(Almost) Last Chance to Get out of Stocks

[powayseller]

Most new hiring, related to MEW, is retail and restaurants. These will be adversely affected first.

Then the cycle spreads to production/manufacturing. If Rubios orders fewer burrito wrappers, the paper production company has fewer sales.

Then the cycle spreads to capital spending.

Eventually, the stock market is down for retail, wholesale, producers. It’s a domino effect.

In difficult economic times, customers change where they shop – they trade down. The Rubios customer goes to McDonalds and the McD customer eats at home. So I sold my Rubio stocks. However, I may have made a mistake, because the restaurants have a way of overcoming this penny pinching: entice the customer with new menu items. Jack in the Box posted quarterly higher profit yesterday, despite higher gas prices, bec. of new menu items. Starbucks advertised its coconut beverage on the radio and the line was out ther door yesterday (this is according to my friend who is tracking Starbucks informally), after having been very slow for weeks. So while I thought the restaurants would go down, I do lack the knowledge of what can happen to delay the downturn.

Consider pawn shops (Cash America and others), consumer durables, but PEs are too high.

Has anyone checked the Rydex funds? They’ve got a bunch of inverse mutual funds.

[privatebanker]

I’m not too worried about a correction in the near term, it will be very healthy for the long term. I see a lot of dooms day claims here which I think is rather entertaining. Don’t buy into all the hype, sure the market will definitely be affected by the drop off in consumer spending when the “house ATM” runs out of cash, unemployment is skyrocketing and interest rates are high. Everything is cyclical. I have roughly a 25% exposure in alternative assets which has and will do very well as market volatility picks up. But in the long run, those who stick to their guns will ultimately be rewarded. I don’t see the big money running for the exits yet. I’ve also been overweighted in international & emerging markets for quite some time. Don’t chase the hot dot, yesterday’s winners, etc.

[powayseller]

Fear of inflation seems to be the near term factor driving down the markets. But as you said, emerging and international markets may fare better. It all depends on how closely tied the global economy is. How did your international funds do in the 2000 correction?

I’m following the advice of the economists and advisors I mentioned previously. I take responsibility for my own decisions if they are wrong.

[Anonymous]

The big money did run for the exits in the S&P futures last week. That is one of the main reasons behind my post on my blog last Wednesday warning of a bearish setup.

[privatebanker]

Good luck!

[privatebanker]

I didn’t read your blog but some sell programs went off which was expected. Like I said, the market will pull back indeed. This a healthy correction. I can see the market pulling back a lot more than current levels. Again, I think that would be healthy. But in the longer term, I have no worries. By the way, I have an inside view on what the big money is doing i.e. institutional investors. I see a major shift to alternative asset classes. But they have not abanded their core equity positions. A derivatives overlay strategy has been used in many cases. My point here is I wouldn’t be chasing any hot ideas here like I have read in this post. I’ve seen investors get really burned with this philosophy.

[powayseller]

Good luck on what?

What asset classes do you mean? Precious metals?

[PD]

Does anyone recommend switching cash from USD to another currency? Whidh one? What is the best way to do this?

[4plexowner]

There are no non-fiat currencies in the world today.

Switching from the USD to other currencies is not a bad idea – just realize that you are moving from one sinking boat to another sinking boat.

I would focus on the commodity producing countries (Canada, New Zealand, Australia) – they have RELATIVELY better economies than the US (they actually export real stuff – all the US exports is debt and gunboat democracy).

As a goldbug, when I switch out of USD I am moving into silver and gold (the only REAL money). (and they happen to be in a secular bull market besides!!!)

[powayseller]

I’m in limbo on this issue. Euros? Renminbi (can you even buy it)? Or better to buy stocks in those countries, as Warren Buffett has done, so you get the benefit of the stock and the currency exchange.

In Dollar Crisis, Richard Duncan has about 100 charts/tables from the IMF and Fed Reserve to back up his points. He shows that the entire global economy slowed in 2000 when the US consumer slowed spending during our little recession (except China – don’t know why yet – am not that far in the book). He says when the US hits its next recession, the entire globe will hurt, because they are export oriented. In 2000-2001, commodity prices plunged as demand for goods dropped. This will happen again. Unless these countries can stimulate internal demand, they will hurt when the US goes into a big recession.

[Anonymous]

Leung, Poway

The largest futures firms are:

Lind-Waldock
Alaron Trading
EDF Mann

All 3 of these places have discount, and full service options. Do not take the full service, the commissions are outrageous, and the advice sucks.

Tradestation Securities is another one. I have accounts with them due to the way they integrate their order entry platform with the data service. That integration is the best there is. Their rates are good, but not rock bottom. They charge about $5 round turn on electronically traded futures.

Also, you can get a real person on the phone if any problems arise. With many firms you cannot do this. Stay clear of Interactive Brokers!!!!!!!! Great rates, but the worst customer service imaginable. They made a mistake on one trade of mine many years ago, that cost me 20k, and I battled forever to finally get them to “make it right.”

[PD]

Last night my fortune cookie said, “Invest, but never speculate.” Hmmm….

[gromit]

This is kind of funny, wanted to bump this thread because we know now in hindsight PS was just a teensy bit early, maybe a year and a half or so, on her stock market call. Being such a newbie about 2 years ago, after reading her repeated warnings back then, and then reading Roubini, I… shifted my savings out of equities. When I shifted out of equities, the market was at something like 11,400, maybe… and here I was, worried it was about to crash! Totally my fault for making investment decisions based off of pretty much just a blog. Too funny, and lesson learned, hopefully– the first of many.

I wonder what’s up with PS, I know she was kind of chased out but I noticed her posting here again recently.

[gromit]

This is kind of funny, wanted to bump this thread because we know now in hindsight PS was just a teensy bit early, maybe a year and a half or so, on her stock market call. Being such a newbie about 2 years ago, after reading her repeated warnings back then, and then reading Roubini, I… shifted my savings out of equities. When I shifted out of equities, the market was at something like 11,400, maybe… and here I was, worried it was about to crash! Totally my fault for making investment decisions based off of pretty much just a blog. Too funny, and lesson learned, hopefully– the first of many.

I wonder what’s up with PS, I know she was kind of chased out but I noticed her posting here again recently.

[gromit]

This is kind of funny, wanted to bump this thread because we know now in hindsight PS was just a teensy bit early, maybe a year and a half or so, on her stock market call. Being such a newbie about 2 years ago, after reading her repeated warnings back then, and then reading Roubini, I… shifted my savings out of equities. When I shifted out of equities, the market was at something like 11,400, maybe… and here I was, worried it was about to crash! Totally my fault for making investment decisions based off of pretty much just a blog. Too funny, and lesson learned, hopefully– the first of many.

I wonder what’s up with PS, I know she was kind of chased out but I noticed her posting here again recently.

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