we presently observe may have harsh consequences, as they have in prior cycles. We’ll defer our immediate concerns if market internals shift to a more uniformly favorable condition, but if anything, we’re seeing a sharp broadening in the number of red flags and warning signals we monitor. I’ve noted in recent weeks that our most extreme variant of “overvalued, overbought, overbullish” conditions has emerged; a secondary signal at a level on the S&P 500 about 4% higher than the syndrome we observed in July. Apart from a set of false signals in late-2013 and early-2014 at the height of zero interest rate enthusiasm, every other instance of this syndrome has been associated with a major market peak, including 1929, 1972, 1987, 2000, and 2007.

DYI:  That is exactly as I see this market associated with previous market peaks that Hussman just listed.  This is not a time to be enthusiastic regarding stocks and long term bonds[until just recently] gold as measured by the Dow/Gold Ratio has increased upping my allocation to mining companies and a small amount in long term bonds.

 Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 1/1/17

Active Allocation Bands (excluding cash) 0% to 60%

72% - Cash -Short Term Bond Index - VBIRX

23% -Gold- Precious Metals & Mining - VGPMX

 5% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

1-23-17 Dow/Gold Ratio is 16 to 1(rounded).

 

DYI:  Actual unemployment for men age group 25 to 64 is 15% significantly more than the headline numbers politicians love to espouse showing almost FULL employment.  Overall for men and women is around 23% unemployment; women only around 30% unemployment(ages 25 to 64).

What is very troubling men's employment peaked around 1953!  And has dropped 12 percentage points or so.  My best guess 1/4 of those men are on welfare of some kind. The rest is unemployment that has become systemic due to technology advancement dislocating workers, fraud(corporate - government) and mismanagement.

  DYI

The

Rogue State

Abolish the CIA

Every American who looks at the CIA objectively or in a balanced way and judges it by any number of criteria, such as moral, legal and pragmatic, should reach the conclusion that the CIA should be abolished. JFK wanted to break it into a million pieces. Trump is right to dismiss its intelligence reports about DNC hacking. The CIA war on Trump shows us immediately that the CIA is a rogue organization within the U.S. government and a severe threat to America. 

The CIA is an internal threat to the rule of law and to the government that it supposedly serves. Senator Schumer acknowledges the CIA’s unbridled power, its subversive power, its power to undermine even a president, especially one that wishes to control or alter the organization, when he says: 

“Let me tell you: You take on the intelligence community, they have six ways from Sunday at getting back at you. For a practical, supposedly hard-nosed businessman, he’s being really dumb to do this.” 

Schumer is saying that the CIA is so powerful that a president should not attempt to control it or else! The CIA is so powerful that elections do not matter when it comes to the CIA. The CIA stands alone. The Constitution that empowers the president as the Executive, the boss of government operations, does not matter. Basic American institutions and laws must bow before the threats that the CIA possesses. This is the assessment of a Senator beginning his 4th term and who is the highest ranking Democrat in the Senate in his post as minority leader. 

The CIA is an organization that perpetually undermines traditional American values and moral values. It consistently kills innocent people. It continually causes instability and wars. It undermines other societies and our own. It interferes constantly in foreign nations, to the detriment of them and us. It is an unelected power that challenges elected officials. It favors abuses of power, including torture. Its actual value at generating usable intelligence is minimal, often wrong, often misleading, inaccurate and harmful as in the WMD that were never found in Iraq. 

“The Association for Responsible Dissent estimates that by 1987, 6 million people had died as a result of CIA covert operations. Former State Department official William Blum correctly calls this an "American Holocaust." This quote and a detailed timeline of CIA atrocities is available. 

William Blum has listed CIA interventions for us. 

All that needs to be done to understand the enormity of CIA crimes against humanity is to associate each of these interventions with the deaths, injuries, disruption of lives and destruction that they have caused. The most recent of these are: 

Afghanistan 1980s *
Somalia 1993
Yugoslavia 1999-2000 *
Ecuador 2000 *
Afghanistan 2001 *
Venezuela 2002 *
Iraq 2003 *
Haiti 2004 *
Somalia 2007 to present
Honduras 2009
Libya 2011 *
Syria 2012
Ukraine 2014 * 

The asterisks indicate a case where the CIA overthrew a government. 

As long as Trump is at war with the CIA, a war that the CIA launched against him, not that this matters much because Trump has every right to change the CIA and the CIA has no right to disobey or blacken his name, he should attack the CIA much more completely and thoroughly. It deserves to be attacked. He should abolish it altogether. 

For a bone to those who have fears that the republic will fall without the CIA, whatever small amount of residual value that is present in its intelligence operations can easily be retained or transferred to other agencies. The latter are already in profuse abundance in Washington. The fact is, however, that the republic is more likely to fall further than it already has in the presence of the CIA than in its absence.

DYI:  Department of Homeland Security, FBI, and the CIA need to be disbanded  They are beyond reform and are a tyranny upon America. 

