Sunday, June 7, 2009
2 charts, 1 message
Both charts stolen from www.chartoftheday.com and they have been kicking around cyberspace for awhile, but they're worth showing again:
Forget hoping for the rally to continue and forget "buy and hold" for the long term. Without earnings to support them over the next year, stocks are toast. And where are the earnings going to come from while banks are failing in increasing numbers (yes, it's getting worse not better), unemployment is rising (no, it's not stabilizing), and the residential and commercial real estate crash continue unabated (no, they're not stabilizing either)? If a business is not part of the fascist keiretsu business model that has evolved in this country, that business is likely to be in trouble. With credit drying up on the vine, 90+% of businesses are not in expansion mode, they are in survival mode.
Maybe my call for the exact top of the stock market last week will be proven right and maybe not, but you can bet a year from now people will be hoping and praying to get back to anywhere near the level the major stock market indices are at now. Get out of general stocks now, while there's still time. Forget chicken little, the sky has already fallen and it's time to batten down the hatches and get ready for reality.
And remember that Gold stocks are not immune from a correction when the stock market falls to new lows, but Gold stocks will not be making new lows again for years, as they have started a new secular bull market. Gold and Gold stocks are the only investments with a bright long term future.