DYI 

Incompetent

McCain

Almost Every Word Of John McCain's Response To Chelsea Manning's Sentence Commutation 

Is Flat Out Wrong

DYI:  The entire article is spot on regarding McCain's half baked reasoning response to the commutation of sentence(Chelsea Manning) and his opinion of General Patraeus that is nothing more than a double standard.  Apparently from McCain's line of reasoning if you are divulging national secrets to your hot looking mistress then he needs a pass on any punishment.

Petraeus and his mistress Paula Broadwell

However if you are a whistle blower you will receive a 35 year sentence - which has been commuted by Obama - with multiple years in solitary confinement which is nothing more than a long form of torture.  Chelsea Manning took an oath to defend the constitution dumping massive information to Wikileaks highlighting government abuse of our most cherished possession - the constitution.  Those who used internal means to whistle blow either have ended up fired, imprisoned, and in some cases murdered.

What John McCain needs to do is go and retire his time has passed, if he ever did have a time doing anything of importance.  Think I'm beating up on Republicans think again there are many Democrats who need to go as well.  This highlights the need for term limits. My suggestion is 2 terms for Senator and 3 terms for the house - plus staggered 12 year term limits on the Supreme Court as well.

DYI  

The

Tyranny

of

Socialism 

Venezuela Debuts New Banknotes Amid Soaring Inflation

Venezuelans stood in long ATM lines Monday to take out new, larger-denominated bills that President Nicolas Maduro hopes will help stabilize the crisis-wracked economy.

DYI:  No it will not stabilize anything only until you end these insane socialist policies and regain free markets, private property rights, rule of law, low taxes and minuscule government spending will Venezuela end its economic death spiral.  But alas, this will never happen as Maduro is the worst kind of Socialist - THE TRUE BELIEVER!  He will double down and triple down only to be bewildered as to why all of his socialist education doesn't work in the real world.    

Maduro last month said he was scrapping circulation of the most used bill, the 100-bolivar note, and replacing it with new bills ranging from 500 to 20,000 bolivars. 

Residents in Caracas expressed shock at seeing bills with so many zeros — a sign of how worthless the bolivar has become amid triple-digit inflation and a collapse in foreign exchange reserves that has led to severe food shortages. 

"I never thought I'd have such a big bill in my hands," Milena Molina, a 35-year-old sales clerk, said as she inspected crisp, new 500-bolivar notes she had just withdrawn. "But with the inflation we're suffering, the notes we had weren't worth anything and you always had to go around with huge packages of bills." 

Monday's rollout of the first batch of imported notes came weeks later than the government had originally promised. Maduro last month ordered the 100-bolivar note to be withdrawn from use well before the replacement bills were ready, leading to widespread chaos as Venezuelans rushed to spend the bills before they were taken out of circulation.

DYI:  At least there was a reduction of the money supply but you did it on the backs of your every day citizen.  With your new bills and no policy changes in the direction of free markets inflation will once again soar ahead.

 With cash running out, looting and protests were widespread and Maduro had to backtrack. On Sunday, he extended for the third time, until Feb. 20, the deadline for the 100-bolivar note to remain legal tender. 

While the new denominations should make cash transactions easier the relief may be short-lived: the 20,000-bolivar note is worth less than $6 on the widely used black market, where Venezuelans turn when they can't purchase dollars at the tightly controlled official rate. With inflation forecast by the International Monetary Fund to hit four digits this year, few economists expect the currency to rebound any time soon.

DYI:  Why have failed lessons of Socialism or Communism have to be repeated? The allure of obtaining something for nothing is so strong it overwhelms common sense!

DYI 

A

Tough Time

For

George Soros

Get Out of Hungary

Hungary set to turn screws on Soros-backed NGOs

Szilard Nemeth said that criticism of government policies by "fake" civil organisations set up to "influence politics" by Soros and others was "impermissible".

DYI:  Old George is having a hard time of late as country after country are fed up with his meddling.  He has bragged in interviews about the countries he has overthrown or changed their political direction benefiting him.  Hopefully this will be sweep world wide and leave Soros impotent.

DYI   

Exponentially

Speaking

How the Medical Industrial Complex

Will Destroy the Economy!

Roughly 20% of Americans income goes to the cost of health care which is double other 1^st world countries including those that have socialist health care systems.  A capitalist system as opposed to a socialist system would deliver higher quality at a lower price due to the free markets nature of undercutting your competitor(s) and new lowering cost efficiencies. And yet our costs are double.

 

Why?  The Medical Industrial Complex colludes - price fixes and employs tactics such as campaign donations – BRIBES – in order to reduce the overall level of competition.  This in turn has driven the cost as measured by GDP from 5% to 20% and is growing exponentially.  It is now 25% of the Federal budget growing exponentially as well.  Within 10 years, if left unchecked, this figure could easily double to 50%.  If I’m wrong it will be higher.

The consolidation of this industry is moving at the speed of a meteorite reducing competition and their pricing significantly.  As a nation we are on a path of health care hell that will suck the life out of our economy.  Amazing as it is, the Medical Industrial Complex is far more powerful politically than the Military Industrial Complex.

Why do they collude?  Simple – human nature as it is – it is far easier to cheat than to push for efficiencies delivering quality and low prices.  Simple as that.

The solution is already with us.  The Clayton, Robinson-Patman and the Granddaddy Sherman Antitrust Acts, if applied aggressively and effectively, costs would drop by 75%.  That’s not a typo.  That is how outrageously as a nation we are being ripped off.

President Trump if you do not take this on within your first 100 days – if you plan on running for reelection – YOU WILL NOT WIN.  The economy and Federal budget (and State budgets as well) will be dragged into the swamp you said you would drain! 

DYI 

Low Risk:

Fake News

High Risk:

Sanitized CIA Global Political Elite Directed News

Facebook to roll out fake news tools in Germany

Facebook is introducing new tools in Germany to help combat the spread of fabricated news stories.The world's largest social network said it would enable German users to flag potentially false stories.The stories will then be passed to third-party fact-checkers and if found to be unreliable, will be marked in users' news feeds as "disputed".It is the first major expansion of the fake news features since Facebook announced tests in the US in December."Last month we announced measures to tackle the challenge of fake news on Facebook," the company said on Sunday in a German-language statement."We will put these updates in place in Germany in the coming weeks."

DYI:  A blind man can easily see where this is headed.  A sanitation of news with little or zero dissent regarding the political narrative driven by the global CIA political elites.  This will be attempted here in the the good old U.S. of A.  You can bet on it. How will Donald Trump react?  I hope on the side of an open free press.  At least you would think so with his past experience with his reality TV show. 

Nevertheless the internet has created a wild west show of news; just as it should be giving our citizens a wide range of options.  No doubt there is a level of crap news and that can be said without apology regarding CNN with all of their reoccurring "crises actors!" Spewing out the establishments narrative especially gun control such as the fake shooting at Sandy Hook terrorizing the American public.  The internet is the check that is balancing the government collusion of the main stream press(MSM).  Our government primarily the CIA has now lost its ability to propagandize the American public. Painting Russia as the new bad boys to gin up a second cold war is gaining almost zero traction is just such an example.  What will they dream up next to spew out of the MSM?  I don't know but with the internet will catch their lies in a big hurry!

DYI       

Ouch!

APNEWSBREAK:

 RINGLING BROS. CIRCUS TO CLOSE AFTER 146 YEARS

ELLENTON, Fla. (AP) -- After 146 years, the curtain is coming down on "The Greatest Show on Earth." The owner of the Ringling Bros. and Barnum & Bailey Circus told The Associated Press that the show will close forever in May.

DYI

Mass

Delusion

“The problem with police officers and firefighters isn’t a public-sector problem; it isn’t a problem with government; it’s a problem with the entire society. It’s what happened on Wall Street in the run-up to the subprime crisis. 

It’s a problem of people taking what they can, just because they can, without regard to the larger social consequences.

It’s not just a coincidence that the debts of cities and states spun out of control at the same time as the debts of individual Americans.

Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of the society to the bottom.

 They’d been conditioned to grab as much as they could, without thinking about the long-term consequences.”

― Michael Lewis, Boomerang: Travels in the New Third World

Welcome To The Third World, Part 21: This Pension Thing Is About To Get Real

And this, remember, is happening at the tail end of a 30-year bull market in bonds and a 7-year bull market in stocks, which took the main asset classes held by pension funds to record valuation levels. So the rubber truly meets the road during the next recession when stocks will, if history is a reliable guide, drop by 20% or more. The current gaps in thousands of pension funds will become gaping holes, and the experience of Teamsters and Dallas cops will be replicated across the country.

DYI:  If history is any guide?  Stocks are going to drop far greater than 20% expect a magnitude of 45% to 60% only to bring valuations back to its mean!  The bond market has been a raging bull since 1981 only a fool would believe rates are to stay sub atomic low for another 10 or 15 years.  This is going to an ugly time for Americans especially for those up in age many will die in poverty.

DYI

The Death of Europe

Soaring childlessness among southern European women - report

"Reliable contraception, delayed union formation and childbearing, greater family fragility, demanding careers and job instability, as well as general economic uncertainty, are likely to foster childlessness". 

The report cites high unemployment, "inadequate family policies" and "persistent gender inequalities in the division of domestic work and childcare" as important factors. 

"While childlessness has broadly stabilised in western and northern Europe, it is likely to continue rising fast in southern Europe, where up to one quarter of women born in the 1970s may remain childless," the report concludes. 

"Childlessness will also continue rising in central and eastern Europe."

DYI:  The birth rate in Central Europe has been dropping and remained below replacement for over 30 plus years.  At this current level Central Europe will lose half of it population within two generations.  With the migrant situation Europe could very easily become an Islamic State within 50 years.  So far I've seen very little effort on the part of the authorities to remedy their dismal birth rate.  Only the French have manage to maintain at replacement as opposed to the Germans who are on a population decline trajectory.

If these trends are not reversed Turkey could end up being an European/Asian powerhouse both economically and militarily.  This has been noticed by the U.S. and Russia.  This is why tension between Turkey, Russia and the U.S. have been sliding as of late despite the fact that Turkey is a NATO member.  Big demographic forces are at work that could easily come to head and be settled by war.  Hopefully saner heads will prevail.

DYI